Big companies are stepping up their plans in case Britain crashes out of the EU without a deal as British Prime Minister Theresa May struggles to get talks back on track after a major setback.
Senior executives in the UK’s financial services sector, which accounts for about 12 percent of the economy, said May’s efforts to secure a transition deal had come too late and that they had no choice but to start restructuring.
Big supermarkets such as Tesco PLC and Sainsbury’s PLC have been working with suppliers to identify potential delays, shortages or price rises.
They have lined up alternative providers, suppliers and sources in the industry said.
The uncertainty is particularly painful for the manufacturing sector as low margins make it risky for them to restructure unless it is essential.
They have been holding off on investment, but are preparing for new certification that would allow them to sell in Europe if there is no deal.
“The delay is so great and the uncertainty is so great that companies have no choice but to start triggering their plans,” the head of one of Britain’s largest companies said.
Britain and the EU are working to get talks back on track this week, but executives of one large international bank had decided to plan for the worst, the company’s chairman said in a conference call on Tuesday.
“The question is no longer whether we are moving [operations to the EU], it is a question of how big those moves are,” he said.
The bank has started discussions with customers about rerouting client activity to European hubs, including rewriting thousands of contracts, the chairman said.
Senior employees were told last month if they had to relocate to Europe, he said.
Another senior executive at a large US bank said that he was increasingly concerned that May’s government could collapse after the Brussels talks broke down over a dispute about the Irish border, adding to the uncertainty.
“We are at the maximum point of danger,” he said.
The financial sector needs extra time to make sure its clients are prepared. For instance, a British bank opening a subsidiary in Europe might need its clients to adopt a new sort code throughout their own supply chains.
In other sectors, companies are making smaller changes that would enable them to operate in Europe after Brexit, from preparing compliance changes to drawing up shadow supply chains and looking for additional warehouse space.
Food retailers are lining up alternative suppliers in Britain or outside the EU in case delays at borders or new tariffs disrupt deliveries. About 30 percent of Britain’s food supplies come from the EU.
Ireland provides almost 70 percent of UK beef imports, or 270,000 tonnes a year. Were tariffs or border delays to make Irish beef less competitive, supermarkets could look further afield, for instance to Argentina.
Many manufacturers are unwilling to sign off on new plans until they know how Britain will trade in the future.
The drugs sector has been among the first to move so that they can comply with EU regulations. GlaxoSmithKline PLC and AstraZeneca PLC have already set up new facilities in mainland Europe to test batches of drugs made in Britain.
Auto and aerospace firms are focusing on certification.
Some companies are considering applying to the European Aviation Safety Agency for a status that would enable them to sell in the EU if Britain was no longer a member state, said ADS Group Ltd, the aerospace and defense trade body.
Japanese carmaker Honda Motor Co, which builds about 8 percent of British cars at its plant in Swindon, is considering increasing its warehouse capacity in Britain and stock levels to counter any new border delays.
Having a transition deal would allow businesses to survive the two years after Brexit by allowing them to defer any big decisions until the final parameters of Brexit are worked out, said Andrew Bonfield, finance director of National Grid UK and chairman of the 100 Group, an association of finance chiefs.
“It’s about the avoidance of a cliff edge,” he said.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks