Akzo Says `Brexit' Risks Hampering Worker Rotation Through U.K.by
Personnel would be harder to rotate around region: CEO
R&D exchanges between U.K., other companies would be tougher
Akzo Nobel NV Chief Executive Officer Ton Buechner said a U.K. exit from the European Union would threaten the paintmaker’s habit of rotating workers and research between Britain and member countries.
“We rotate a lot of people, we rotate a lot of research and development, we rotate a lot of knowledge,” Buechner said during an interview at the company’s offices in Amsterdam on Wednesday. “For that, we like one of the large markets we operate in to be part of a trade arrangement within a broader European environment.”
Buechner said the direct impact on business of a “Brexit” may be limited. Still, Akzo Nobel’s $17 billion purchase of industrial conglomerate Imperial Chemical Industries in 2008 deepened its connection to the U.K., which accounts for about 6.6 percent of revenue. Prime Minister David Cameron may hold a referendum on a Brexit as early as June, just as Akzo Nobel looks to switch on part of a new factory complex in Ashington capable of producing 100 million liters of paint, including the iconic Dulux brand.
Half the plant is in the commissioning phase and will start production in the second half of the year, with the second part coming on stream next year, the CEO said. Plans to build the 110 million-euro ($124 million) plant, located in southeast Northumberland, an area of high unemployment, were first announced in 2011.
Bank of England officials say the buildup to the vote has yet to impact investment, but several surveys have shown business confidence is slipping. Economists at Nomura said Tuesday that an exit from the EU could provoke a U.K. recession by aggravating existing structural issues such as the large current-account deficit.
Buechner is more sanguine about Akzo Nobel’s prospects in the U.K., where paint sales grew in the fourth quarter.
“We don’t think the immediate business impact will be significant,” Buechner said, explaining that most of the paints and coatings businesses are local. “We produce in the country, for the country.”