An Aylesford, Kent, factory is set to close, with the loss of about 100 jobs, DS Smith, a major manufacturer of packaging and cardboard display stands for shops, has decided to allocate production to other plants, including recently opened facilities on the continent.
The group showed an increase in profits of 80% to £315mn over the six months to October, and revenue increased by 28% to £4.3bn. However, the company has to face the reality that there has been a reduction in the market for Aylesford’s products, not least in High Street shops.
Post-Brexit regulations hamper trade with major market
There are a number of reasons. One is the increased cost of dealing with the increased bureaucracy resulting from Brexit. What was for many years a straightforward process of moving goods around Europe is now tied up in British red tape when it enters or leaves the United Kingdom.
Those who campaigned for the United Kingdom to leave the EU vowed that we would be released from the shackles of Brussels’ red tape. The reality has turned out to be that, as a ‘third nation’ the UK is subject to far more red tape than it was as a member of the internal market.
Firm subsidising loss-making facilities
It is also claimed that the company can no longer afford to subsidise the loss-making British facilities with profits from the continental plants. The closure at Aylesford still leaves the group with one paper mill and 27 packaging units across this country. It also has factories in Germany, Poland and Italy.
The promise of ‘taking back control’ and ‘sovereignty’, has meant a divergence of British standards from those of the EU, not to mention a considerable duplication of testing for conformity. The divergence and increased bureaucracy mean that it is now harder, and dearer, to get British-made goods into our largest, and closest, market. In fact since Brexit the company’s exports to the continent have more-or-less halved.
Retained EU law
A further complication which is causing concern for the company is a bill before parliament which sets out to abolish laws that had their origin in European directives. As a part of the process of leaving the EU these laws were taken, lock, stock and barrel into UK law. The bill aims to keep some laws, of which there are some 4,000, and rescind any which are deemed unnecessary or inappropriate, by the end of 2023. Any laws which have not been either re-adopted or repealed will become null by default.
This will allow government to propose divergence from current EU standards, which DS Smith still largely follows. This will produce no benefit, but will have the effect of making trade with the firm’s largest market, ie the European Union, well-nigh impossible.
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There are still jobs available in the company’s warehouse in Cambridge, but the Aylesford workers would have to relocate to that area to take advantage of them.