Brexit: as half its sales are wiped out, silk firm joins exodus to Europe

Toby HelmSun, 14 February 2021, 10:30 am

<img src="https://s.yimg.com/ny/api/res/1.2/eGOmxNRUJ6nTrY5xHXHjPg–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQyMw–/https://s.yimg.com/uu/api/res/1.2/5tmAGVb3FaQv4Sk5lWk3Ng–~B/aD02MDA7dz0xMDAwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/theguardian_763/269922e643268fe206d166af8ebaf56d&quot; alt="<span>Photograph: Christopher Thomond/The Observer
Photograph: Christopher Thomond/The Observer

Mike Bennett runs a small firm called Bennett Silks in Stockport, Greater Manchester, which has been in his family since his great-grandfather set it up in 1904.

The company employs 15 people, and has, in normal times, an annual turnover of about £2.5m. It operates in what Bennett describes as “a niche market at the top end of fashion”. The silk is produced in a region of China that has precisely the right climate for the mulberry tree to prosper. Silk worms feed on mulberry leaves.

The company imports the silk, then sells to a wide range of industries, from the makers of wedding dresses to film-makers, theatres, high-end boutiques, firms that manufacture clothes for jockeys to wear at race meetings, and people who want special garments made for parties.

Covid-19 was a disaster for sales, but then came Brexit. “Having spent the last 25 years developing a successful sales operation throughout the EU, which until recently accounted for about 50% of our sales, we are now facing the prospect of our EU business being wiped out due to the complications of the Brexit deal,” says Bennett.

“Feedback from our clients on the continent is that they will not accept the extra customs charges and duties, and will simply switch to our competitors who remain in the EU. Who can blame them? I would do the same.”

Like many other UK small businesses – the British Chambers of Commerce said last week that half of small businesses that export to the EU from the UK were struggling with Brexit rules, regulations and costs – Bennett says he has no option but to shift part of his company from Stockport to France, so it is back inside the EU’s single market.

“Our only chance to retain EU business is to create a distribution centre in France,” he said. This, unfortunately, will have the effect of taking jobs and economic activity away from north-west England.

Luckily, back in 2016 Bennett took a majority shareholding in a French weaving factory based between Lyon and Roanne, and which still has spare space. To help cover his costs Bennett will offer joint use of the facility to other UK companies with similar problems.

“There must be thousands of companies in exactly the same situation. If they all reduce their UK staff by one-third, the consequences to the UK economy will be massive,” he says.

Already the authorities in the Netherlands and Austria are luring hundreds of UK companies into their territories and tax jurisdictions as UK exporters struggle. And now, so too are the French.

Artus Galiay, the representative to the UK for the Hauts-de-France region that extends from the outskirts of Paris to Calais and Dunkirk, says the regional council there is not trying to act as a parasite on the UK’s post-Brexit economy – but to help.

He is, however, keen to sell what the region offers, and delights in historical allusions. Hauts-de-France offers industrial and logistics sites, what he calls “a dynamic commercial real estate market with competitive costs”, as well as lawyers and accountants. It also wants a chance to repay past generosity.

“We are here to strengthen relations that are centuries old,” says Galiay. “History fans will remember that around 500 years ago, in 1520, it was Henry VIII who welcomed his rival French King François I at the Field of the Cloth of Gold near Calais, at a time when the city was English. Five hundred years later, we are here to return that favour.”

Bennett, meanwhile, is glad that after a dismal period, his French investment will help Bennett Silks in a way he had not expected. But he still can’t believe the unnecessary problems that have been put in exporters’ ways. He ridicules the idea that other trade deals with far-off countries will replace being members of the EU single market.

“To turn our backs on the world’s largest trading bloc, which is on our doorstep, in favour of trying to create trade deals with countries that couldn’t be further away, and have much smaller economies, is total stupidity and beyond comprehension,” he says.

“Covid has kept the Brexit issues out of the headlines, but to try and get a message across to our single- minded, short-sighted government, it needs to be in the headlines. I cannot think of one single positive benefit from Brexit, only negatives, and all my customers and contacts are of the same opinion.

“Britain used to be great but no longer,” he says, blaming Tory politicians at the top of government. “To adapt a phrase from our most famous leader, ‘Never in the field of British business has so much been destroyed for so many, by so few.’”