Insight

In March Ian Doherty, CEO at Owlett-Jaton, announced his retirement – stepping down after nearly a decade at the company. However, with his extensive knowledge and expertise, it’s no surprise that he will be taking on an advisor role at the business – enabling him to advise on market challenges, such as the Carbon Border Adjustment Mechanism (CBAM) regulation. 

By the time readers are seeing this interview, you will have retired as CEO at Owlett-Jaton  and taken on your new advisory role. What will the new role entail?

“My role at Owlett-Jaton now is to advise on what’s next, such as how the company can continue to prepare for the UK CBAM regulation, as well as ensure its reliable supply chain. CBAM is not just a simple number, it is not a box ticking exercise, there needs to be a process of education in the wider industry for companies to know what they’re asking their suppliers for. 

As part of my role as chairman with the British and Irish Association for Fastener Distributors (BIAFD), and therefore consequently EFDA (European Fastener Distributor Association), I have been involved with the whole EU CBAM process right from the outset – I was very vocal at the initial stages, working to try and exclude fasteners from the regulation altogether. Obviously, despite our best efforts, we weren’t successful – a similar story with the UK CBAM regulation, which also looks like it will be following the EU version and still be including fasteners.

My main hope is that we get some harmonisation between the UK and EU CBAM, which would then mean that principally, from a UK distributor’s perspective, we would import once into the EU and then sell anywhere in the EU or UK without having to make CBAM declarations. However, that is very dependant on harmonising the admission trading schemes and I don’t know if that’s a step too far for the UK government. Everything we’ve seen so far in the process indicates that there doesn’t seem to be objections, with the calculation methodology already looking like it will be the same.

We see these initial preparations largely as an exercise in preparation for UK CBAM. By getting all of this right now, we believe we’ll be well placed when UK CBAM comes along. Yes, it’s a lot of work and information gathering – but it’s completely feasible.”

With that in mind, how is Owlett-Jaton progressing with its plans to be EU CBAM ready and have there been any challenges?

“Owlett-Jaton is using a slightly simplified template created by EFDA to collect data from suppliers to create a big database, full of reliable data. However, at this moment in time, the quality of the data is imperfect. Partly because it is very complex – with over 80 different data fields that need to be filled out – so our suppliers are finding it difficult. 

The data needed requires suppliers to look at where their electricity comes from, as well as other information, to be able to give an accurate amount of carbon embedded. Most fasteners are made from steel and we’re finding the carbon in the steel input is quite often where our suppliers are struggling to get the data they need to actually complete the whole thing. 

There is also, I think, still a huge gap in understanding in the UK when it comes to what customers are actually asking for. It’s common for customers to say ‘give me the CBAM data’ – but have absolutely no idea what they’re actually asking for. CBAM is more than just a number,
it’s specific to the factory of manufacture and more education across the industry is certainly needed. 

We are in a situation at the moment where we are able to support our export customers and provide them with data as best as we have it, but even then we have some gaps and we continue to work with our suppliers to fill this. Generally, suppliers are recognising the need to supply data and are genuinely trying hard to do so – despite finding it difficult to understand.”

Do you think this data collection method will be something that will have to change in the future? Could incomplete data or lack of CBAM compliance be a deciding factor when looking for new suppliers?

“I believe the European Commission will soon have to put some sort of defaults in place, which will be at a punitive cost level as they see it. I’m a bit of an old cynic and believe that people’s behaviour is only going to change when it costs them. If we can get to a point that ‘factory A’ is providing CBAM data and ‘factory B’ can’t, therefore making ‘factory B’s’ default CBAM charge higher than ‘factory A’s’ – that will become a deciding factor that will be driven by cost. 

In terms of new suppliers, of course it might result in us using a different factory in China, but it won’t stop us sourcing from China. I don’t think CBAM is going to directly impact sourcing patterns or change them dramatically at all. I think people are looking at the situation and will continue to work at it, as there’s still more time until January 2026. 

This is their livelihood, it’s in the factory’s interests to – or at least show they’re trying – to provide CBAM data. Early doors we were seeing factories ignoring it, you’d ask for the data and you weren’t getting anything back. However, we’re now getting data back. Yes, this data might be incomplete and it might be imperfect, but suppliers are engaging with the process and we’re going back and forth, working with them to identify where it’s not right and helping them fill out the particulars. We are not claiming ourselves as experts at filling out the CBAM data but we’re giving what guidance we can – working together to try and get a number. We want the data to be complete because that will help us for UK CBAM.

However, as previously mentioned the EU CBAM is already causing challenges and we’ve already got customers saying ‘if we can’t provide the data they won’t buy from us’. The problem with this is, a lot of the time, these customers don’t know what they’re asking for, which as you can imagine is challenging. Particularly larger customers with pan-European supply chains, they are suddenly finding that if they want to move stock from the UK to France for example, they can’t without finding out the CBAM data or pay a default value or show they’ve done the work.

In my view, when the Commission set-up the CBAM process, it never really considered secondary importing, particularly fasteners and finished products. It’s a very complex supply chain with many complex processes and it’s proven very difficult for everyone involved to do what’s required, but I think everyone is trying and I think we’ll get there. Will there be some suppliers who fall by the wayside? I’m not sure. I suspect it will be driven by commercial, once again, as well as if people genuinely stop buying from ‘factory X’ because it is not providing the data. 

It will just come down to economics. I don’t think this will be a ‘let’s make the world greener’ exercise. At the production end, I think it will be driven by cost penalties and that is what will change people’s behaviour.”

You mentioned a ‘greener’ world. Do you see sustainability continuing to be an important topic in the immediate future? Do you see further regulations regarding sustainability and the environment being introduced? 

“CBAM is only part of the buzzword that is sustainability. At Owlett-Jaton, we take sustainability very seriously. We have achieved ISO 14001 and, as far as I know, we’re the only wholesaler that has gone that far in terms of looking at its whole operation. 

We’ve changed to LED lighting, high-speed doors, moved away from single use plastics, as well as updated the company car policy. Do we want to reduce the carbon emissions of the world? Yes. However, the thing that is quite sobering is that if we look at the carbon that’s really involved in our business – 99.5% of it is to do with the product, only 0.5% is to do with how our business operates. The ‘elephant in the fastener room’ is the steel content of fasteners and the energy that’s required to form a fastener – that’s where the carbon is. 

We also see very little demand from people willing to pay any sort of premium for sustainability. Of course, it’s the right thing to do and I suspect the only way you’ll drive more sustainability is through taxation, which is what CBAM is doing – by saying this is a high carbon content and we’re going to make it more expensive for you.

Where I see this going is, undoubtedly, the expansion of CBAM, which will be expanded to downstream items. It will go to high energy, high carbon intensive industries and will continue to increase the scope to achieve the sustainability and political aims, which as we’ve seen with the fastener industry – is so very complex.”