19th January 2021
Some thoughts on Brexit and the year ahead...
A friend recently contacted us asking us about our outlook on 2021. Well, it goes without saying that we're spending a lot of time trying to plan for another probably mercurial year. One we begin with hope and optimism.
Below you can read Dom and Cal's answers to questions put to us by our industry friend...
How will leaving the EU affect Mason from a business point-of-view?
Our bicycle and frameset sales to the EU were previously unhindered by customs and we could easily dispatch to any EU destination. This was an ideal circumstance for our EU customers because they were effectively buying from us 'locally' and they were not 'importers'. Now, we're faced with some minor barriers to trade. On our part as a supplier we will be adapting our operating practices to comply with the new customs procedures to fulfill our role of delivering the best possible buying experience for the customer. One aspect of this is a straightforward, well communicated and stress free order process for our customer. From the customer's perspective they have a potential barrier to purchasing which is administering an import (because the customer is now an 'importer').
Towards the end of 2020 we had anticipated and made potential plans for a dip in sales to the EU when there was a possible 14-15% duty applicable to our bicycles - which is a significant price increase for any customer. However, with the recent TCA / Trade Deal we have seen that it is possible to export/import bicycles with 0% duty and tariffs - provided the exporter meets specific regulations on the origin of materials. As we have our frames made in Italy and several other Italian/EU made parts are used on our bicycles, they fall within 'Rules on Origin' regulations and we're able to export with these preferential rates (0%). All of this means that our EU customers won't be paying any more for a Mason bicycle than they did before Brexit. It is our job to communicate this as effectively as we can because there is still uncertainty amongst consumers regarding the new regulations.
So, with this in mind we expect that sales will continue to be strong in the EU. A product that can be supplied from UK > EU with 0% duty inherently [thanks to the new regulations] has a message of localised manufacturing which has always, and will continue to, appeal to our EU (and UK) market.
Mason would not be here today without our friends and community in the EU. From our frame builders in Italy, our good friends and supplier, to the customers who have supported us since our very early days. Brexit has done nothing to diminish the bonds that mean so much to us.
Does this affect your product development or relations with your EU suppliers?
Yes, but that's not to say in a bad way. Previously our EU production connection was simple. We could organise stock and prototypes to and from our suppliers with nothing more than an email needed. Accounting for this was straightforward, too. This was a key factor in allowing us to build the relationships and work so closely with our friends in Italy as we could exchange ideas (travel) and samples (shipments) with virtually no barriers. Now, none of this will change but it requires more admin.
It's important to remember that our partners in the EU are also adapting to the new procedures. Our friends in Italy are also adapting their operations to maintain the flow of goods in and out of the EU. It really does require cooperation on both sides of the border to make the new deal work, and the commitment shown from both UK and EU businesses sends a powerful message that we want to continue working together as we have been doing for many years.
How will it impact your delivery schedules and does this require a rethinking of international logistics & operations?
I mentioned that we're working hard to give all EU customers stress-free deliveries. Paperwork is intrinsic to this, i.e. it needs to be accurate and present with every delivery. We're a small team of just 6 employees, so really we try and limit 'paperwork' to the minimum. One way we're achieving this is making sure we adhere to best practises for all our internal processes. In this case, it means that our export documentation and logistics records systems are fully automated, accurate and handled electronically. This yields benefits for all of our sales channels and we anticipate company-wide operations improvements.
Like any small, growing business, Mason has been through some tough times. We know that with these situations, what may at first seem like barriers or challenges to business actually are the best opportunities to improve your business, learn, and to become more robust and efficient in all aspects of the business.
All businesses face difficulties and problems and now more than ever I think the customer realises this and is sympathetic and supportive. We have been very encouraged and often touched by the patience and support from our customers over the last few challenging months, they know they are getting something special and are happy to wait a little longer if there are delays because of supply chain strain or shipping issues. But, good communication is the key.
During our time in business, we've learned that problems will occur and they will be stressful but they give us the opportunity to show our customers how well we respond and deal with the issues raised, to really prove how good our customer service is. Some of our strongest bonds with customers have stemmed from us solving problems for them early on.
This mindset will remain as Mason Cycles tackles the combined challenges of Brexit, Coronavirus and an overstretched cycle industry.
It's a crucial learning experience for the whole team. Obviously we've not experienced this sort of trade transition before and we're now facing the same challenges, and asking the same questions, as companies much bigger than us. It's reassuring and scary in equal measures. But, we're embracing the challenge and making sure it's a positive change for Mason and our customers.
We're not putting our prices up as other brands seem to be doing and we hope to hold our position which is price competitive in the EU market. Operating on the international level is still a big learning curve for us, but by striving to develop new and better processes we can start putting time towards other operations e.g. implementing Industry 4.0 methods.
How does it impact customer deliveries?
We do not anticipate a direct impact to UK customer delivery. Once the frames are in stock in the UK, delivery is as usual. Our shipping partners are still operating our usual Intl. road and air services.
Now that each shipment has to be customs-processed it is reasonable to expect a small delay to our EU deliveries, I would expect them to take 1-2 days longer than the previous 2-3 day services. Although the Brexit negotiations deadline was 31st Dec, there is still effectively a transition period so tax/duty/rules of origin procedures will be deferred behind the scenes in order to keep things running smoothly. What has become apparent to us is that customs officials, logistics teams, the trade organisations that keep things going, they all genuinely care about UK/EU trade and want to keep things running smoothly. It's in everyone's interest.
Another change that we are trying to make for our EU customers is to improve our customer service experience, specifically information regarding delivery, in these uncertain times. For sure the importation process will be a new experience for many customers and we will be on hand to help make their purchasing experience easy. We're used to communicating with customs offices around the world so we're making sure we're ready to help customers get their bicycles.
As per the UK, we don't foresee Brexit causing a problem for our US deliveries. If anything we're aiming for an improvement in the customer experience and delivery of our US sales. As our logistics efficiency improves with implementation of best practises in the EU, this will carry over into all of our export operations. As we grow as a company, our relationships with shipping companies grow stronger.
Looking further forward, we are of course eagerly anticipating the resumption of trade talks with the US in spring. We know that Biden was strongly opposed to Brexit (like us), and how this directs the narrative of those talks is something we are interested in following. Of course, we can only hope for positive steps towards a FTA and anything that makes business and travel with our friends and customers in the US easier is most welcome.
There are other opportunities that we hope Brexit may bring us. Mainly these are the possible FTAs that our ambassadors can seek out with our various suppliers' countries around the world. We know that Export is a key focus for the DiT to rebuild the economy after Brexit and COVID.