Brexit uncertainty putting 860,000 jobs at risk, warns car industry

The car industry has warned Theresa May there is “no Brexit dividend” for the business, with 860,000 jobs being put at risk unless the government “rethinks” its red lines in negotiations.

In the starkest warning yet from a single business sector, the car lobby has told the government that it needs “as a minimum” to remain in the customs union and a deal that delivers “single market benefits”.

“There is no Brexit dividend for our industry,” Michael Hawes, chief executive of the Society of Motor Manufacturers and Traders, said.

It said Brexit uncertainty was thwarting investment and repeated calls for the UK to stay in the customs partnership until the government came up with a “credible plan B”. 

With investment slowing and time running out, negotiators must get on with the job of agreeing a deal that will put an end to uncertainty and prioritise the needs of the automotive sector, the SMMT said.

The sector had grown for the eighth successive year with turnover at a record £82bn in 2017. However it said 2018 has showed a slowdown in output with investment earmarked for new models, equipments and facilities in the UK halving to around £347m.

In a lengthy statement showing the depth of frustration over Brexit in the sector, the SMMT hinted that car firms including BMW, Honda and Nissan would have to move production elsewhere if the uncertainty around Brexit continued for much longer.

“With decisions on new vehicle models in the UK due soon, government must take steps to boost investor confidence and safeguard the thousands of jobs that depend on the sector,” it said ahead of a key conference for the automotive industry.

The government had “no credible Plan B” for customs arrangements post-Brexit, it said, that would keep the Port of Dover flowing freely.

Car manufacturers rely on what is known as “just in time” production whereby components, mostly from the EU, cross the channel just hours before they are needed on the assembly line. More than 1,000 trucks a day cross the channel with these components.

 “The current position, with conflicting messages and red lines goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership,” said Hawes. “There is no credible ‘plan B’ for frictionless customs arrangements, nor is it realistic to expect that new trade deals can be agreed with the rest of the world that will replicate the immense value of trade with the EU. Government must rethink its position on the customs union.”

Frictionless borders can only be achieved through continued membership of the customs union and maintenance of the benefits that the single market delivers, he added.

“There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment. Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it,” he said.

The car industry is one of the leading employers in the country responsible for 856,000 jobs, 186,000 of which are on the production lines. 

Hawes’s comments comes hours after BMW said it would be forced to close its production sites in the UK, putting 8,000 jobs at risk, if components for Mini and Rolls-Royce cars are caught up in customs delays after Brexit.

Bosses from BMW and other car companies have been urging the government for months not to damage the supply chain that keeps Britain’s car assembly lines running. 

Speaking later on the BBC, Hawes said the car industry was not likely to close overnight, but it was suffering “a death by 1,000 cuts”. 

Honda told the Financial Times on Tuesday it still only stores enough kit to maintain production of the Honda Civic for 36 hours.

To keep the plant in Swindon open for nine days, it would need to build the largest building in the world, with the equivalent of 42 football pitches, almost three times the size of Amazon’s main US distribution centre.

Source: The Guardian