Three quarters of UK automotive businesses fear a ‘no-deal’
Brexit will threaten their future viability with claims of plant closures and
job losses, according to a new member survey by the Society of Motor
Manufacturers and Traders (SMMT).
The results highlighted the “critical need” for a Brexit
withdrawal deal and transition to prevent the industry falling off the
“cliff-edge” on 29 March next year when the UK leaves its largest and closest
trading partner, the European Union, said the SMMT.
The survey was published as Prime Minister Theresa May
attempts to secure Parliament’s backing for the Brexit deal that she has
negotiated with the European Union.
A total of 74.1% of companies with UK operations responding
to the survey said that a ‘no-deal’ scenario would damage their business, with
fewer than 9% foreseeing any positive impact.
More than half said their operations had already suffered as
a result of uncertainty about future trading arrangements, while almost a third
said they had postponed or cancelled UK investment decisions because of Brexit,
with one in five having already lost business as a direct consequence.
More than half of firms said contingency plans are now being
executed, with more than one in 10 (12.4%) relocating UK operations overseas
and the same proportion already reducing employee headcount. Many had also made
alterations to logistics and shipping routes, investment in warehousing and
stock and adjustments to production schedules.
SMMT members also outlined the further and long-term damage
that a ‘no-deal’ Brexit would do to their businesses.
Almost seven in 10 (68.5%) said their profitability would be
negatively affected, with 53.9% concerned about their ability to secure new overseas
business and a similar number worried about maintaining investment in their UK
operations. A further half said a ‘no-deal’ scenario would undermine their
ability to maintain their existing workforce.
Automotive is one of the UK’s most valuable assets,
employing 856,000 people and delivering £20.2 billion to the economy, according
to the SMMT. Since 2010, car production has risen by a third, with 1.67 million
cars leaving production lines in 2017 - 80% bound for export, most to the
European Union. Over the same period, the number of jobs supported increased by
That growth, said the SMMT, had been dependent on free and
frictionless trade afforded by the single market and customs union. A no-deal
Brexit would, said the organisation, bring an immediate end to the seamless
movement of goods, resulting in disruption at the border and delays, throwing just-in-time
manufacturing into chaos and undermining the competitiveness of the sector -
ultimately putting profitability and jobs at risk.
Mike Hawes, SMMT chief executive, said: “Frictionless trade
as part of the European Union single market and customs union has driven the
success of the UK automotive industry so the fact we are leaving is already
painful, and already causing damage.
“Leaving without a deal would be catastrophic - plants will
close; jobs will be lost. Leaving is not what we wanted, but we recognise that
the withdrawal agreement has been hard-fought and, crucially, delivers a
transition period which steps us back from the cliff-edge.
“We need a deal now, and we need an ambitious deal for the
future that guarantees frictionless trade with our most important market -
nothing else will do, and we urge all parties to remember what’s at stake.”
Tony Walker SMMT president and managing director, Toyota
Motor Europe - London Office, said: “No deal is not an option. In the short
term, crashing out of the European Union would have immediate and devastating
impacts, with border chaos disrupting the just in time basis on which our business
“Disruption could last for weeks - even months. It is
unimaginable that we could implement full World Trade Organisation import and
export procedures overnight. For the longer term, a ‘no-deal’ Brexit would harm
our competitiveness, undermine sales and cost jobs… We need the certainty of a
deal, not more uncertainty, and we need the smooth transition period based on
current trading conditions.
“It is vital we have free and frictionless trade with common
technical standards. Without these, we risk losing all we have achieved in
building a world-class automotive sector.”
- Dr George Gillespie, executive vice president,
HORIBA Automotive Test Systems, will become president of the SMMT on 1 January,
2019, replacing Tony Walker managing director, Toyota Motor Europe - London
Office, who steps down at the end of this year after completing the post’s
two-year tenure. Dr Gillespie has some 25 years’ international experience in
the automotive and marine sectors, having previously held senior roles with
Ricardo and Schenck AG. He joined MIRA in 2009 as CEO, growing the business
internationally and leading its sale in 2015 to HORIBA Japan. Today, HORIBA
MIRA is one of the leading global providers of engineering, research,
development and testing services to the automotive industry. Dr Gillespie is
also chairman of the Intelligent Connected Vehicles Group within the Automotive
Council, where he leads activities relating to intelligent and connected
vehicles. Following his appointment, he said: “It is a pivotal time in our industry
to be taking on this role - not only is the global automotive industry
undergoing huge amounts of technological change but we have the unique
challenges of Brexit and improving air quality to address at the same time.”