Business

Brexit offers car industry nothing, lobby group warns

Investment in car sector has halved in last year amid uncertainty over UK leaving EU

Nissan car plant in Sunderland: Japanese ambassador to UK said firm would not quit Britain,but was facing “difficulties” over Brexit. Photograph: Nigel Roddis

Tue Jun 26 2018 - 21:34

British car manufacturers have warned Theresa May there is "no Brexit dividend" for the industry, with investment in the motor trade and thousands of jobs at risk unless the government rethinks its red lines in negotiations.

Investment in the car industry has halved over the past year amid uncertainty over Brexit, an industry lobby group says.

Public announcements of fresh investments into new plant, machinery, models and model development fell to £347 million (€394 million) between January and June 21st, down from £647 million in the first half of 2017.

"There is growing frustration in global boardrooms at the slow pace of [Brexit] negotiations," said Mike Hawes, head of what is Britain's main car lobby group, the Society of Motor Manufacturers and Traders.

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In a sign of just how worried big business is getting, Siemens, Airbus and BMW have publicly cautioned Britain in the past week that their businesses will be hurt by a disorderly Brexit.

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

Customs union

“There is no Brexit dividend for our industry,” said Mr Hawes. He said Brexit uncertainty was hitting investment and repeated calls for the UK to stay in the customs union until the government came up with a “credible plan B”.

Mr Hawes said he made “no apologies” for making the industry’s position clear and disagreed with politicians who felt big business should butt out at a critical time in negotiations.

At a day-long automotive summit, industry leaders lined up to warn of the perils Brexit uncertainty was causing. BMW, which employs 8,000 people in the UK, said it needed to know by the end of the summer what the Brexit strategy was as that was when key decisions would be made by the manufacturer.

Mr Hawes said that companies would not close down overnight but added it would be “death by a thousand cuts” if the government did not change its red lines of quitting the customs union and the single market.

Production lines

The car industry is particularly vulnerable because it operates “just in time” production, where parts are sourced from all over the EU and often delivered to production lines with hours to spare. The system saves on the huge cost of maintaining stocks, but leaves carmakers vulnerable to disruptions at ports.

Honda told the Financial Times on Tuesday that it stored only enough parts to keep its Honda Civic production line in Swindon going for 36 hours. The car giant added it would need a warehouse the size of 42 football pitches to keep enough parts in stock to last for just nine days.

The Japanese ambassador to the UK said Nissan would not quit Britain, but like all manufacturers was facing "difficulties" in making investment decisions while Brexit uncertainty prevails.

"No manufacturing company I know . . . has expended their capacity since Brexit because the uncertainty is there," Koji Tsuruoka said. – Guardian

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