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Electrocomponents to bump up inventory as part of Brexit plan

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(Reuters) – British industrial distribution company Electrocomponents Plc <ECM.L> said on Tuesday it would invest in additional inventory as part of its actions to mitigate potential impact from Britain’s exit from the European Union.

The company, which owns the RS Components, IESA and Allied Electronics & Automation brands, said it planned to invest 30 million pounds more in inventory in fast-moving product lines across UK and Continental Europe in the second half of the year.

The move comes just a day after peer Diploma Plc <DPLM.L> said it had begun building inventory for some products to help offset the impact from significant disruption in cross-border trade due to Brexit.

Lack of clarity over Britain’s future relationship with the world’s biggest trading block is creating a headache for companies that rely on the smooth flow of goods and parts across borders.

Electrocomponents said it had applied for an Authorised Economic Operator accreditation, which will ensure reduced checks of its shipments crossing the UK-EU border, and that it may need to change product sourcing and supply routes to deal with additional Brexit-related tariff and duty costs.

“Based on our assessments we believe that over time the vast majority of inventory needed to meet our EU customer needs could be sourced and retained directly within the EU post the UK’s exit,” the company said.

(Reporting by Shashwat Awasthi in Bengaluru; Editing by Gopakumar Warrier)

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