May 17, 2020

Government payment policy not passed along supply chain

news/government-payment-policy/government-payment-policy-not
Freddie Pierce
2 min
Daniel Ball of Wax Digital goes through what organizations must think of when implementing a P2P system

Official figures show that the majority of government departments pay main contractors within 10 days, but that this is not always being passed along t...

Official figures show that the majority of government departments pay main contractors within 10 days, but that this is not always being passed along the supply chain.

According to the Forum, some subcontractors and suppliers have been left waiting months for payments.

Matt Goodman, the Forum’s Head of Policy, said: “Passing on prompt public sector payment through the supply chain would not only help small firms maintain a healthy cash flow, it would encourage more businesses to bid for public contracts.”

He emphasized that the issue is not confined to any one sector, adding that work needs to be done to ensure that timely payment becomes “the norm” in the UK.

“The risk is that more firms go under because they are unable to maintain any kind of cash flow because of late payment from larger companies,” Goodman said.

The Forum has campaigned extensively against the practice of late payment and was responsible for lobbying for the Late Payment of Commercial Debts (Interest) Act, introduced in 1998.

Its work also led to the implementation of the Prompt Payment Code which comprises a list of companies pledging to pay smaller suppliers on time and in full.

SUPPORTING SMES

Eleanor Grant of EG Heating and Plumbing Ltd, the firm she runs with her husband, told the Forum: “While we welcome the commitment to reduce public sector payment terms, this doesn’t always work in practice.

“In addition, most contracts are subject to 5 percent retention, with 2.5 percent released on practical completion of the works. The defects period on Government contracts can be as much as 36 months.”

However, Grant remains supportive of the Forum’s commitment to name and shame those companies who delay payment to suppliers.

“The Government must listen to the voices of SMEs, which are the lifeblood of the economy and are struggling to stay afloat because of the effects of the recession,” added Grant.

Edited by Jennifer Denby

Link: www.fpb.org

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

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Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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