As Britain turns inward, one firm looks to Europe

[June 29, 2016]  By William Schomberg

HUNTINGDON, England (Reuters) - Britain and the European Union are likely to take years to rewrite the rules that govern their business ties after the UK voted to leave the bloc.

Mike Ashmead can't wait that long. The managing director of Encocam, a company that makes crash-test dummies, had planned to hire 120 people between now and 2018 to work at the company's design and production base near Cambridge.

But at a hastily called meeting on Monday, four days after the so-called Brexit referendum, Ashmead and his management team shifted their sights to the continent.

The firm, which currently employs 172 people, immediately began enquiring about grants to open a design center in Spain and is considering Portugal, Ireland, Germany and Poland too.

"We cannot wait for two years to see what will come out of this," Ashmead said in an interview at the firm's headquarters in the town of Huntingdon, part of a high-tech cluster centered around Cambridge.

His worry is not the markets meltdown that was unleashed by Thursday's vote. A plunge in the value of sterling, which touched a 31-year-low against the U.S. dollar earlier this week, is likely to help Encocam’s bottom line.

Eighty percent of its revenues come from exports - including motorcycles and lightweight panels for high-speed trains – which will now be cheaper for buyers, although the aluminum it imports from Germany and Italy will be more expensive.

What worries Ashmead is the likelihood of new immigration rules that could hinder his ability to hire engineers, designers and other skilled workers from abroad. It is a concern that is reverberating among many British employers who have long relied on foreign workers.

Telecoms giant Vodafone <VOD.L> has said the continued freedom of movement of people is vital for its choice of location.

According to the Office for National Statistics, 2.1 million people from other EU countries and 1.2 million non-EU nationals are working in Britain, compared with 28.2 million Britons.

One of the key pledges of politicians who campaigned to leave the UK has been to introduce more selective immigration rules, responding to widespread concerns among voters about strains on public services.

It is not clear whether those promises will survive the renegotiation of Britain’s entire relationship with the EU as a non-member. Many issues will be on the table, including the rights of UK banks to sell their services in the EU and myriad other trade issues.

The issue of foreign workers promises to be one of the thorniest because migration featured so prominently in the Leave campaign while the free movement of people is a key element of the EU’s single market for goods and services – something to which the UK wants to keep as much access as possible.

Ashmead expects it will become too hard to keep on hiring from abroad as his firm has done until now. While most of its employees are British, a quarter come from other EU countries.

"We love making things in this country and we will continue operations here, that is for sure," Ashmead said as workers from Poland, Spain and Britain prepared high-tech replicas of human legs for simulations of a pedestrian being hit by a vehicle.

"But we have to have the ability to do it. I need the people who can make it happen."

SELECTIVE OR RESTRICTIVE?

Leaders of the Leave campaign say their planned changes would give priority to immigrants who are most needed by British employers. Under the current system, EU citizens can work in Britain without visas, unlike workers from outside the bloc who often have to pass a complicated application process.

Project Co-ordinator, Ollie Khabiri, unpacks and checks child size crash test dummies (Anthropomorphic Test Devices) at the headquarters of ENCOCAM, in Huntingdon, Britain, June 17, 2015. REUTERS/Peter Nicholls/File Photo

Employers have long complained that they cannot find enough British workers with the right skills to fill their vacancies, especially in areas such as engineering and programming. Recruiting from abroad has been an answer to that problem.

Extending administrative controls to workers from Britain’s neighboring countries does not sound promising to Encocam. It took the company 18 months to get a work visa for an engineer from India. The process at one point required three managers to travel to Birmingham to explain how the engineer had skills they could not find among workers locally nor in the EU.

Helen Dighton, Encocam's head of sales, said Britain was unlikely to be able to spend sufficient time on designing a visa system that worked well for employers, given how many other issues it will have to deal with as it leaves the EU.Within hours of the announcement of the referendum result on Friday, she called Spain's embassy in London to ask about grants and other assistance for foreign investors and has followed up with enquiries with other EU embassies.

By deciding to focus abroad, the firm is necessarily reining in its plans for Britain. It canceled a 500,000-pound ($668,500) investment in 20 meter-tall, automated storage tower which would have stood in a forecourt of one of the company’s sites to open up space for more production on its shopfloor.

Encocam also dropped a plan to buy a four-bedroom home for employees moving to the Huntingdon area which would have added to the five others it owns for staff accommodation.
 

Ashmead is worried about morale too. He fears the vote may unsettle some of his foreign staff, despite his assurances that, as far as Encocam was concerned, nothing will change for them.

"We don't know how many people we're going to be able to hang on to. They have pride. They have other options," he said.

Angel Rivero Falcon, a 30-year-old chemical engineer from Spain who has worked at Encocam for more than four years, appreciated the support from the firm.

Still, he said friends in Spain had sent him emails asking whether he felt pressure to leave the UK and he believed the vote could change Britain’s image abroad as a welcome place for young, skilled Europeans.

Rivero Falcon has noticed a difference around him.

"The atmosphere in the street and on the shop floor; there is something going on there. It's a strange feeling. I don't know if people want us to be here," he said.

(Editing by Susan Thomas)

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