The votes have been cast and Britain is officially on course to leave the European Union. While some of the initial commotion of plunging stocks is calming down, the idea of a new reality is settling in and many are disappointed by the road ahead.
From Britons ditching plans to work or invest abroad to multinational companies reporting that the plummeting pound and stronger dollar is likely to weaken sales in the UK, the business community is bracing for stormy weather.
“It’s tough to find anything good in this when it comes to the business world,” says Alan Barton, CEO of Lehigh Technologies, a materials company that manufactures micronized rubber powders from recycled tires.
A trained chemist who spent decades working in R&D at Rohm and Haas before it was acquired by Dow Chemical in 2008, and a native Briton, Barton says the post-Brexit world is creating an uncomfortable uncertainty as companies wait to find out what the new trade agreements will be.
According to Barton, the chemical investment situation for Britain was already difficult. Recently, when Lehigh began scouting a European location for a new manufacturing plant, the company considered England but shied away from the UK because the island is too isolated from the EU, which poses transportation and other challenges. Eventually, the company chose to set up shop in Spain.
“Brexit will simply make that investment decision even less attractive,” Barton says.
Barton says that in the week since the Brexit vote was announced, he has already heard a consistent refrain of apprehension from other CEOs in the chemicals industry.
“I think it’s clear that as little capital will be invested as possible because nobody is clear what the terms will be,” he explains. “In new facilities, R&D and hiring decisions will probably be postponed.”
He says generally the mood he’s encountered has been “pessimistic.”
“I think the most hopeful comment I’ve heard is: ‘Maybe we can have an agreement where tariffs come in and they are minimal, and immigration will continue, even though it won’t be as big.’”
Barton says the effects also go beyond economics and could impact institutional knowledge in the industry.
“For large companies like BASF in the EU, it was easy to take an executive from France and move them to Spain or England,” Barton explains. “And that’s one of the reasons that led to this cadre of senior leaders across chemical companies that are very well versed in multiple markets. And I think that’s helped them become better leaders. But it is going to become more difficult to train and move workers around.”
It will take years though before Britain has fully exited the EU, which means for now, all business leaders can do is wait and see what happens while preparing for the changes ahead.