Folding bicycle maker Brompton has leased a warehouse near Heathrow Airport where it has stockpiled parts worth £1 million to minimise disruption to its supply train in the event of a ‘No Deal’ Brexit.
The news comes as the company files its annual report and accounts for the year to 31 March 2018, with turnover rising 11 per cent to £36.1 million.
The increase reflects the impact of increased manufacturing capacity in the first full year of operation at its factory in Greenford, west London.
But with the UK set to leave the European Union on 29 March this year and it looking highly unlikely that Prime Minister Theresa May’s proposed deal will be approved by Parliament, the company is making contingency plans.
The company’s CEO, Will Butler-Adams, has previously said that fall in the value of sterling following the June 2016 referendum had enabled Brompton to reduce prices in overseas markets.
However, its manufacturing capabilities would be threatened with disruption in the event that the UK leaves the EU with no deal and parts and components, whether from Europe or further afield, get held up at customs.
Quoted in the Guardian, Butler-Adams said: “Taking storage [has cost] £50,000 but the implications of running out [of parts] could be £50,000 in a few days.
He also confirmed that the business had engaged consultants Grant Thornton to assist with its “shit hits the fan planning.”
He added: “The most important thing is that we are going to continue to make [it] through Brexit. The rest we’ll muddle through.”
In the year to 31 March 2018, strong sales in the UK saw Bormpton’s unit sales for export markets drop from 77 per cent to 71 per cent of the 45,410 units produced.
Pre-tax profit for the year rose from £2.5 million to £3.1 million, with an improvement in gross margin more than making up for the higher operational costs incurred through employing more staff, higher overheads associated with the new factory, and opening own-brand stores in key markets.
Domestically, while some parts of the UK bicycle industry, including distributors and retailers, have struggled in recent months, Butler-Adams believes that Brompton’s distinct products focus will help insulate it from wider industry issues.
“The bike market is still mostly recreational but we are selling in the ‘useful tool for living’ market,” he said. “When things are a bit challenging selling something useful is a strong asset.”
Adding to the company’s positive outlook is that as well as its factory now fully operational, the electric model of its folding bike is now on the market after several years of development costs hitting the bottom line.
The bike launched in the UK in August, almost six months into the current financial year, with 750 units already sold, ahead of a rollout to several European countries over the next couple of months.
Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.