LAW
Peter Snaith is a partner at Womble Bond Dickinson , manufacturing sector head and head of the firm ’ s Teesside practice . Here , he reflects on the impact of uncertain times for business .
The future of the economic and
political landscape for the UK has rarely been more challenging than it is now , but we have resilient businesses in our region with strong leadership who have shown their ability to adapt to new challenges and to grasp fresh opportunities .
Many of our local companies have reinvented themselves before and they can do so again .
We can take comfort from the fact that Teesside is home to world-class manufacturers of products that underpin the supply chains of numerous global industries , many of which can offer sustainable solutions to the lifestyles we consumers expect .
Our region is a hotbed for digital tech innovation and we also boast the largest industrial development site in Europe at Teesworks that is attracting inward investment from across the world .
Throughout the Covid-19 pandemic , we have continued to enjoy local success stories but never before have crystal balls been in such demand .
What will the new normal look like for the rest of this year and will it change again after the Brexit transition period ends ?
Will we experience a second wave of coronavirus infections and have we built in the resilience measures to enable business and our communities to plough on through ?
Will traditionally strong customers and suppliers survive increasing cash flow challenges as support measures begin to be rationalised ?
We should be optimistic about the fact that , in contrast with the economic crash of 2008 , there is no shortage of liquidity in the market . Financial institutions and private equity houses have capital to
Trading through a global pandemic
invest in strong businesses which can help our region thrive again , but deal activity levels are modest at present and it is likely to be the new year before things pick up . However , nobody can afford to put business on hold as we wait to see how things develop .
After the financial crisis 12 years ago , businesses focused on their supply chains , moving away from ad-hoc purchase orders and onto longer term supply contracts to provide greater certainty of supply and predictability with respect to price .
Dealings with customers switched from spot orders and just-in-time deliveries to framework agreements under which greater resilience could be assured for customers in return for guaranteed sales .
Contracts are the lifeblood for businesses and there are real opportunities for differentiation within manufacturing and related sectors .
We are seeing the increasing trend of “ manufacturing as service ” or servitisation as manufacturers seek to maintain a relationship and revenue stream beyond the supply of product as well as manufacturers going direct to the end-user . The new approach can deliver a greater share of wallet , longer-term contracts , better relationships with customers and steady cash flow forecasting , among other benefits .
Alongside such developments , recent events have triggered more evolution in longstanding English contract law principles than we have encountered for many years . Exporters must try to anticipate and manage the potential additional obligations attaching to goods and services leaving the UK as well as the possible delays and disruption to imports .
The impact of the pandemic has brought renewed focus to the principles of force majeure as customers and suppliers experience setbacks to their business which arguably may , or may not , be outside their reasonable control .
The new Corporate Governance and Insolvency Act , which came into force in June , has significantly impacted the wellestablished measures businesses can take to protect themselves opposite potentially insolvent customers and suppliers , at a time when more businesses than ever are facing financial difficulties .
Great change brings great opportunity for those who are both dynamic and prepared - and great threat for those who are not .
Having an experienced legal advisor to help you identify and resolve legal and commercial issues will be more essential than ever .
To find out how Womble Bond Dickinson ’ s legal team can assist and grow with you on Teesside , please contact Peter on 0345 415 0000 or email peter . snaith @ wbd-uk . com
Womble Bond Dickinson ’ s dedicated national manufacturing sector team is one of the largest in the UK , with specialists with years of experience of supporting clients with regulatory challenges , compliance matters , day-to-day contracts and strategic projects .
78 | Tees Business