Weir Group warning on EU exit risks

Business faces a “triple dip” of uncertainty lasting a minimum of six years if the UK opts to exit the European Union, one of Scotland’s biggest manufacturing companies has warned.

Weir Group legal chief Keith Ruddock expressed skepticism at last week’s Law Society of Scotland conference over the sort of treaty negotiation that could be achieved ahead of an EU referendum by the end of 2017.

Europe is expected to dominate the Conservative Party conference, which got underway yesterday in Manchester, as David Cameron seeks to win concessions from Britain’s EU partners.

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Weir has a presence in over 50 countries around the world as well as doing business in over 100, including major operations in continental Europe.

“So much is unknown at the moment, so much in terms of the future relationship, so much in terms of what might be negotiated before a referendum,” Ruddock, general counsel and company secretary for the Glasgow-based valve and pump maker, said.

“My worst fear is that before a referendum we will be asked to vote on a promise of what will be negotiated because frankly I really struggle to see treaty negotiation being achieved in what is now really running down from two years.”

Ruddock, who spent nearly two decades with oil major Royal Dutch Shell PLC before joining Weir, said the “number one issue is minimising uncertainty”.

“Businesses hate uncertainty. There are some businesses that make it their job – that’s what they do, they leverage uncertainty.

“But for many, what you want is to know what lies ahead and here we have a bit of a triple dip of uncertainty because in the next few years we don’t know what is going to really be happening, for the period of negotiation – if indeed there is a vote to leave – again we don’t really know what is going to happen during that period, and even then we enter into an unknown period.

“So we’re looking at, I would say, a minimum of six years of uncertainty going forward. From a business point of view… why are we changing the pieces on the board without knowing where they’re going to land? It doesn’t really help.”

Free movement of people within the EU is “hugely beneficial”, added Ruddock, especially in light of skills shortages. Almost a third of Weir engineers at their largest UK plant in Yorkshire are Polish.

He also cited an impact on employment law as well as product labeling and safety standards, while suggesting an exit from the EU could result in reduced inward investment.

“Stepping out of one of the world’s largest trading blocs at a time when the rest of the world is consolidating into some even greater trading blocs feels counter-intuitive,” he said.