Insight

Here Ian Doherty, managing director at Owlett-Jaton, focuses on how the leading UK & Ireland wholesaler has still been able to achieve growth over the last two years – thanks to key investments and restructuring.

Since mid-2020 the main impacts on Owlett-Jaton have been the ongoing Covid-19 pandemic, shipping costs and disruption, BREXIT, and most recently the war in Ukraine. Despite all these challenges the business has been in a position to exploit opportunities as they arose, and we have seen growth.

A big part of this was that we continued to operate throughout the Covid-19 pandemic, with working patterns changing dramatically for office-based staff – with most working from home for most of the time. We were well placed technically to support remote working thanks to our VPN, Microsoft 365 – providing MS Teams, and our VoIP based phone system, which all gave seamless connectivity to those working remotely. Whilst remote working does prove a challenge in terms of recruitment, training and staff development, overall it has worked very well and productivity has not been adversely impacted. From early June we started returning to office-based working at least one day a week. We did furlough some staff in May/June 2020 but since then we have been at full strength, with the warehouse operating throughout.

Another important step was in mid-2020 when we restructured the business and consolidated all our sales activities under the Owlett-Jaton brand at our Stone site. This means customers now have a single point of contact with the business and a single account, which improves communication. By consolidating at a single site, we avoid split deliveries from what was two sites – with a similar reduction in paperwork. This change has been well received by our customers and means we can spend more time fully understanding their needs.

One current challenge that can also be traced back to the impact of the Covid-19 pandemic is the shipping issues we are all facing. The cost challenges are well documented and have had a dramatic impact on product costs. For some lower value products, the cost of shipping has jumped from 5% of cost to 50% of cost. We have had little option but to hand these cost increases on. When it comes to the disruption to shipping schedules, this was initially covered by our deep stock holding, but by mid 2021 real gaps were appearing. It has taken many months to resolve these, but availability is now back at the high levels we expect.

Looking forward on shipping, I suspect costs will remain elevated through 2023. How disrupted the services are will be heavily dependent on the Chinese approach to managing Covid-19. If they continue to run a zero-infection policy with major lockdowns then I fear disruption will continue.

One area that has almost been forgotten with everything that has happened over the last two years is BREXIT. When the BREXIT transition period ended it principally only affected trade with the island of Ireland, both the Republic and Northern Ireland. Due to this we changed our processes to allow us to use Delivered Duty Paid (DDP) Incoterms for these transactions, which meant that we dealt with all the customs procedures and any duties – keeping things simple for customers in Ireland. Unfortunately, with the imposition of the anti-dumping duty, we have had to move to Delivered at Place (DAP) Incoterms for some of our deliveries, which puts the onus on customers to clear products liable to ADD with customs and pay any duties. With this mind, we will shortly be launching a range of products sourced outside China, which will allow most of our sales to revert to the simpler DDP route.

The war in Ukraine has had no direct impact on us, but I am concerned that the impact on the cost of living, particularly energy and food, will damage the economy and make for a much more challenging business environment going forward.

In spite of all these challenges, we continued to invest in the business. We launched our new Jaton Riveting Product range in March 2020 (not the greatest of timing), but it has still proven very successful and grown strongly. We are now expanding that further with a range of battery powered riveting tools.

We also launched a new website in early 2021 upgrading the content and web shop, which has doubled our sales via our OJ-Trade web shop. The site gives users the ability to access and download product information and test certificates directly. We are also continually adding new content – including videos demonstrating our products. As we move away from lockdowns we have also just appointed four new field sales managers to enhance our ability to meet customers face to face and fully understand their needs.

 Alongside these new developments we will also look to continue to grow as a business and remain flexible so that we can adapt to any new situations within the market. The events over the past two years have certainly challenged the current business model of supply from the Far East and highlighted the potential impact of geopolitical risk. However, I do not see the industry being willing to accept additional cost to mitigate these risks. So, I suspect we will carry on as we are now, but with a watchful eye on developments in the Far East.

Economically, indicators show a slowdown not just here in the UK but across the global economy. That creates a challenge in any event. With the long lead times we have from the Far East, slowing demand may cause stock to build and cash flow challenges for some companies. We are fortunate in being well funded and not at any financial risk in the event of a slowdown. We should be well placed with our substantial stocks to maintain service in the face of any disruption and to exploit any opportunities which did arise.