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Brexit and the hazardous area market

Author : Prof. Dr. Thorsten Arnhold

15 July 2016

In these days it is almost impossible to write a column in an international magazine published in London without a reflection about Brexit. For me as a German European with a wife from a Baltic country and with two adult daughters, one of them living and working in London, this event has a special relevance for our private lives. But also our business lives will be affected by the vote of the British people to leave the EU.

The hazardous area product and service business has been one of the sectors which has gained the most from the harmonisation of European standards and regulations. Twenty-five years ago, when I started my business life in this very special market niche, every European country had its own national regulations and doing business in Europe across borders was a nightmare.

A huge amount of money was wasted on the numerous national certificates all sending the same message: This product is safe! For every single country a special certificate was necessary.

The strong commitment of all member states of the European Union brought us harmonisation step by step, and finally with ATEX it became so much easier to offer explosion protected products within Europe. Experts from the UK joined our work from the very first days and made a much-appreciated contribution to our common efforts. Now we are confronted with the Brexit vote, but I cannot imagine that much will change in the world of explosion protection regulations, either in the UK or the rest of Europe. And if my hunch is correct, this will be true for the many other industries and sectors where harmonisation in Europe has been achieved or will soon be.

But is this really so important for the future development of European countries’ economies, as so many EU politicians are telling us? I don't think so. I recently read the following interesting figures in a German magazine: The EU’s share of the world’s GDP (purchasing power adjusted) dropped from 21.77% in 2005 to 16.95 % in 2015, so the EU has a declining commercial importance in the world. No wonder, if we consider another interesting figure: 50% of the world’s social and welfare spending is made by EU countries.

It is always a matter of priorities. For my company, a multinational manufacturer of explosion protected equipment where I am the acting Chief Strategic Officer, the importance of ATEX certificates is diminishing at a similar rate.

What counts for global business in the exciting markets in North America, the Middle East and Asia is the IECEx system. More than 50.000 IECEx Certificates and Test Reports have been issued and this is expanding at double-digit rates every year, because they are expressed in clear language, are simple, available in a database and are customer friendly.

Both the traditional ATEX and even more the new edition of ATEX bring little additional value to the manufacturer nor to the process industry as the customer. Once useful, they are increasingly seen as a necessary evil for the industry.

I am convinced that globalisation, and the free trade of goods and services which is strongly  connected to it, will bring prosperity to all nations and cannot be stopped in the long run by any ideology.
And the best organisations to regulate this global development are networks of experts representing all stake holders and acting professionally on democratic principles.

IECEx is just such an organisation.

Compared with systems like ATEX, IECEx has many advantages. Here are some of them:
•  A thoroughly democratic organisation. The membership, consisting of 33 member countries, is involved in all important issues. Once a year the management committee, where all national delegations have a vote, get the opportunity to discuss all issues which are important to them. And in between, members can vote remotely.
•  A lean and professional organisation for ongoing day-to-day business. The Executive Secretary carries out his tasks with a handful of full time employees supported by the group of executives consisting of the officers of the IECEx System. In the executive group there are members from Australia, the US, Canada, China, Russia, Switzerland, Germany, France and the UK.
•  Transparency and friendliness towards stakeholders. All information such as certificates, rules of procedure, operational documents are available free of charge from the IECEx website.
•  All stakeholders are directly involved in all processes. According to the IEC master plan, the industry generates the money necessary to run the business and is fully represented. Four out of 11 members of the Executive group come from manufacturers.

In these turbulent weeks, Brexit may overshadow all other issues, especially in Europe, but I am sure that within the coming months we will find reasonable solutions for all sides. In Germany, we have a saying that no food is eaten as hot as it was cooked. Thanks to world wide organisations such as the IEC and IECEx, the stability of international business is assured regardless of the many ideologically driven issues which are shaking our modern world.

About the author

Prof. Dr. Thorsten Arnhold is VP Technology and Chief Strategic Officer at Stahl AG and and Chairman of IECEx

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