Potential job losses, overnight increases in imports and a 15% loss in turnover… UK lifting equipment manufacturer Penny Hydraulics has been hit hard on day one following the referendum.
The Chesterfield-based company was founded in 1978. Following a record year in sales, Penny Hydraulics is set to better this again in 2016 with the end of year turnover set to exceed £8m. The news of a departure from the EU couldn’t come at a worse time for the company as work has just commenced on a £1.5m site development at its premises. The development is set to create 10 new job opportunities within the next two years and has been aided by an EU grant.
The company has just been awarded “Family Business of the Year” at the Family Business Awards, where the judges commented on the companies’ innovation, investment and support and promotion of the engineering sector in the UK.
Penny Hydraulics started and continues as a family-owned business. Over this time it has grown to become the UK’s leading manufacturer of load handling equipment for commercial vehicles, factories and workshops, retail and licensed premises. The company, which operates within 22 countries worldwide, designs and manufactures its own products in the UK. These are serviced and supported by Penny Hydraulics' own nationwide network of service engineers.
Vehicle-mounted equipment sales account for 35% of Penny Hydraulics' sales. Products include the Swing Lift range of electric cranes, PH, V and FV hydraulic cranes and the Load Lift, Side Lift and Tail Lift loading platform ranges for use on pick-ups, drop-sides and vans as well as Penny Hydraulics own range of electric winches.
Ten per cent of the company’s annual turnover is thanks to sales of load handling devices for commercial vehicles supplied to EU countries (outside of the UK) through its EU chain of distributors. Not only does Penny Hydraulics export widely to the EU, export also forms an integral part of its plan for strategic growth.
Penny Hydraulics has 12 distributors throughout the EU, key markets being The Netherlands, France and Hungary.
Distributors hold Penny Hydraulics stock and provide after-sales services including OEM spare parts and Statutory Thorough Examinations in most cases. Distributors are all well connected within the commercial vehicle market, namely commercial vehicle converters, commercial vehicle bodybuilders and auxiliary equipment suppliers.
The single market now consists of over 500 million consumers, the aim being to enable easier access to a wide range of suppliers and consumers, lower unit costs and greater commercial opportunities.
General Manager and third-generation family member, Jess Penny. explains: “There is no doubt that the single market has fuelled Penny Hydraulics growth. It has helped to remove existing barriers to trade within the EU and promotes a business and consumer-friendly environment through transparent rules, which helps give us legal certainty and clarity.
"The stability, support and opportunities that the EU has brought over the years has enabled our company to grow and become the profitable organisation we have today.”
In the lifting equipment industry, safety is king, and Penny Hydraulics' sales are heavily legislation driven. European Standards and harmonised standards between EU countries have helped the company to improve safety and drive innovation.
Being part of the single market has also benefitted Penny Hydraulics with regards to the importing of goods. The company announced the launch of its new range of fully hydraulic PH Cranes in April 2015. Introduced to meet the needs of the 1 to 18 tonne UK commercial vehicle market, the PH Crane range offers over 470 models which are imported from an Italian crane manufacturer to the UK.
The addition of this new product range is a key component in Penny Hydraulics' strategy for growth, but since the Brexit announcement, cost prices of these units have increased. Jess Penny expands on this: “We have seen a 13% increase in the cost price of our new crane range overnight due to the exchange rate of the Euro.”
It is not only items imported from EU countries that are costing the company more. The company also import winches from outside the EU. Jess Penny comments: “We have purchased a batch of winches today (Friday 24th June); they will be £8,585 more expensive than they were yesterday due to this decision.”
Penny Hydraulics is the largest employer in Clowne, currently employing 83 members of staff. Jess Penny comments: “We have been able to provide jobs and opportunities for people that have been in short supply since the decline of traditional industries within our region. Due to this sad news, we will now almost certainly be looking at job losses. We are going to see a gradual decline in pay, pensions, services and living standards as our economy begins to shrink and no-one knows how long this could last.”
A departure from the EU means that the success of the company in now shrouded in uncertainty, according to Jess Penny, who goes on to comment: “We project a loss of turnover of at least 15%. We traded with 22 countries last year and they all accepted our EU manufacturing standards with no import tariffs imposed on our goods even outside the EU. We now have to negotiate new standards and tariffs with these countries and whether we like it or not Britain is not a superpower and does not hold great sway in the world.
"Will the EU want to help us if we have just left? Will the combined weight of the EU put pressure on the rest of the world to get more favourable trade terms than us? Most would in their position so this will directly affect us and indirectly affect us via our customers suffering in the same way.”