Is it still Cheaper to Use European Manufacturers after Brexit?

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The benefits of the UK being a part of the European Union have been debated furiously in recent times. None more so however than the policy of free trade and globalisation. This can have some benefit when buying supplies or materials from European manufacturers, especially when taking advantage of Low Cost Country Sourcing.

Low Cost Country Sourcing

The concept behind cheap supplies from certain European countries is low cost country sourcing. It is a procurement strategy which takes advantage of foreign European manufacturers, who pay lower wages and work in a lower cost environment, to produce supplies. These supplies or resources can then be imported to the UK. Although there are costs associated with importing goods from foreign countries, the magnitude of savings of using a foreign manufacturer are so great that overall, the whole process is cheaper than using UK suppliers.

In Europe the best candidates for low cost country sourcing are eastern European countries such as Poland and Slovakia. Free trade in the European union also make these countries advantageous as import tariffs are lower and in some cases, workers can be imported alongside goods.

After Brexit

The benefits of low cost country sourcing are obvious, however political change on the horizon could change this. Brexit is adding increasing amounts of uncertainty to the prospect of using European countries to import materials and supplies. Although the UK could remain part of the free market after Brexit, Theresa May’s government appears to be heading towards a hard Brexit. This means there may be enhanced tariffs when dealing with importing goods from Europe.

There are other low cost countries which could be used however. Other countries include China, Vietnam, Thailand, India, Mexico and Turkey. However, Brexit is also adding uncertainty to the financial viability of these countries. Following the Brexit Vote, the value of the pound dropped significantly, and is still yet to recover. With it, the extent to which savings can be made with low cost country sourcing has fallen. It remains to be seen now what the future may hold for the viability of low cost country sourcing.

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