BCF Survey Shows UK REACH a Major Threat to UK Manufacturing

Guest blog by CPA Trade Association Member, British Coatings Federation.

The latest ‘Brexit Impact’ survey of British Coatings Federation (BCF) members has found that UK coatings manufacturers are increasingly concerned about the effects of the new post-Brexit, UK chemical regulations. Almost 80% of respondents believe UK REACH will impact negatively on their business, with the fear the new regulations – as currently legislated - will lead to a significant reduction in the portfolio of chemical substances available in the UK or increased raw material costs in future.

Any hit on UK chemicals companies, and sectors like coatings, will no doubt be felt downstream. So, concerns about the impact of UK REACH will be of interest to CPA members too, as many of the products they use – from paint to specialist coatings - rely on chemicals being available in the UK. That is why BCF and other industry bodies – including the CPA - are continuing to lobby the UK Government to amend its position on UK REACH, which is currently estimated to cost industry over £1 billion to implement in full. We argue it is compatible to both simplify the registration process for chemical substances and still maintain high standards of environmental and health protection.

Moving away from the thorny issue of chemicals regulations, two other broad themes emerged from the survey findings.

Firstly, there are the continued added complexities of importing and exporting since the start of the Trade and Co-operation Agreement (TCA) on 1st January this year. True the number of members reporting problems with customs paperwork and understanding rules of origin is down: perhaps that is to be expected as businesses have worked hard to get to grips with the new rules and procedures. However, the numbers citing those issues as problematic is still high. Moreover, those procedures are now manifesting themselves in the form of additional costs and also leading to delays and lack of availability of shipping and haulage. 69% of members said that the added costs due to customs paperwork was their joint biggest concern about a negative impact on their business competitiveness in future.

Second, is how those added administrative burdens impact on exporters in the sector. After experiencing nearly six months of the new UK-EU trading relationship 60% fear that having to abide by EU REACH and CLP rules as a ‘third country’ will impact on their business competitiveness. The number of members reporting issues with other regulatory matters like CE/CA markings has more than doubled between January and June too: a problem CPA members know all about. Taking these regulatory and red-tape issues together, it is no surprise about half of respondents are concerned they risk losing EU export customers in future.

Having said that, the survey shows exports are currently largely holding up – members have proven resilient thus far. However, there have been a couple of members report they have stopped exporting to the EU because of the added bureaucracy and another three are reconsidering their position. Conversely, and worryingly, 19% of survey respondents said that EU suppliers had stopped trading with the UK because of Brexit.

How is this impacting on bottom lines? BCF members are now estimating the cost of Brexit to be significantly higher than when asked to do so in January. Back then, when asked to ‘estimate how much extra do you think new trading arrangements with the EU will add onto your operating costs?’ the highest proportion of responders, a third, said ‘don’t know’: perfectly reasonable given the TCA was just a few weeks old. By June, respondents are much more certain, with just 14% saying ‘don’t know.’ Instead, more than four in ten (43%) now report increased operating costs of over 5%, with one in ten (9%) citing a figure of more than 10%. As one member said: ‘Our operating costs have increased significantly more than we initially expected.’

Is there any good news in the figures? Although small-ish numbers, there are a fifth of members (21%) who feel the TCA will allow more trading opportunities with the rest of the world, and 17% that it will mean more opportunities for them to increase trade in the UK.

Overall, despite BCF members showing huge resilience over the past four months, our June survey results continue to demonstrate how Brexit has impacted negatively on the coatings sector in the form of red-tape and higher costs. And to end where we started, growing fears about how UK REACH will affect the sector are also extremely concerning.


The full survey results can be found in the downloadable report here.

Other June Posts