Cirrus Research CEO, Daren Wallis, has answered some of the frequently asked questions we’ve received regarding our preparations for the UK’s exit from the European Union. Below, are the answers:
Are any of your products made in the EU and can you still make them?
In terms of where our products are made, over 90% of our products are made in the UK. For the products we do make in the UK, we generally work on a six-month cycle, so we’ve typically got, as work-in-progress, about six months’ worth of products. What we’ve decided to do, is increase that to nine months, which is a process we started about three months ago. So, we’re now ramping up our finished products, ready for March, by about 50%.
For the products we don’t manufacture in the UK, we’ve got a policy where we always hold at least six months’ supply at any given time. We’ve now increased that to 12 months, so that will mitigate any delays in importing products while borders are sorted out and the new systems are put in place.
Are any of your component parts from Mainland Europe?
In terms of component parts and raw materials, we’ve done a number of things there. Rather than analyse where the thousands of components we use come from, we looked at all the critical components and the vital products we sell, and we not only liaised with our subcontractors to make sure they’ve got the raw materials, but we also over-bought components. So, rather than having about six months’ supply of raw materials and component stock, we now have almost 12 months’ supply.
We’ve freed up a lot of our cash reserves and invested that into component stock. So, not only can we keep standard product coming through, but we’ve got the next batch of product catered for, in terms of raw materials.
We generally do that as a standard practice anyway, because our 15-year warranty dictates we have to have higher-than-expected stock of components at any given time.
Will supply lead times be affected?
In terms of product supply and lead times, not only have we, as I’ve said, increased our finished stock holding by 50%, what we’ve also done, which goes against our standard policy, is we’ve shipped some finished products to our office in Germany. So, they’ll be able to service the European market if we do have problems with supply from the UK. So, we’ll have continuity to our EU partners, by doing that.
Will there be any price increases for your products?
In terms of price increases, they’ll be largely affected by exchange rates, which are completely out of our control. Now we as Cirrus operate in three currencies. We operate in sterling, euros and US dollars, and we buy raw materials and components in a combination of those currencies. But by buying raw materials in advance, any changes that are caused by exchange rate fluctuations, should be minimised in terms of final product pricing, because we’ve bought a lot of components. So, by the time we need to buy again, for most things, in theory, the exchange rate fluctuations should have stabilised, and we’ll know what the new average exchange rate will be.
Do you foresee any negative impact on Cirrus Research?
Will there be any other negative impact on Cirrus Research and therefore you as customers and partners? Hopefully not. We’ve done as much as is practically possible for an SME, but Brexit will affect most exporting manufacturing companies in the UK in some shape or form. But, as you’ve heard, we’ve increased our work-in-progress, we’ve increased our finished stock, and we’ve also pre-bought lots of critical components, which means we can also hold true to our current pricing. And we’ve also shipped finished products to our offices in Germany.
With sales offices in Germany, France and Spain, we are and still remain an EU-based company.
Please be assured that we as Cirrus Research, take our responsibility very seriously. We know that we help protect workers’ hearing and also the standard of living for people by measuring noise and providing noise measurement equipment. We take that responsibility very seriously, so hopefully the tactics we’ve put in place will mitigate any unforeseen impacts of Brexit, while the “powers-that-be”, figure out what the UK does next in terms of operations with the EU and beyond.