Manufacturing boss concerned over tariffs

Manufacturing boss concerned over tariffs

20 February 2019

A LOCAL business leader has said he hopes that a Brexit deal is agreed before his manufacturing firm is subject to tariffs in the event of a crash-out.

John Mellon, managing director of Ballynahinch-based Nitronica, claims that World Trade Organisations (WTO) tariffs would impact on around 20% of his business — potentially jeopardising contracts in the short to medium term.

In the event of the UK leaving on March 29 without an exit deal, Mr Mellon told the Recorder: “We would come under WTO tariffs so everything we buy in will be subject to tariffs. Everything we sell will also be subject to tariffs which may make us less competitive.

“We have customers in the Czech Republic and Germany who are very close to eastern Europe firms.

“We constantly come up against price pressures against those companies, so anything that adds to that is obviously may be of a threat to lose business from those customers.”

Nitronica, which builds, designs and supplies electronic engineering parts and employs over 140 staff, is currently performing well.

It achieved a 30% growth over the past two years and Mr Mellon is forecasting a 15% growth for this year.

Mr Mellon, who along with three other colleagues, took over Nitronica in 2000 as part of a management buy-out, says the US and the aerospace sector are growing markets.

“The UK represents up to 55% of the company’s business, 30% would be to the US, around 5% to the Republic of Ireland and around 10% to mainland Europe, but it varies all the time.”

He described a no-deal as “the worst case scenario”.

“The UK infrastructure trading with the EU and the rest of the world just falls apart and it’s back into WTO rules which is a bit odd as nobody in the world trades on WTO rules,” said Mr Mellon.

“Every other country has negotiated other trade deals so it makes you think it’s undesirable. At the end of March, the UK will have nothing in place. Somewhere deep down we think that a deal will be struck at the last minute.”

He said that some customers have tried to Brexit-proof their supplies by putting in orders early.

However, he said Nitronica could not stockpile certain supplies as many componments could be obsolete within weeks within such a fast-changing industry.

“There’s a lot of uncertainty,” stressed Mr Mellon. “You are never quite sure what’s going to happen particuarly as we are currently shipping goods out that we don’t know will get through customs at its destination.”

A Remain voter, Mr Mellon said he welcomed the Prime Minister’s deal from November last year, which so far has not been accepted by parliament.

“I would say it was a good deal for pretty much all businesses in Northern Ireland as it gave us a foot in each camp which would beneficial to deal with both UK customers with the benefit of the best of both sets of rules. But that’s been shut down. A hard border is going to hit everybody essentially.”

He confidently predicted that come what may, most customers will stay with them.

“I would doubt very much if any of our customers would move just because of Brexit,” he continued.

“Businesses are naturally conservative in many ways. If you have a supply chain that works you don’t want to disrupt it. Price isn’t always key. 

“Many times our customers don’t always buy from us just because we are the cheapest, but because they know they can rely on us.”