Opinion – Investing to avoid a Brexit downturn4 October 2016
Our columnist Rob Lane discusses the impact of the Brexit vote on the UK AV industry.
Is it just me, or was it an unusually long, hot summer following the United Kingdom’s EU Referendum on 23 June? A lot has certainly changed since the shock result, and perhaps this, along with the sunshine, made summer 2016 feel particularly lengthy. A new Prime Minster with no Y chromosomes (and arguably no mandate?) has shaped a completely new Cabinet, ditched Cameronism and austerity, trailed a supposedly more inclusive future, while insisting (more than once) that “Brexit means Brexit” – whatever that means…
What we do know, of course, is that a lot more change is on the horizon, and that it will undoubtedly affect UK businesses. Although it’s far too early to say whether the surprisingly buoyant response to the referendum result is the calm before the storm, The Good Ship UK will certainly be buffeted.
So how is our industry faring? I approached some influential integrators, vendors and distributors to find out. Most preferred to stay off the record, but some were happy for us to give their names. Unsurprisingly almost everyone I spoke to said it was too early to say how the result would affect business – which backs up most economics experts’ viewpoint that the post-vote economic buoyancy is a red herring. The other key takeaway is that the widely held view among AV-focused companies is that those with mainly UK-centric businesses are going to be affected more than those whose concerns are more outward-looking.
Tim Stone, vice president marketing EMEA, Polycom (UK), said: “I think it’s too soon to say. We are a global company and our business is generated across the Americas, APAC and EMEA. While the UK is a very important market for us, we haven’t experienced the same impact in the short term that some UK-only businesses have felt.”
One immediate impact on AV distributors is the fluctuating exchange rates – something Stone sees as “short term”. The impact seems to have depended on how prepared (or otherwise) companies were ahead of the referendum vote: did they plan for both eventualities or, like Cameron and his Cabinet, only for a Remain outcome? Gordon Dutch, director of BBG and Peerless Industries Inc, commented: “The reality is that the dollar has strengthened significantly against the pound, and consequently a large amount of electronics and AV products will ultimately go up – even if you’ve hedged ahead as we have done; you can only buy the dollar so far forward. In the short term it’s going to make things very difficult.”
Dutch expects a “very tough time” over the next three to six months, as a result of this and of the collapse of Hanjin Shipping (the container shipper filed for bankruptcy protection on 31 August, sending global sea freight into turmoil). In terms of the longer-term effects of Brexit, he reckons it’ll remain unclear for five to 10 years.
Stone believes that those affected most keenly in the short term will be Polycom’s smaller UK partners, but he’s confident that there’ll be a corresponding and “probably greater” need for UK businesses to collaborate with their European colleagues, partners and customers.
Of course, for those exporting, the weakening pound has had a positive effect. Holo-Gauze manufacturer Holotronica has experienced a “very buoyant” summer with no ill effects, with its Holo-Gauze screens available outside the UK for 10% less than before.
Stone’s assertion that “in business, every challenge is an opportunity” is an astute one, and perhaps the referendum decision – and the delay in Article 50 being invoked – has injected additional business urgency into the AV industry. During lean times the successful businesses are often those that reach out further, and maintain (or increase) marketing.
“Everyone needs to be proactive to ensure negative growth doesn’t happen,” says Steve Blyth, founder and group CEO of UK-headquartered integrator Engage Works. He expects a negative impact, but is confident that the industry will continue to flourish as long as everyone is “more aggressive”, while “casting the net further with increased spend on marketing and events”.
It might be a case of all hands on deck as The Good Ship UK prepares for stormy waters, but – to over-egg the seafaring metaphor – for the AV industry it’s very much full steam ahead.
Rob Lane is a tech/business journalist and founder/owner of Bigger Boat PR. Perhaps unsurprisingly, he lives by the sea.