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Uncertainty about Brexit putting the brakes on investments in the UK

Elers Medical, which develops and manufactures products to control hospital-acquired infections, entered into a significant two-year contract on deliveries to Britain in 2018, but due to Brexit, the company is not making any new production investments for the time being.

09.04.2019

The uncertainty concerning the withdrawal of the UK from the EU is at its peak, and the date of Brexit has already been postponed once. The new deadline was set to 12 April, but due to the latest turns of events, Britain is applying for a longer extension to the execution of Brexit. From the point of view of a company exporting goods to Britain, a clear withdrawal solution would be preferred over a prolonged transition period. Health technology company Elers Medical is hoping for a quick solution but not a no-deal Brexit. Facts related to customs duties, standards or payment arrangements are still open, and the company is keeping its production investments in the UK to a minimum.

“We are waiting for the Brexit solution, disconcerted. A withdrawal as quick as possible would be good, but not without a deal. A no-deal Brexit may cause problems that nobody can foresee,” Elers Medical CEO Niklas Elers summarises.

Elers Medical develops and manufactures products to control hospital-acquired infections. In 2018, the company entered into a significant two-year contract on deliveries to Britain, but due to Brexit, the company is not making any new production investments for the time being.

“For us, the most essential thing is to know the content of the final Brexit deal that will be executed. Schedule-wise, it is a completely different thing whether the no-deal Brexit happens in the short term or whether an undefined withdrawal takes place over a longer period of time,” Elers says.

The direct or indirect impacts of Brexit on the business operations of Elers Medical are associated, in particular, with the execution schedule and the ensuing uncertainty. The company has already put the brakes on its investments in terms of products it exports to Britain.

“Our sales are better than ever, which partially results from our neutral position as we observe the situation from the outside. The greatest impact has been felt in our production investments, where we have had to apply a different strategy. We do not know yet the facts concerning customs duties, standards or payment arrangements. At this point, we are keeping the production investments related to the business operations in Great Britain to a minimum and waiting for further information. Perhaps the single most significant issue is that we cannot assume that the medical devices and products we have registered for the EU’s internal market would continue to have registration also in Britain after the Brexit. We may need to be prepared to register the same products again for Britain, which would increase bureaucracy, be time-consuming and incur additional expenses. Elers Medical’s product range is extensive, which is why re-registering the products would incur additional expenses in the range of millions of euros, at worst.”

"We cannot assume that the medical devices and products we have registered for the EU’s internal market would continue to have registration also in Britain after the Brexit. We may need to be prepared to register the same products again for Britain."

Great growth outlook of infection-control products

Elers Medical Finland, established in Helsinki, Finland, about three years ago, has experienced rapid growth, and the Group estimates that its turnover will exceed three million euros this year.

“Currently, we manufacture, license and distribute patented bedding solutions, beddings for operating tables, patient blankets, mattresses and pillows, as well as antibacterial hospital curtains for patient rooms and operating theatres in hospitals. We also design composite materials for future health care. Our product groups are exported to approximately 45 different countries. The World Health Organization has calculated that in the USA and the EU alone, more than 100,000 people die of hospital-acquired infections,” CEO Niklas Elers said in the article published in Finnvera’s Newsroom in the summer of 2018.

So far, Elers Medical has prepared for the changing situation in Britain by, among other things, working on agreements with its partners and clients while taking the various Brexit scenarios into consideration.

What advice would Niklas Elers give to companies that are weighing trade with Britain?

“The UK is an important market and therefore worth entering, but one should carefully manage the risks associated with Brexit. What kind of risk management is warranted for different companies depends on a number of things, such as the company’s operating sector, the nature of its customer relationships and whether the company operates through its local subsidiary in Britain, whether it has its own or licence-based production there or whether the company is solely engaged in export trade.

Read also:

Health technology exports bring a hefty amount of euros into Finland

Information on Brexit on Foreign Ministry's website

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