With Brexit now only a matter of weeks away, Mannok’s CFO, Dara O’Reilly, has outlined the work the company have been doing to prepare for the 1st January deadline in this new interview. The message from the interview is clear: Mannok is ready for whatever the Brexit outcome is, and ensuring a smooth transition and continued customer supply is a top priority.
“Mannok is a uniquely located business; it’s located on the border between the Republic of Ireland and Northern Ireland, on the only land border which will exist between the EU and the UK following the UK’s exit on 1st January. We have operations both in the Republic of Ireland and Northern Ireland within our business, so for example in the Republic of Ireland we have our cement plant in Ballyconnell, our packaging plant which manufactures plastic packaging, and we have our PIR insulation plant. We also have some quarry assets in that jurisdiction as well. On the Northern Ireland side of the border we have a number of our concrete products facilities, so we have our precast concrete plant, we have our roof tiles plant, our administration offices, our aircrete block plant, and our dense concrete block plant, as well as ready mix facilities and a number of quarry activities located in Northern Ireland.
“On a day to day basis, the Mannok business would have approximately 450-500 cross-border movements of our product. That could be raw materials coming from our quarries into the cement plant in the Republic of Ireland, or some of our cement product going to our concrete products facilities in Northern Ireland. In addition to that, obviously we have a significant amount of customer product moving from our facilities out to our customer base within the island of Ireland. On a daily basis we also have on average around 80-90 truck loads per day leaving our base here in Ballyconnell and Derrylin and traversing the Irish Sea over to our GB customer base.
“The border in that eventuality is invisible. All that might differentiate the border in this area is a line in the tarmac in the road where it changes from one local authority to another, but outside of that at present we have no customs infrastructure, and haven’t had for many years.
“We’ve taken a lot of measures within the business to facilitate a smooth transition from the pre-Brexit era to the post-Brexit era to ensure our customer base sees that transition as seamlessly as possible, and that they continue dealing with Mannok for their product needs.
“The work that we’ve done in that regard involves some systems development in our IT systems here; it also involves some changes in the way we’ll operate going forward. In addition to that, we’ve also had to look at our corporate structure to ensure that corporate structure is fit for purpose under the new post-Brexit day scenario.
“So, we have established a number of new legal entities within our business, a number of new companies, within the GB market, and in effect what will happen is our GB customers will be dealing with a Mannok GB entity. They will be dealing with that entity directly: they’ll be placing their orders with that business and they’ll be getting their invoices from and paying that GB-based entity. And then, behind the scenes as such, we as a business will be catering for and dealing with all of the administration that’s associated with the cross-border movement of those goods. All of the red tape associated with customs documentation, declarations etc., is contained in effect within the Mannok organisation and we will look after all of that for our customers. So, from a customer’s perspective, it’s the exact same dealing with Mannok as dealing with a supplier who’s just down the road from you.
“No doubt our customers will be wondering if this is going to lead to extra cost for them in relation to the product we’re supplying to them. I suppose if you look at that, what we will be doing is we will be seeking to get a market price for our product. Tariffs obviously is something which is a little bit of an unknown post January 1st. In terms of the actual tariffs that apply to our products, they range in value from potentially zero under WTO tariffs to 6.5% for some of our products. Those tariffs will impact on our competitors as well, some of which import a significant amount of their raw material from Europe.
“The price that we charge on the invoice will be the entire price, including whatever tariffs might apply to us. So, in summary, we can reassure our customers that the price we charge for our products will be in line with market pricing within the markets we’re operating in and servicing. And we do believe that for the quality of the product that we supply, we are very competitively priced.
“Naturally, another consideration for the business is the supply chain of raw materials, and indeed parts, for example for our machinery on our production lines: where those products are coming from, where they’re sourced, and is the eventuality of Brexit going to have any impact on those? And we’ve been working with our supplier base for quite a period of time now to ensure that the structures that they have in place and the supply chains and supply lines that they have in place are sufficient and robust to cater for a Brexit scenario.
“For example, as far back as 18 months ago, some of our raw material suppliers have started utilising different routes for getting their product from their production facilities on mainland Europe to our production facilities in the Republic of Ireland. What we have been doing more recently is building stocks and making sure that we have stocks of critical parts and raw materials for our production enterprise. We have the capability within our own storage facilities to store enough raw material – for example within our PIR insulation and our packaging areas of the business – to cater for a number of weeks’ production requirements.
“On the other side of the business, the concrete products side of the business, virtually all of our raw materials are sourced locally within our own reserves, and we have plenty of that as well. But for those products we have to buy in, we’ve built our storage and the amount of products we’re keeping on site at our production facilities; we have arrangements with our key suppliers also that they will maintain buffer stocks for us at their own locations, and as I mentioned, we’re also looking at the supply chains and the supply lines from their production facilities into our facilities to ensure that any delays are minimised and that, if there are delays, we have sufficient stock to maintain a supply to our customers.
“A key priority for us in all of this was to ensure that the service we can provide to our customers in a post-Brexit environment is as seamless as possible. We’ve made the changes to our structures; we’ve made the changes to how we operate; and as a result of that, regardless of the outcome of the Brexit negotiations, we’re ready.”