ILMA Compoundings - November/December 2020 - 30

" We're effectively an island
nation that depends on
other countries for its services and goods. Flow has
got to be a priority, second
only to security, followed by
revenue and taxation. "
David Wright, director
general, U.K. Lubricants
Association

NOVEMBER/DECEMBER 2020

| COMPOUNDINGS | ILMA.ORG

" Assume you're a U.K. player selling in Europe, and you
get a European blender, " said Jarquin. " That could alleviate
some of the loss through trade issues. "
Partnerships are also taking on different looks, in
lubricants and other sectors, as companies acquire new
capabilities by teaming with players in such areas as technology and data mining. " It's an open ballpark now for what
partnership looks like, " said Jarquin. " It's all about increasing
your ability to service your end customer. As a lubricants
player, you have to decide: Are you just selling an oil, or are
you selling the more holistic solution to that end customer? "
A no-deal Brexit could interrupt supply chains and
negatively impact cost structures, said Voss. In an uncertain
business environment, companies outside the U.K. could
seek sources as alternatives to U.K.-based suppliers or possibly establish independent U.K. branches. U.K. companies
could move operations to other EU countries.
From its base in Germany, Oemeta is getting Brexit-ready
by considering new logistics and independent enterprise
resource planning and by decentralizing legal and regulatory
controls to comply with diverging regulations. The company
is also exploring alternatives to U.K. suppliers as it expects
additional import duties, qualifying toll manufacturers to
eventually shift production from Germany to the U.K., and
to increase its finished-goods stock in the U.K.
Smaller companies have the agility to capitalize on shortterm disruptions, but falling sales and tightening margins
could accelerate a consolidation trend that makes them
targets for acquisition, said Wright.
Companies well-positioned to manage both Brexit and
COVID-19 are those that have diversified, with a mix of
offerings for metalworking, industrial and automotive,
Wright added. One British lubricant manufacturer that also
makes paint, leveraging the synergies in fluids and additives,
got a boost from homeowners locked down during COVID19 who picked up paintbrushes for DIY projects.
Companies planning for the impact of Brexit should model
scenarios based on having a deal or having no deal, analyzing
business metrics to determine whether to continue on as
usual or orchestrate a shift. " Lubricant companies produce a
product that truly adds value to base oils and chemicals, " said
Jarquin. " If a business is truly adding value to raw materials,
you'd like to think that it would still be able to maintain a
profitable business, post-whatever happens. "
Schiefer has seen some U.K. clients shift production to
EU sites, including Germany and Belgium. Some of Ergon
International's partners, such as U.K.-based distributors, " are
prepared to help us if needed, " he said. " They have a long
experience on the British market, and they will find ways. In
general, all our partners were not keen on a Brexit but have
to live with it now. "

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ILMA Compoundings - November/December 2020

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