Supply Chain Interruptions and Cost Fluctuations A Concern For Manufacturers
June 26, 2016 – The EU is made up of some 28 countries (now 27) and has been in effect for 23 years. Some countries, such as Great Britain and Germany, have been paying for those countries which have not been financially prudent. This has placed an unfair hardship on the stronger countries. On Thursday night (June 23, 2016) Great Britain voted to pull out of the EU, which is now called the BREXIT. This has sent shock waves across the world with the US losing some 600 points on the Dow Stock Exchange. It is feared that other EU countries may decide to drop out of the EU as well and if they do it could put the entire EU experiment in jeopardy.
What does this mean for those companies in the US that have European production lines and need a continual supply of spare replacement parts? This could include the thousands of plastic squeeze tube products which are manufactured in the US. They are made in the millions for such products as Toothpaste, hand lotions, pharmaceutical products etc. If you have production machines manufactured by Norden, Iwka, Unipac, Kalix, Tonazzi, Comadis, Axomati and others, you may want to consider a “second source” for these valuable replacement parts that are required to keep your production lines moving. Looking at using US as a second source for replacement parts could provide a welcome alternative to unstable EU countries. This could include Hot Air Nozzles, Tube Holders, Dosing Parts, Tilting Stations, valve systems, pumps and many other consumable parts.
European politicians are already preparing for Brexit’s aftermath. On Saturday Jean Asselborn, Luxembourg’s foreign minister and an outspoken critic of the UK leaving, will head to Berlin to discuss the referendum’s outcome with Germany, France, Italy, Belgium, and the Netherlands.
Already, other countries in Europe are taking actions to distance themselves from the European Union. Hungary, for example, is holding a referendum this autumn that could challenge mandatory quotas for migrant resettlement set by the EU. Marine Le Pen, president of France’s conservative National Front party, declared the referendum’s results a “victory for freedom,” adding “As I have been demanding for years, it is now necessary to hold the same referendum in France and the EU countries.” “The European Union can break apart. This can go incredibly fast, when isolation instead of solidarity becomes the rule internally and externally,” Asselborn told German Media last November. “We may have only a couple of months.”
END OF THE EU? Germany warns FIVE more countries could leave Europe after BREXIT FIVE European countries may seek to follow Britain’s lead in leaving the EU in a BREXIT domino effect, Germany has warned. By Jonathan Owen
France, the Netherlands, Austria, Finland and Hungary could leave. Front National leader Marine Le Pen has pledged to hold a French referendum if she emerges victorious in next year’s presidential elections. While for the past two months an exit has been on the cards after Dutch voters overwhelmingly rejected a Ukraine-European Union treaty
Details of Berlin’s concerns were outlined in a finance ministry strategy document. Angela Merkel’s country faces having to pay an extra £2.44billion a year to the annual EU budget once Britain has left. Fears for the future of the EU have prompted German government officials to propose that Britain is offered “constructive exit negotiations”.
The aim is of making the UK an “associated partner country” of the EU, according to German newspaper Die Welt today.
Economic Impact of BREXIT (in one day):
London (AFP) – Britain’s shock vote to pull out of the European Union wiped $2.1 trillion from global equity markets Friday as traders panicked in the face of a new threat to the global economy.
Investors fled to the safety of gold, the yen and blue-chip bonds as the seismic shift in the structure of Europe left many huge questions hanging, including who will lead Britain following the resignation of Prime Minister David Cameron.
The Brexit vote sparked eight percent losses in the Tokyo and Paris bourses, nearly seven percent in Frankfurt and more than three percent in London and New York.
Central banks stepped in to bolster confidence, promising to inject liquidity where needed and appearing to mitigate some of the sharpest losses.
Still, the pound crashed 10 percent to a 31-year low at one point, before rebounding slightly for a 9.1 percent loss against the greenback in late trade.
The euro also plummeted, dropping 2.6 percent on the dollar.
Benefiting from a massive safety selloff, gold jumped nearly five percent and the yen surged 4.2 percent against the dollar and 7.0 percent on the euro. The dollar at one point fell below 100 yen for the first time since November 2013.
US 10-year Treasury bond yields hit their lowest since 2012 at 1.42 percent before edging higher, while the German 10-year bond fell into negative territory for the second time in history.
It is impossible to predict what the outcome will be for the EU and what short-term and long term effects it could have on commerce. But it is worthy to look at the fact that things are changing and to be prepared for any eventuality that might happen. As a country pulls out of the EU they have a lot to consider and to deal with. Most of the countries are using the Euro as their currency and it may have to be converted back to its original monetary unit. This would cause pricing and exchange rates to change making it more difficult to keep the steady supply chain parts flowing. Also as these currency units change they have to be accepted by the banks and financial institutions. Another possibility is that borders will be erected, issuing passports and also slowing down the general flow of commence.
There are several companies in the US that either manufacturer or stock many of these change parts. Since they are in the US you are not affected with many of the stability issues that may come from the EU changes. If you use the US sources you will eliminate currency changes, holidays, shipping charges, duties, customs, and other potential problems. In many cases these products may be equal or better quality and cheaper than the original O.E.M. part. AnC Precision (http://ancprecision.com/manufactured- tooling/), located in Northern Nevada and has been in business for more than 20 years servicing this industry. We have a large inventory of replacement parts for most machines. These parts are manufactured at their facility and often can be shipped in days.