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Chairman's update Vol.3

Over the next twelve months our industry is going to face further uncertainty and unfortunately, this will be coming at us on two fronts. The first issue is that disruption stemming from COVID-19 is likely to continue as, although the number of cases here in Europe are in decline and several countries have started to relax lockdown regulations, it would be unwise for anyone to think that that’s an end to the matter. Resurgent spikes have already been seen in parts of Asia, and there are concerns that if western economies try to move out of lockdown too quickly, we might experience a second wave. Until a vaccine is developed and approved, then made in sufficient quantities to inoculate the population, the virus will continue to pose a threat. The second major issue is one that we had more advanced notice about – namely Brexit. Here the deadline for a deal is fixed for the end of 2020 and the UK government has said that there will be no extension to this deadline. In fact, UK law prohibits it from agreeing to one.

Harwin has been at near full production right through the pandemic, with our components being integral to the medical equipment used to save patients’ lives. Keeping the production output at high levels, despite the challenging situation, is a testament to the hard work and diligence of the staff at our Portsmouth site. They’ve been quick to adapt to the new working conditions and coped admirably with doing their jobs while observing the necessary social distancing measures.

Brexit poses very different challenges – for us and the industry as a whole. It should firstly be noted that over 60% of Harwin’s sales come from outside the EU. As part of our post-Brexit strategy we’ve put provisions in place so that there are sufficient raw materials to deal with the expected disturbance that leaving the EU will have to supply chains. As a rule, the company holds six months of raw materials and critical supplies in stock. This gives us a sizeable buffer so that our ability to serve the market is not impacted by unforeseen circumstances and lead times are kept short. On the distribution front, the company is experienced in working under world trade agreements, complying with the tariffs and regulatory guidelines relating to them. As well as working with local stockists in key markets, we partner with multi-national distribution firms, including Avnet, Digi-Key, TTI and Mouser. Each of these stock our products in depth, with the ability to rapidly address any demand increase in a particular geographic region.

Based on previous events, there is certainly a possibility that a breakdown in Brexit negotiations could delay product shipments to Europe out of UK ports. This is unlikely, however, to extend to the shipments of US distribution companies (such as the ones mentioned earlier). They will still be able to ship products into Europe if necessary. The EN9100-certified quality management system we have put in place means that our supply chain has the levels of resilience needed. Both our direct shipments and those passing through our distribution network are carefully monitored so that any problems can be flagged and any risks mitigated before they’ve had the opportunity to escalate. Absolute traceability of all Harwin products from the end customer all the way back to the company is also assured.

To summarise, the combination of our efforts and those of our distribution partners means that Harwin’s supply chain is robust enough to withstand any eventuality. Whether it’s a pandemic disease or a geopolitical upheaval, we are fully prepared.

 

Damon de Laszlo