As the United Kingdom prepares to vote on whether or not to leave the European Union this Thursday, discourse within the business community has centered largely on the economic consequences of a potential Brexit. Questions of trade, logistics, monetary stability and recession loom large for British businesses, and those within the musical instrument industry are no exception.
Reverb recently spoke to representatives from three British gear companies to get their perspectives on these economic uncertainties.
For some manufacturers and distributors, there are inherent logistical hurdles that would come from operating in a non-EU country. Carl Cook of Eastwood Guitars UK says that 80% of Eastwood's EU business is outside the United Kingdom, and he described the serious operational problems a departure would pose.
"Eastwood Guitars set up in the UK to service Europe... it took all complications and guesswork for EU customers out of the equation. Having the ability to ship with no hidden or surprise costs is a big advantage for us."
According to Cook, in addition to increased shipping costs, more borders and layers of bureaucracy would increase import duties and other fees, and extend shipping timelines.
"We currently deal with countries in Europe who are not in the EU, Norway and Switzerland being the main ones. Shipping to these countries usually takes 4-5 days (EU countries are usually 2 days) and costs 3 to 4 times as much."
For Cook and Eastwood, "If the UK were to vote to leave the EU, it would be a major step backwards for our business, and one that we would have to address."
If the UK were to vote to leave the EU, it would be a major step backwards for our business, and one that we would have to address.
Luke Hilton of Stone Deaf FX and Amplification takes a more optimistic view of the situation. According to Hilton, a Brexit would mean, "Lower cost products to US and EU countries because the pound sterling becomes weaker, and increased sales to US."
As the US is already the largest market for Stone Deaf products, the potential for lower production costs would ultimately lead to increased margins for the firm's line of boutique amps and pedals.
Hilton sees an additional benefit for domestic manufacturing: "...the money we save that we [now] send to Europe will enable us to spend in the UK on UK companies."
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The weakening of the pound is clearly a paramount issue facing the British economy, and Tony Miln, who operates Soundgas, an online retailer that specializes in high-end vintage gear, sees both positives and negatives to the situation. As both a buyer and a seller, Soundgas does business all over the world, and as Miln explained:
"A weaker pound will make us more attractive to overseas customers, but it will cost us more to buy stock from outside the UK. We may see a downturn in UK business as a result of the almost inevitable recession, though as we started Soundgas in a recession, I feel we're well-equipped to cope. We have bought a fair bit of overseas stock lately so if the pound does tumble, we're insulated in the short term."
Miln also sees his primary clientele as somewhat immune to larger economic forces: "A significant proportion of our customers are established music industry professionals who are likely to still need recording gear whatever the economic situation."
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