ILMA Compoundings - November/December 2020 - 27

have time to consider Brexit's impact until late summer -
just in time for Johnson's announcement that undercut the
idea of a deal, she said.
After Dec. 31, " everything will become more difficult, "
especially in the wake of Johnson's September declaration,
said JÃ¼rgen Schiefer, sales director Europe, Ergon International, Belgium.
Many lubricants companies are operating under their current business models until negotiations conclude, said David
Wright, director general of the U.K. Lubricants Association
(UKLA). The U.K. is the EU's second-largest market for
lubricants, behind only Germany. While large companies
hold 60% market share in the U.K., smaller independents
lay claim to a healthy 40%. Some major companies and
additive companies have research centers in the U.K.,
although they manufacture abroad.
Blenders are " down to a handful, " said Wright, from
about 250 as businesses have consolidated to achieve economies of scale. The U.K.'s Group II base oils arrive from
North America, the Middle East and Asia - some through
EU free trade agreements with individual countries.
Some companies moved overseas from the U.K. in the
past, serving the needs of the U.K. market while managing
the movement of materials. " With the right logistics and
transportation in place, you can service it pretty effectively
from abroad as a single market, " said Wright.
Products that the U.K. can't produce itself will not be
tariffed, and that includes Group II base oils, additives and
some finished lubricants. A handful of aging U.K. refineries
produce Group I base oil, and some PAOs suitable for
automotive are being produced. But metalworking fluids
are starting to embrace Group II as an advanced formulated
base oil for its performance properties, and " we just can't
produce that, " said Wright. " We're not self-sufficient to meet
all of our needs, and therefore, the tariff is set to zero. "

Still, the lack of tariffs doesn't mean an end to bureaucratic hurdles. Schiefer envisions customs controls causing
big delays at first, followed by higher costs as they're
resolved.
Wright agrees that heightened customs checks could slow
down the process, but the first six months of 2021 might
feature streamlined processes " to ensure flow. "
" We're effectively an island nation that depends on other
countries for its services and goods, " said Wright. " Flow
has got to be a priority, second only to security, followed by
revenue and taxation. "
Britain is and always will be " at arm's length of the mainland, " noted Hinrich Voss, head of business development
at Oemeta Chemische Werke GmbH. Agreed-to economic,
environmental and public standards will be difficult to
maintain in an independent nation, but future flexibility
could allow for exceeding standards and developing leading
roles in market areas.
" Independent from any additional friction in licensing
agreements, it is to be expected that both sides honor common-sense business practices and will do their utmost best to
reduce additional burden for economic growth, " said Voss.

The REACH Dilemma
In a complex web of trade, the U.K. is finding ways to
mirror many EU regulations - for instance, adopting and
adapting EU regulations in such areas as use of biocides and
automotive type approval. But then there's REACH. While
other regulations have been adopted wholesale, " the big one
hasn't, " said Wright.
REACH is the EU's chemical safety regulations. The U.K.
has adopted the main articles of REACH, but it reserves the
right not to adopt the annexes, which cover such areas as classification, labeling, packaging, cost-sharing and technology.

ILMA Compoundings - November/December 2020

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