As we see in the daily news, there is significant uncertainty about the future direction of the UK economy as a result of the Brexit negotiations. There is also growing uncertainty amongst business leaders and analysts about likely negative impacts on the economy and the construction sector. This in turn could lead to reduced demand for our products leading up to and following 29th March, the date when the UK is scheduled to leave the EU.
For these reasons we have formed a UK Brexit Contingency Committee to ensure we are prepared for any negative impact on our 2019 budget. All relevant areas of the business are represented on the Committee, and it is being coordinated by the Europe Risk Management team.
Why Do We Need a CEMEX UK Brexit Contingency Plan?
Whenever our business is faced with potential threats to our volumes and income such as now, it is important that we analyse the risks and take prudent and proportionate steps to mitigate negative impacts as early as possible.
Whilst we are now CEMEX Europe, any negative Brexit impact will primarily affect our UK markets and operations. As described above, we need to be ready in the event of a No Deal Brexit, such that our business is prepared if UK construction output is negatively impacted.
What Are the Mitigation Measures in our Contingency Plan?
For all businesses and functions – Since 1st January 2019 our management teams are working on mitigation measures such as revised expenditure authorisation levels, approvals for new appointments, maintenance and operations costs review, temporary labour, improvement projects and travel and expenses.
For Supply Chain and Procurement – our Supply Chain will be reviewed to ensure we are sourcing from the optimum locations for best cost and imports timing. Procurement will postpone price increases to suppliers – this may cause some disruption but please collaborate with them to deliver the savings wherever possible.
Capital Expenditure Projects
There will be a review of 2019 capex proposals and a strict prioritisation plan.
Any Questions?
Hopefully the above is clear – if not please speak to your Line Manager. It is important that everyone recognises the highly unusual current period of economic and political uncertainty, and that this is a sensible and prudent plan to help us maintain our 2019 business performance as far as possible.
Final Thought – Everyone needs to adopt the mindset that in Q1 discretionary expenditure should not be made – “if safe operation does not require it immediately then don’t spend it”.