UK manufacturing sector stands to lose £50,000 per minute in the event of a no-deal Brexit
Felix Page Autocar writer
25 June 2019

Car industry bosses have called on the UK’s next prime minister to prioritise a trade-oriented Brexit deal, claiming that delays caused by a no-deal Brexit could cost the manufacturing sector £50,000 a minute.

That figure comes from a new UK Automotive Trade Report published by the Society of Motor Manufacturers and Traders (SMMT), that looks at the potential costs caused by delays at the UK/EU border.

The SMMT states that, because car production facilities depend on a ‘just-in-time’ operating model, any delayed order of components or materials from abroad would have a significant knock-on effect, which could result in a £70 million per day penalty in the worst case scenario. 

The financial impact of these delays would be compounded by heavy trade tariffs imposed by the World Trade Organisation, amounting to £4.5bn globally for passenger car trade alone, to which the UK would be subjected in the event of a no-deal Brexit. 

The SMMT claims the commercial freedom cultivated by the customs union and single market has helped the UK automotive sector grow from £47bn in the wake of the 2009 recession, to £101bn in 2018. This 118% increase was due, in part, to the fact that 80% of vehicles produced in England were exported to the EU. 

According to the SMMT’s report, the UK and EU trade 3.3m new cars annually, with the UK also shipping £5.2bn worth of components and £2.9bn of engines to production facilities across the continent.  

Automotive production accounts for 14% of all UK goods, with vehicles and parts shipped to 160 countries worldwide. Any threat to the country’s ability to trade affects not just its economic standing, but the livelihoods of the 168,000 people employed across the sector. 

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The SMMT warns that, without automotive’s £18.6bn-per-year contribution to the national economy, the UK would fall from 10th biggest global exporter of goods, to 14th. 

A Brexit deal must, argues the organisation, encourage the survival of both a competitive business environment and healthy market. The SMMT forecasts that an automotive-focussed agreement could increase the UK’s automotive trade value by up to 20%. 

The SMMT’s chief executive, Mike Hawes, said: “We are already seeing the consequences of uncertainty, the fear of no deal.

“The next PM’s first job in office must be to secure a deal that maintains frictionless trade because, for our industry, ‘no deal’ is not an option and we don’t have the luxury of time.”

In April, the UK car manufacturing sector slumped 44.5% compared with the same period in 2017, as a result of numerous factory shutdowns timed to coincide with Britain’s original EU departure date. 

It was the 11th consecutive month in which manufacturing output declined.

Read more

Brexit shutdowns cause UK car production slump in April​

Analysis: Brexit and the UK car industry​

Ford could move production out of UK due to Brexit​

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Comments
6

25 June 2019

Demostrates nicely why Brexit is stupid.

 

Why should we make it more difficult for businesses to export to their biggest market?   Where is the return?   How many jobs will be lost with businesses being forced to close?

 

It's time we were honest with the people in Britain.   Every version of Brexit leaves Britain, and you, worse off.

 

25 June 2019
Symanski wrote:

Demostrates nicely why Brexit is stupid.

 

Why should we make it more difficult for businesses to export to their biggest market?   Where is the return?   How many jobs will be lost with businesses being forced to close?

 

It's time we were honest with the people in Britain.   Every version of Brexit leaves Britain, and you, worse off.

 

 

Well considering we import far more vehicles from the EU than we export, and the German and now French manufacturers have a vested interest in the UK car market, perhaps the EU can offer a better deal for its biggest market, it takes two to tango, perhaps you need to learn to dance.. 

Brexit isnt stupid, remaining in the EU is. We are leaving the EU not Europe, it will still be the same distance away.. 

25 June 2019
Citytiger wrote:

Symanski wrote:

Demostrates nicely why Brexit is stupid.

 

Why should we make it more difficult for businesses to export to their biggest market?   Where is the return?   How many jobs will be lost with businesses being forced to close?

 

It's time we were honest with the people in Britain.   Every version of Brexit leaves Britain, and you, worse off.

 

 

Well considering we import far more vehicles from the EU than we export, and the German and now French manufacturers have a vested interest in the UK car market, perhaps the EU can offer a better deal for its biggest market, it takes two to tango, perhaps you need to learn to dance.. 

Brexit isnt stupid, remaining in the EU is. We are leaving the EU not Europe, it will still be the same distance away.. 

 

The ignorance is quite astonishing. 

The EU is under no compunction to offer you a better withdrawal agreement, since that doesn't even focus on trade. The "vested interest" in the UK of German and French manufacturers will be the first casualty if there's any negative impact of the UK leaving solely on baseline WTO terms, since their overheads will rocket and the easiest overhead to curatil will be that which is outside of the EU.

25 June 2019

The SMMT claims the commercial freedom cultivated by the customs union and single market has helped the UK automotive sector grow from £47bn in the wake of the 2009 recession, to £101bn in 2018. This 118% increase was due, in part, to the fact that 80% of vehicles produced in England were exported to the EU.

Hold on a minute. The SMMT are saying that since the recession, the automotive sector has grown. No shit Sherlock!  And that is in somehow related to us being in the EU?

Seems such a silly stat but I'm willing to accept it.  Well accept it as long as the SMMT realise that we were part of the EU before the recession, and being part of it did burger all for the tens of thousands of motor industry employees who lost their jobs over the years.

Talk about the SMMT talking a snapshot of history and using it to prove their point. I'm sure it plays well with the remoaners, but you needn't have the intellect of Stephen Hawking to see a flaw in the argument.

26 June 2019

that the car industry worldwide is struggling at the moment, not just in the UK, but in Germany, and even across the pond in America, Germany very narrowly missed out of going into recession, but apparently according to a few remainiacs its all because of Brexit, so if we remain in the EU, it will suddenly be OK - You need to give your heads a wobble.

Is Brexit the reason we didnt get the Ford Mondeo until 2 years after America got it, and its been a very poor seller ever since and now Ford of America have stopped making saloons (sedans)? 

Is Brexit the reason Ford no longer make cars in the UK and havent for years, and shipped Transit production to Turkey (which isnt an EU country)? 

 

27 June 2019
Citytiger wrote:

that the car industry worldwide is struggling at the moment, not just in the UK, but in Germany, and even across the pond in America, Germany very narrowly missed out of going into recession, but apparently according to a few remainiacs its all because of Brexit, so if we remain in the EU, it will suddenly be OK - You need to give your heads a wobble.

Is Brexit the reason we didnt get the Ford Mondeo until 2 years after America got it, and its been a very poor seller ever since and now Ford of America have stopped making saloons (sedans)? 

Is Brexit the reason Ford no longer make cars in the UK and havent for years, and shipped Transit production to Turkey (which isnt an EU country)? 

 

Brexit isn't the reason for the two situations you have cited, but Brexit simply places you in a far inferior position given that a third of the British economy relies upon foreign enterprise. It's the difference between Ford considering production of a car in the UK for the European market and no consideration whatsoever.

Transit production wasn't shipped from Southampton to Otosan. Otosan already built more variants of the Transit, had more expansion capability, and Ford wanted to reduce the number of global Transit production sites from seven to four.

 

 

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