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The EU’s Toy Safety Directive is much less fun than the goods it regulates. Richard Hardstaff has read it all — and when he talks about what Brexit will mean for his company, he highlights the importance of the EU rule book as a basis for doing business.
Polydron, a UK-based maker of educational toys where Mr Hardstaff is managing director, manufactures in India and China and sells to customers worldwide, including 105 in the 27 other EU countries. The bloc’s toy safety regime makes Polydron, as the importer into the bloc, responsible for checking that its products meet European standards.
“It is our phone number on the goods, and if there is a problem it is us who gets called up,” said Mr Hardstaff.
But if Britain leaves the EU’s single market, each of Polydron’s EU customers would become an importer instead — and Mr Hardstaff fears that relations with customers could suffer.
“There could be a hundred different interpretations, which splinters our supply chain and adds costs,” he said. As a result the Cirencester company is opening a branch and hiring staff in Germany to be the EU importer, handling 30 per cent of the company’s operations.
Brexit and business: where facts trump ideology
We would never have done this without Brexit,” said Mr Hardstaff.
His concerns point to a dilemma for many UK businesses in heavily regulated sectors, which are keen to keep at least a foothold in the single market and warn of the costs of leaving the EU’s regulatory regime.
As Theresa May seeks to convince both Brussels and hardline Brexiters that the UK should remain close to the single market for goods — a battle in which the prime minister is not assured of success — some companies, tired of the uncertainty, are beginning to move their business into the EU.
Big groups such as Airbus and BMW have warned of the consequences for their multinational, just-in-time operations of leaving the bloc’s customs union because of the risk of tariffs and customs hold-ups.
But for many other businesses, the single market is far more relevant. In the case of Polydron, tariffs on toys being brought into the EU are low and the playing field between all European importers is level. “Compliance with regulation is the bigger issue,” said Mr Hardstaff.
Polydron is not alone. Business associations that used to complain of the complexity of EU regulations are now asking to remain bound by them. Steve Elliott, chief executive of the UK’s Chemical Industries Association, has warned ministers that leaving Reach, the EU chemicals regime, “would seriously bring into question 10 years of investment, as registrations and authorisations that permit access to the EU single market would suddenly become non-existent on exit day”.
Mike Hawes, chief executive of the car industry association SMMT, said: “Barrier-free access to the EU market and complete regulatory convergence have been the foundation of our success.”
Kemdent, a dental products company based in Swindon, has a similar challenge to Polydron. Its specialist dental waxes, manufactured in the UK, need the EU’s “CE” quality mark to be sold in the single market.
To comply with the bloc’s Medical Devices Regulation, which is regularly revised and toughened, they need to be registered with a certification centre called a “notified body” in an EU member state, overseen by that country’s official regulator.
Jenny Perkins, Kemdent’s sales director, said that because of uncertainty over regulation after Brexit, the company was opening an office in Ireland and would come under the aegis of the Irish Health Products Regulatory Authority rather than the UK equivalent. This will add costs, and is likely to mean more of the business moving to Ireland over time.
Some Brexiters argue that leaving the EU will lift the burden of regulation, particularly for small companies.
But even if the UK adopts its own, less stringent, rules for medical devices, Kemdent will continue to manufacture to EU specifications. “If the UK has different rules, we might have to change the packaging, but I can’t see us changing the product,” said Ms Perkins.
The company exports to many other countries, including the US and Malaysia, and while it might need to register its products with the national authorities, meeting EU regulations generally means it is good enough to meet local rules as well.
Ms Perkins said that if the UK was outside the single market, it could be more difficult for Kemdent to convince new EU clients to buy its merchandise even though exports to the bloc would still have to comply with European regulations.
It could be months before Britain hammers out a broad-brush deal with the EU on future ties. Fully fledged trade talks could take years to complete and implementation longer still. But in the meantime, companies such as Polydron and Kemdent have made clear that, one way or another, they aim to stay part of the single market.
Polydron, a UK-based maker of educational toys where Mr Hardstaff is managing director, manufactures in India and China and sells to customers worldwide, including 105 in the 27 other EU countries. The bloc’s toy safety regime makes Polydron, as the importer into the bloc, responsible for checking that its products meet European standards.
“It is our phone number on the goods, and if there is a problem it is us who gets called up,” said Mr Hardstaff.
But if Britain leaves the EU’s single market, each of Polydron’s EU customers would become an importer instead — and Mr Hardstaff fears that relations with customers could suffer.
“There could be a hundred different interpretations, which splinters our supply chain and adds costs,” he said. As a result the Cirencester company is opening a branch and hiring staff in Germany to be the EU importer, handling 30 per cent of the company’s operations.
Brexit and business: where facts trump ideology
We would never have done this without Brexit,” said Mr Hardstaff.
His concerns point to a dilemma for many UK businesses in heavily regulated sectors, which are keen to keep at least a foothold in the single market and warn of the costs of leaving the EU’s regulatory regime.
As Theresa May seeks to convince both Brussels and hardline Brexiters that the UK should remain close to the single market for goods — a battle in which the prime minister is not assured of success — some companies, tired of the uncertainty, are beginning to move their business into the EU.
Big groups such as Airbus and BMW have warned of the consequences for their multinational, just-in-time operations of leaving the bloc’s customs union because of the risk of tariffs and customs hold-ups.
But for many other businesses, the single market is far more relevant. In the case of Polydron, tariffs on toys being brought into the EU are low and the playing field between all European importers is level. “Compliance with regulation is the bigger issue,” said Mr Hardstaff.
Polydron is not alone. Business associations that used to complain of the complexity of EU regulations are now asking to remain bound by them. Steve Elliott, chief executive of the UK’s Chemical Industries Association, has warned ministers that leaving Reach, the EU chemicals regime, “would seriously bring into question 10 years of investment, as registrations and authorisations that permit access to the EU single market would suddenly become non-existent on exit day”.
Mike Hawes, chief executive of the car industry association SMMT, said: “Barrier-free access to the EU market and complete regulatory convergence have been the foundation of our success.”
Kemdent, a dental products company based in Swindon, has a similar challenge to Polydron. Its specialist dental waxes, manufactured in the UK, need the EU’s “CE” quality mark to be sold in the single market.
To comply with the bloc’s Medical Devices Regulation, which is regularly revised and toughened, they need to be registered with a certification centre called a “notified body” in an EU member state, overseen by that country’s official regulator.
Jenny Perkins, Kemdent’s sales director, said that because of uncertainty over regulation after Brexit, the company was opening an office in Ireland and would come under the aegis of the Irish Health Products Regulatory Authority rather than the UK equivalent. This will add costs, and is likely to mean more of the business moving to Ireland over time.
Some Brexiters argue that leaving the EU will lift the burden of regulation, particularly for small companies.
But even if the UK adopts its own, less stringent, rules for medical devices, Kemdent will continue to manufacture to EU specifications. “If the UK has different rules, we might have to change the packaging, but I can’t see us changing the product,” said Ms Perkins.
The company exports to many other countries, including the US and Malaysia, and while it might need to register its products with the national authorities, meeting EU regulations generally means it is good enough to meet local rules as well.
Ms Perkins said that if the UK was outside the single market, it could be more difficult for Kemdent to convince new EU clients to buy its merchandise even though exports to the bloc would still have to comply with European regulations.
It could be months before Britain hammers out a broad-brush deal with the EU on future ties. Fully fledged trade talks could take years to complete and implementation longer still. But in the meantime, companies such as Polydron and Kemdent have made clear that, one way or another, they aim to stay part of the single market.
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