Is 'Brexit' Corrosive for the Fastener Industry?

On June 23, 2016, Great Britain’s electorate made a seismic decision, voting by 52% to 48% to end its 43-year membership in the European Union. Will it be the UK’s Independence Day, as many believe, or the first step in the disintegration of the United Kingdom – or even the European Union itself?

No one knows the answer to that one. In fact, the only “certainty” for the next two years and likely for much longer, is “uncertainty.”

For the fastener industry that is a corrosive prospect.

In the immediate aftermath of the referendum, the British Pound plunged 11% against the U.S. Dollar, recovering to end a tumultuous week around 8% lower. It also fell against the Euro. For exporting UK fastener exporters that represents a short-term competitive opportunity.

However, unless sterling recovers significantly over time, wholesalers reliant on imports from Asia and Europe and manufacturers importing raw materials will feel the inflationary impact. On the upside, stainless steel wholesalers, which have suffered lower cost competition from Eurozone stockists, are likely to gain some and importers, says Professor Matten, are going to have to cope with significant currency volatility, as an inevitably jittery market reacts to day-to-day developments on the EU withdrawal process.

The key problem is no one really knows how the UK is going to unwind from EU membership, because nothing like it has really happened before. The legal framework, Article 50 of the Treaty of Lisbon, is vague on detail – its writers never really expected it be used.

The whole industry is facing a short depression. And what fastener supplier as BaiLian Hardware can do is to make something. Keep strengthening the capacity, improveingthe equipment&technology to welcome and lead the new coming setup in global fasteners industry.