The boss of a leading workwear manufacturer says the Brexit vote is already having an impact on his business, but insists it’s strong enough to deal with it.
Alex Ingham, Managing Director of Thornaby-based M.I. Supplies, says the company will lose approximately £170,000 this year due to an increase in importing materials, as a direct result of the slumping pound.
The losses equate to around a tenth of the firm’s costs base.
But he has already absorbed the price hikes so that he doesn’t pass it on to his customers.
And he says his company’s strong financial performance of recent years – sales have grown 205% in the last five years – has put it in good shape to deal with the challenge.
Ingham said: “Since the end of June and the Brexit vote, we’ve generally had price increases from virtually every supplier, averaging 9-10%, when normally it would be 2-3% every couple of years.
“Every single day we get a letter or email from one of our main suppliers, advising their prices are going up due to Brexit. If there is no negotiation and we need to get our goods, then it does make it difficult.
“They’re all putting it down to the weakness of the pound, and the majority of product that comes into us from abroad is bought in dollars or Euros, so I can see why it’s causing many firms a lot of problems.
“I think it’s going to cause quite a lot of heartache in the UK over the next six months or so. Prices are going to keep on rising, and it’s going to make it quite challenging for a lot of companies. The 10% increase is a major deal – a lot of companies are barely making 10% profit on their sales as it is.
“We haven’t passed anything on to our customers yet, and we’re trying not to. Instead, we’re looking for efficiencies in other areas – utilities, courier charges and anything that takes costs out of the business so we don’t have to pass it on to the customer.”
M.I. Supplies has been supplying a wide range of workwear clothing and accessories for more than a decade after celebrating its 10th year in business in 2015.
The firm has enjoyed a staggering 205% growth in the last five years and expects to achieve another record turnover this year, up to £2.5m from £2.25m in 2015.
The firm, which moved from 3,000 sq ft units to a new 8,000 sq ft unit at Willows Court on Teesside Industrial Estate in February last year, recently signed a new three-year deal with European supermarket giant Aldi, worth more than £3m.
And it’s their unique offer of giving clients a two-year fixed-price guarantee which he says will affect his profits.
He said: “Whenever we take on a new customer, we guarantee to fix their prices for two years.
“In fact, one major client has had 13 years of fixed prices from us, which is unheard of in our industry. We’ve taken a bit of a gamble on that over the years but we’re still in a strong position which enables us to do that.
“We turned over £2.25m in 2015 and expect to hit £2.5m this year, but the increase buying in our goods has already cost us £170,000 so it will affect the bottom line, but thankfully we’re in a good position to absorb that and carry on business as usual without affecting our customers, which is our ultimate aim.”
M.I. Supplies now has a growing client base consisting of more than 250 business customers including the fire brigade, local councils, engineering firms and charities, while more than 26,000 customers have ordered supplies from the company’s website, and brands supplied by M.I. include Sainsbury’s, Barbour, Aldi, Lidl, Royal Mail and Mercedes.