The earliest rumblings of Brexit’s impact on the water market are being felt by the UK supply chain
The result of the EU referendum has triggered a degree of uncertainty unknown in the UK water sector since the privatisation of utilities in England and Wales over 25 years ago. It is natural, when there is uncertainty, for people to wait before they take major decisions, which we have already seen emerging in the construction sector. The products we supply are a fairly substantial purchase, so caution about investment is to be expected. It may be too early to determine the long-term trend, but reflecting the national picture, we have already seen a bit of bounce-back from the immediate post-referendum slowdown.
We had our best month ever in August. At WPL we are celebrating the company’s 25th anniversary and securing significant orders from Central Europe is a major breakthrough. As an export business, with networks across the continent, I am happy to report we have not seen any reluctance from our European client-base to engage with a UK partner.
We are proud of having invested in our European distributor network for the long-term, and these orders show that it has paid off.
Access to the European labour market has been invaluable, and we support efforts to keep freedom of movement in place. Our representative in Central Europe came to WPL as an intern through Portsmouth University on a European exchange scheme.
After 12 months, he saw the opportunity for WPL in Central Europe, which is at a similar stage to the UK 10-15 years ago in terms of centralising wastewater treatment. We supported him as he carried-out a sales and marketing function over two years, which is now paying dividends. We knew we needed local knowledge and contacts and we knew that we had to be patient.
An order from Czech Republic was the largest, comprising a first-time wastewater treatment plant for a small town, financed from combined EU cohesion funds and investment from the municipality. In Slovenia, we are providing technical assistance and equipment to a long-standing water company client to assist with a problematic wastewater treatment plant installed by another provider only eight years ago.
The technical expertise of a company like WPL is valued by our European clients, and it is a market where a high amount of technical input is required, a need which is unlikely to diminish post-Brexit. For the more complicated schemes WPL has been involved with, we can add value and there is a clear opportunity.
Our package treatment plants are well suited to the way our European partners want to work. They are much easier and cheaper to install than traditional plant, saving on civil engineering works and requiring a much shorter lead-time.
The biggest threat to the UK water market from Brexit is dilution of European legislation like the Water Framework Directive (WFD) and Urban Waste Water Directive (UWWD). European environmental policy has been a huge legislative driver for UK utilities and cabinet minister David Davis, who is leading the negotiations for Brexit, has said that EU law will initially be transposed into domestic law.
WPL has responded to this very important legislation by developing secondary wastewater systems that meet the most stringent consent standards imposed by the Environment Agency, including phosphorus removal. It is important that the environment and water resources are protected, especially in eastern and south-east England, where population growth and climate change pose the greatest challenge.
Most water companies in the UK are run as commercial companies and may push for a relaxing of standards in the longer-term to drive down costs, which in turn may lead to projects being postponed. WPL is a member of British Water and supports them in lobbying to keep existing European legislation in place and continuing and advancing improvements.
We do not know how attitudes in Europe will change as Brexit progresses, but we do not anticipate a hardening of the positions of our partners. Other nations are questioning their place in the EU, so the UK Is not unique and the uncertainty is likely to continue for the forseeable future.
We have put a lot of effort into sourcing partners in Europe and finding our niche. Our products and technical services are highly valued, and there is no reason why that should come down to price alone post-Brexit. If tariffs are imposed, we will deal with that; it is too important a market to ignore.