Will Brexit affect companies that import lots like Axminster

[Phil Pascoe]

I went to Auckland, NZ, in 1998 and looked into a small, expensive suburban hardware shop where I found a Marples chisel being offered for sale (at its normal price) at a third of what one had cost me two weeks before in a reasonably priced local outlet at home. I do not pretend to understand international trade but I defy anyone to explain how that is right. Incidentally their Estwings were about a third of what they where in the UK as well. I brought home a load of DeWalt stuff all taxes and import duties paid for well less than half what it would have cost here. This single market is indeed a wonderful thing!

 

[Jake]

Sterling is being manipulated once again by the big players, so yes, we, the taxpayer, will bare the brunt of this in the short term, as we always do.

It is almost impossible to manipulate forex in any meaningful sense (more than a few basis points), the volume is too great.

Especially when we have major world economic powers literally falling over themselves to offer free trade deals. We are just waiting on someone to take that forward.

We are like sharks, or shark bait, for which major economic powers?

The FTSE tells the real story. The 250 is down, but not by any significant amount in the great scheme of things. It's probably down because of the speculation on sterling causing blips in import/export for smaller companies, who don't have the capital reserves to even out their prices.

It's down a massive amount from foreign investor's perspective.

The FTSE 100, full robust companies with reserves, is doing very well.

Multinationals with little real exposure to the UK economy, whose largely non-GBP earnings are suddenly worth much more in GBP, have gains in their now cheaper GBP-priced shares. That's just guaranteed by the currency move. Watch it reverse if the currency does.

 

[custard]

It begins!!!

Blimey, that's a bit brutal. And the time frame is so short it doesn't even appear it might be a promotional gimmick to whip up sales.

I'd been working on the basis that most equipment exporters to the UK were "pricing to market" rather than "pricing to costs", so they'd at least temper increases by shaving their own margins, meaning we wouldn't see price increases of more than say 4 or 5%. Maybe Jet's margins are just too thin to shave? At any rate I'm going to have a hard think about any overseas equipment I might want in the next year or two and consider getting it immediately.

Let's hope that Sedgwick, Clifton and all the others are seeing the flip side of this coin.

Thanks for the heads up.

 

[YorkshireMartin]

Sterling is being manipulated once again by the big players, so yes, we, the taxpayer, will bare the brunt of this in the short term, as we always do.

It is almost impossible to manipulate forex in any meaningful sense (more than a few basis points), the volume is too great.

Especially when we have major world economic powers literally falling over themselves to offer free trade deals. We are just waiting on someone to take that forward.

We are like sharks, or shark bait, for which major economic powers?

The FTSE tells the real story. The 250 is down, but not by any significant amount in the great scheme of things. It's probably down because of the speculation on sterling causing blips in import/export for smaller companies, who don't have the capital reserves to even out their prices.

It's down a massive amount from foreign investor's perspective.

The FTSE 100, full robust companies with reserves, is doing very well.

Multinationals with little real exposure to the UK economy, whose largely non-GBP earnings are suddenly worth much more in GBP, have gains in their now cheaper GBP-priced shares. That's just guaranteed by the currency move. Watch it reverse if the currency does.

I am European and I'm English. This vote didn't change my desire for an espresso in Italy or a snowboarding holiday in France, or my desire to learn about other cultures and meet with people of different backgrounds. Being part of the EU is a requirement for none of these things. We're as European as we want to be and nothing will ever change that.

[/quote]

It's not impossible to influence Sterling by a large amount. It's been done and is being done at the moment. All you need is a few billion to play with, which several key players have. Might be worth you looking into the circumstances surrounding Mr.Soros and exactly what he was responsible for in the past. A lot of people follow his lead, so you're not just talking his multi-billions, you're talking hundreds of billions, which does absolutely have a major effect. It's not simply about amounts anyway, its about timing and perception.

The rest, we will have to wait and see, but in any case, I don't see the point in citizens talking the country down, regardless of which way they voted.

It's a shame we will have to suffer price increases, but I hope that this event might see the start of UK manufacturing, which has been all but lost.

 

[DiscoStu]

I think this is just a "blip" at the moment the UK is going to exit from the EU and therefore the free trade. That much is known. What isn't known is what deal will be struck with the EU on trade and they should be willing to do a good deal as it is in the EU's interests more than our own as we import far more than we export. Also what isn't known is what trade deals will be done outside of the EU. I read that USA, Canada, China, Pakistan and about 7 other countries have all said that they want to do a trade deal with the U.K. So I think that once these can be done and we can exit the EU then we will see the pound rise beyond where it was pre brexit. Which ultimately should mean cheaper tools!


Sent from my iPhone using Tapatalk

 

[Jake]

It's not impossible to influence Sterling by a large amount. It's been done and is being done at the moment. All you need is a few billion to play with, which several key players have.

A few billion is not enough to move it against fundamentals in any substantial way - GBP daily volume is approximately 600 billion, weekly 3 trillion. No-one has the wherewithal to manipulate the rate in any substantial way (apart from central banks and even they have their limits). Soros identified that we were in the ERM at the wrong rate and that was unsustainable and bet large the right way, but he did not manipulate the rate.

 

[shed9]

A few billion is not enough to move it against fundamentals in any substantial way

Have to agree here, a few billion will not cut it in terms of and significant manipulation.


Also, just to point out that whilst new trade deals can and will be created there are huge issues surrounding this very process.

Firstly, despite the restrictions imposed by the EU, as this is uncharted territory it is highly likely those deal negotiations will start upon implementation of Article 50, not the actual departure itself - this in itself will cause huge ripples within the current EU single market.

