Why this is important to Wisconsin businesses: Depending on how Brexit plays out, companies with a presence in the UK may be looking to move to mainland Europe.
The EU and the UK have recently come to an agreement to further delay of Brexit until Oct. 31. Unsure of what is going to happen, UK-based companies are starting to hoard goods in their warehouses in case of a no-deal Brexit; others are looking for alternatives for a new forward base in mainland Europe.
A no-deal Brexit would leave many companies in a serious predicament. It is common practice for U.S. companies to utilize the UK as a forward base for business in Europe. Goods arrive in the UK and then get distributed or sent to clients in other European countries. It’s hard to tell whether this will still be a feasible strategy after Brexit, as there is still uncertainty as to the type of exit deal that will occur. If Brexit negotiations lead to the installment of new customs barriers between the UK and the rest of Europe, U.S. companies currently settled in the UK will potentially have to look for alternatives on the mainland to avoid extra costs.
The Benelux Union (a politico-economic union of Belgium, the Netherlands and Luxemburg) houses two of these alternatives: Belgium and the Netherlands. The two neighboring countries offer an optimal climate for business and logistics activities, each with its own advantages. The Netherlands was ranked number one as the most desirable logistics location in 2018 by the VerkehrsRundschau, a leading German magazine with a website about transport and logistics). The Dutch are fluent in English, offer quality infrastructure and have years of experience in quality logistical services. The country is well known for its port in Rotterdam, Europe’s largest port, where the annual throughput is 469 million tons. The Netherlands is centrally located in Europe and has excellent ties with many of Europe’s prime economies, including France and Germany). However, this almost optimal business climate comes with a price. The Dutch are slowly but steadily running out of logistical space, and companies are struggling to find suitable personnel for open logistics positions. This is causing costs to rise, making it harder for small companies to find a foothold in the Netherlands. Many larger corporations will find a suitable partner in the Netherlands, as Japanese electronics manufacturer Panasonic did—the company recently announced it will move its European headquarters from the UK to the Netherlands.
Another, perhaps less known, option is Belgium—and more specifically the Walloon region, the southern, French-speaking province of Belgium. Many of the people in this region are multilingual and well-versed in the English language. Language barrier aside, the region offers many benefits. While in the Netherlands the amount of available space and the available workforce is steadily declining, the Wallonia region offers a larger available workforce and more available space that is also less expensive. To put it in perspective, near Amsterdam, warehouse space rents for an average of €85 per m2 per year; in Brussels, the average is €55 per m2 per year, and near London it would be €194 per m2 per year. The average for the entire Wallonia region is €39 per m2 per year. Another advantage of Wallonia is Liege airport, where arriving goods Liege airport are released very quickly from customs. The goods leave the airplane and are loaded on a truck within one hour. Even some Dutch companies choose to use Liege airport over Schiphol to ensure their products (e.g., flowers) arrive as fresh as possible. Just like the Netherlands, Belgium (and thus Wallonia) is connected to Europe’s prime economies.