Case Study: Navigating Brexit and Post-Brexit Operations at ESE/Otto

Background:

ESE/Otto UK Group, a diversified entity within the European industrial sector, faced significant challenges in the wake of Brexit. With the UK exiting the European Union (EU), businesses like ESE/Otto had to quickly adapt to new regulations, trade complexities, and logistical challenges. I was appointed as the lead adviser on Brexit matters for ESE/Otto’s UK operations and their integration into the wider European operation. My role was to manage the transition smoothly and ensure that all Brexit-related processes were aligned with both UK and EU regulations.

Challenge:

Brexit brought several operational and strategic challenges for ESE/Otto’s UK and European businesses, including:

• Complex Regulatory Environment: With the UK no longer part of the EU customs union, the company had to adjust to new rules governing imports, exports, customs duties, and value-added tax (VAT) systems.

• Supply Chain Disruption: The group had a significant reliance on European suppliers, and there was a real risk of delays and increased costs due to new customs procedures.

• Workforce Uncertainty: Staff across the UK and EU operations were affected by changing immigration rules, which created challenges for employee mobility and hiring.

• Data Protection Compliance: With GDPR still in place across Europe but the UK no longer being part of the EU, ensuring compliance with data protection laws became more complex.

• Customer Relations: ESE/Otto also faced concerns from its clients regarding service continuity and pricing, especially with the potential impact of tariffs and increased customs checks.

Approach:

1. Establishing a Brexit Transition Team:

To ensure a smooth transition post-Brexit, I set up a dedicated small team tasked with handling all aspects of the new import and export procedures. The team was responsible for ensuring compliance with the new regulatory framework, handling customs paperwork, and managing any emerging operational issues related to trade between the UK and EU.

• New Import Procedures: I worked closely with the legal and compliance teams to establish new protocols for imports from the EU into the UK. This included securing the necessary documentation and customs declarations and ensuring compliance with new tariffs.

• Employee Training: To reduce delays and ensure smooth operations, we trained staff on the new processes and customs regulations, which included educating employees on the intricacies of the new systems and updating the IT framework to handle the additional paperwork requirements.

2. Advising the Wider European Operation:

Beyond the UK operations, my expertise in Brexit-related issues made me the "go-to" adviser for the company’s European divisions. I advised on various aspects of the transition, including:  

• Cross-Border Operations: Working with European colleagues, I developed solutions to reduce the impact of Brexit on cross-border operations. I implemented strategic planning initiatives to anticipate customs delays and ensure that the flow of goods between the UK and EU remained as smooth as possible.

3. Enhancing Client Negotiation and Management:

In face-to-face negotiations with key clients, including major public sector bodies like the Dublin Airport Authority, I took a proactive approach to reassure them about the continuity of ESE/Otto’s services post-Brexit. This involved:

• Service Continuity Assurance: I worked to ensure customers that new customs requirements would not disrupt delivery timelines or service quality.

• Pricing Strategy: I collaborated with the sales and finance teams to adjust the pricing strategy, accounting for the potential additional costs resulting from new import duties and administrative burdens.  

4. Mitigating the Impact on Supply Chains:

Brexit’s effects on supply chains were substantial, with additional customs procedures creating risks for delays and cost increases. My team addressed these issues by:

• Pre-emptive Stockpiling: In the run-up to Brexit, we developed a strategy to stockpile key inventory, minimising disruptions due to customs backlogs and delays in sourcing components from Europe.

5. GDPR and Data Protection Post-Brexit:

Post-Brexit, the UK’s departure from the EU’s GDPR framework posed data compliance challenges. To ensure the business remained compliant:

• Data Sharing Protocols: I oversaw the implementation of new protocols to ensure that cross-border data sharing with European partners complied with both UK data laws and GDPR.

• Data Security Audits: I organised periodic audits to assess compliance and worked with IT to develop systems that met the dual regulatory requirements of both the UK and EU.

6. Customs Procedure Automation:

To handle the increased burden of post-Brexit customs paperwork, I led the implementation of automated customs documentation system with SAP S/4HANA which included real-time transmission of MRN numbers to vehicles already in transit before arrival at the port of departure.

I outsourced the input of import and export declarations to SGS (a customs brokerage) and worked closely with them to develop their systems to mutual benefit and helped them with the migration of declarations from CHIEF to CDS.

This reduced the manual workload and improved efficiency in managing the documentation for UK-EU transactions. The system also allowed for real-time tracking of goods, helping mitigate delays and giving us the capability to swiftly respond to any border issues.

Benefits to the Wider European Operation:

The strategies and processes implemented to navigate Brexit had several benefits for ESE/Otto’s wider European operations:

• Improved Resilience: The proactive measures taken to mitigate supply chain disruptions and manage customs paperwork created a more resilient operational model, allowing the European and UK businesses to adapt to future regulatory changes with minimal impact.

• Cost Efficiency: By leveraging trade agreements and automating customs procedures, I was able to reduce the costs associated with Brexit-related duties and administrative expenses. This resulted in financial savings across the group.

• Continuity in Client Relationships: The customised pricing models and assurance of service continuity prevented client churn during a period of uncertainty.

• Knowledge Sharing: My role as the adviser for Brexit-related matters fostered knowledge sharing across the company. I provided guidance to other European divisions on adapting to post-Brexit regulations, ensuring they could benefit from the streamlined processes developed in the UK.

Results:

• Smooth Transition: The company was able to adapt seamlessly to post-Brexit regulatory and operational requirements, ensuring minimal disruption to both UK and European operations.

• Stronger Financial Position: The cost mitigation strategies implemented, particularly around customs duties and compliance, helped preserve profit margins despite the additional Brexit-induced costs.

• Client Retention: The company retained key clients, including public sector bodies, and maintained its competitive position in the marketplace, thanks to clear communication and strategic pricing adjustments.

Conclusion:

The Brexit transition at ESE/Otto posed significant operational challenges, but through strategic planning, team management, and my role as the lead adviser, the company was able to mitigate the impact. The new processes and strategies not only benefited the UK operations but also had a positive ripple effect across the wider European divisions, demonstrating the importance of leadership and foresight in navigating complex regulatory changes.