Secondly (as pointed out by DiscoStu to some degree) don't assume those new trade deals will be good delas in the interests of the UK population. As a country we are woefully undermanned in terms of high level European and International negotiators and I suspect the government will (if it hasn't already) rope in big business and party donors.

 

[sploo]

Blimey, that's a bit brutal. And the time frame is so short it doesn't even appear it might be a promotional gimmick to whip up sales.

I'd been working on the basis that most equipment exporters to the UK were "pricing to market" rather than "pricing to costs", so they'd at least temper increases by shaving their own margins, meaning we wouldn't see price increases of more than say 4 or 5%. Maybe Jet's margins are just too thin to shave? At any rate I'm going to have a hard think about any overseas equipment I might want in the next year or two and consider getting it immediately.

I was recently looking at lathes (either the Axminster 1416VS or the Jet 1221VS), and with the summer promotion on the Jet it was around £670 (if I recall correctly). With that gone, and the price increase, Axy now have the Jet at £803; which is nearer a 20% increase.

I suspect that margins aren't actually that high on many tools, and with Sterling moving from a recent average of around $1.45 to $1.3 that's an 11% drop; so big price rises are inevitable. I've seen the same warnings coming out from tech suppliers and camera retailers. Given that we as a nation import so much it'll hit people across the board.

 

[sploo]

Also, just to point out that whilst new trade deals can and will be created there are huge issues surrounding this very process.

Firstly, despite the restrictions imposed by the EU, as this is uncharted territory it is highly likely those deal negotiations will start upon implementation of Article 50, not the actual departure itself - this in itself will cause huge ripples within the current EU single market.

Secondly (as pointed out by DiscoStu to some degree) don't assume those new trade deals will be good delas in the interests of the UK population. As a country we are woefully undermanned in terms of high level European and International negotiators and I suspect the government will (if it hasn't already) rope in big business and party donors.

Indeed. Without wishing to mire this into a political discussion; I suspect many think that (post-referendum result) it's now done and dusted, and the current pain will slowly ease. In reality the nuclear button hasn't even been pressed yet, and all the financial wobbles have simply been in reaction to something that might (ok, probably will) happen in the future.

Given the available evidence, I'm not exactly being a doom monger by pointing out that things could get a heck of a lot worse (and for several years) before they get better. Once the dust settles, it also makes no logical sense that the UK would have a trade deal that was as good as the one it had before - we certainly wouldn't be the stronger player in any such negotiation.

Still, at least Leave managed to achieve their actual goal of taking the leadership of the Tory par... oh. Wait.

 

[YorkshireMartin]

It's not impossible to influence Sterling by a large amount. It's been done and is being done at the moment. All you need is a few billion to play with, which several key players have.

A few billion is not enough to move it against fundamentals in any substantial way - GBP daily volume is approximately 600 billion, weekly 3 trillion. No-one has the wherewithal to manipulate the rate in any substantial way (apart from central banks and even they have their limits). Soros identified that we were in the ERM at the wrong rate and that was unsustainable and bet large the right way, but he did not manipulate the rate.

It depends upon your definition of substantial. Soros had/has huge influence and there is a lot of emotion involving trading, even though there shouldn't be. If a typical trader sees someone like Soros actually looking to finance in order to short Sterling, they are going to think something is very wrong and follow suit. His $10bn was enough to shake the foundations of the bank of england and thats not taking into account the other investors following him. The very act of Soros shorting Sterling was what caused him to profit so well from it. He had an underlying reason but only someone of his calibre could be the catalyst for such a large movement and intervention from central banks. It wasn't just the amount of money, its the combined effect.

So no, you cant change the fundamentals of a currency by doing it obviously, but you can cause a wave effect which might have an effect over a period of time, if you have the cash and influence.

In any case, I hope eventually we can all pull together because the way it's being portrayed, you'd think it was the end of the world. Personally, I think people define a country, not politics. I hope this challenge brings out the best in everyone eventually and makes us all stronger, no matter what the political landscape looks like in ten years time.

 

[giantbeat]

Blimey, that's a bit brutal. And the time frame is so short it doesn't even appear it might be a promotional gimmick to whip up sales.

I'd been working on the basis that most equipment exporters to the UK were "pricing to market" rather than "pricing to costs", so they'd at least temper increases by shaving their own margins, meaning we wouldn't see price increases of more than say 4 or 5%. Maybe Jet's margins are just too thin to shave? At any rate I'm going to have a hard think about any overseas equipment I might want in the next year or two and consider getting it immediately.

I was recently looking at lathes (either the Axminster 1416VS or the Jet 1221VS), and with the summer promotion on the Jet it was around £670 (if I recall correctly). With that gone, and the price increase, Axy now have the Jet at £803; which is nearer a 20% increase.

I suspect that margins aren't actually that high on many tools, and with Sterling moving from a recent average of around $1.45 to $1.3 that's an 11% drop; so big price rises are inevitable. I've seen the same warnings coming out from tech suppliers and camera retailers. Given that we as a nation import so much it'll hit people across the board.

Indeed i have been watching mainly as im doing a workshop refit, axminsters aw10bsb2 10" table saw was £739 last week £810 this week.

i import & manufacture in the uk, we have been looking at a 13% rise in costs for both materials & completed items we buy to sell... most companies margins have been getting shaved since 2007/8... there is no absorption room left for anyone i suspect, certainly isn't in my industry.

 

[morfa]

It's a shame we will have to suffer price increases, but I hope that this event might see the start of UK manufacturing, which has been all but lost.

One of the few major economists to speak out in favour of Brexit, Patrick Minford says otherwise:

"Leaving the EU and eliminating this protection would, according to these figures, raise service output and effectively eliminate manufacturing in the long run. " [1]

I've seen large price increases in IT as well. Up to 20% in one case.

[1] - http://patrickminford.net/wp/E2015_17.pdf