To deal or not to deal: Car industry in Brexit emergency

The countdown is running. At the end of the month, Prime Minister Boris Johnson wants to lead the British from the European Union (EU). Taste it, whatever it takes. The sword of Damocles of No-deal-Brexit hovers over the economy in Great Britain, in Germany and in the other states of the EU. While many now prefer an end to horror rather than an endless horror, the European automotive industry warns: "The impact of a no-deal scenario will be grave." Billions of dollars in costs and job losses are discussed.

Nevertheless, Johnson keeps visible course. He would rather be dead in the ditch than to postpone Brexit, the premier had said. Maybe he thinks it over again. For the worst case, the government has drafted a Brexit emergency plan. Because she fears that a no-deal could lead to supply bottlenecks in drugs and food. They also prepare for mass protests, such as in Paris and other French cities. According to estimates of the industry association BDI, the Brexit drama will cost the German economy 17 billion euros this year alone.

BMW: Four factories in the UK

BMW would hit a no-deal especially hard. No other German car manufacturer is as present on the island as the Bavarians. "With four factories producing vehicles, components and stampings for all of our three automotive brands, the UK plays an important role in the BMW Group's production network," reported Headquarters.

In the works Oxford and Goodwood the models Mini and Rolls Royce run off the line. Around 80 percent of production goes into export. 400 EU suppliers supply the BMW factories on the island daily with 120 truckloads of material. In Hams Hall, the company also manufactures engines for its vehicle production in Germany and the USA. In its British plants, the concern 8000 people. In the trade there are further 16 000. In addition, BMW is supporting other 50 000 jobs in the UK - such as with suppliers.

Munichers demand legal certainty

Twelve percent of BMW employees in the UK are EU citizensbut no British nationals. "Legal certainty is urgently needed to ensure continuity of employment. Full access to the United Kingdom labor market must be guaranteed, as must the mobility of workers in the European Union and around the world, "says a company spokeswoman.

Even more worrying for the BMW board is the idea of ​​time-consuming controls, long truck jams at the border, more expensive warehousing instead of just-in-time and customs duties, which would be due in the case of a no-deal brexit for all products and inevitably would lead to higher prices. Therefore, the spokeswoman affirms: "In view of the future trade relations between the United Kingdom and the EU, the BMW Group favors a simple model without tariffs or additional administrative hurdles. A customs union backed by harmonized EU regulation would guarantee the free movement of goods and services without any restrictions on local value creation. "This requires an orderly Brexit.

One minute outage costs 54 700 Euro

The European automobile industry, represented by their associations, also warned in a letter to the British government and the EU Commission and warned against billions in tariffs, which would be unreasonable for consumers on both sides of the channel in the event of a no-deal catastrophic consequences for the industry. A one minute production break in the UK alone would cost 54 700 Euro cause. "The automotive industry in the EU and the United Kingdom needs smooth trade. It would be severely damaged by additional duties and administrative costs, "emphasizes Bernhard Mattes, President of the German Automobile Industry Association (VDA). More than 100 production sites and research and development sites in the UK are evidence of the commitment of the German automotive industry in the UK market.

Sigrid de Vries, General Secretary of the European Association of Automotive Suppliers CLEPA) shares the concerns of her colleague Mattes: The European automotive industry operates highly integrated global supply chains. A single vehicle consists of up to 30 000 parts, many of which pass through national borders several times. Smooth and duty-free trading and legal certainty are crucial. "Mike Hawes, CEO of the British Society of Engine Manufacturers and Traders (SMMT), even sees the risk that" the European automotive industry, as an important pillar of our economies, is going through a no-deal -Brexite could be destroyed ".

Even the German suppliers would hit a hard Brexit hard. For them almost four billion euros are at stake. That's five percent of total sales. This puts 14 000 jobs at risk. This is the conclusion of a study by the consulting firm Deloitte.

ZF: Works are part of the flow of goods

ZF Friedrichshafen has been present in the UK for almost half a century and employs 2850 staff there. Among other things, the supplier produces components for commercial vehicle and passenger car steering as well as for airbag and suspension systems at seven locations. Last year, ZF generated sales of 1,9 billion euros in the United Kingdom. That is 5,1 percent of the consolidated turnover of 36,9 billion euros. "This makes Britain the most important foreign market for ZF in Western Europe, ahead of France and Spain," said a company spokesman. "The factories in the UK are firmly integrated in the global flow of goods to other ZF plants as well as to our customers." Employees who are personally affected by Brexit due to their nationality or location want to support ZF - for example when applying for a work permit , "We want to keep their know-how in the company in the future," said the spokesman.

Indeed, how ZF will continue to operate on the island depends above all on the long-term arrangements for bilateral trade, the reactions of customers that the company supplies to the UK, and the behavior of car buyers if vehicles were made more expensive by customs duties. "Now it is important to act in a prudent manner and to talk to one another in order to mitigate the negative consequences of a still possible no-deal brexit in the interests of the entire European economic area," says ZF Production Director Michael Hankel. For ZF as a globally operating company, the import and export of goods across national borders is a daily business. A free exchange of goods has always proven to be an advantage for economic development. Hankel: "What matters now is what regulations will be made for the period after Britain leaves the EU and how they impact on economic relations and our business."

Schaeffler closes two plants

Others no longer trust the Brexit jumble. The supplier Schaeffler will close its Llanelli and Plymouth sites. The production is to be relocated to Germany, China, South Korea and the USA. Honda will close its Swindon plant and soon withdraw from the UK. Toyota wants to review its Burnaston site. It was precisely the Asians who discovered Great Britain as a production site in the 70 years, in order to supply Europe with their products duty-free. Jaguar is massively building capacity in Slovenia. Even Ford reflects on his future on the island. The Astra production at the Vauxhall Ellesmer Port plant is far from secure.

Analysts fear that the sell-off of the UK automotive industry could continue with the no-deal Brexit. It started many years ago with the bankruptcy or takeover of well-known brands such as Jaguar, Triumph, MG, Rover, Sunbeam, Rolls Royce or Bentley.

"Everyone involved should now work to avert a hard-Brexit. Against this background, a postponement of the withdrawal date may make sense, provided that substantial progress can be achieved, "VDA President Mattes had already demanded in January, when even under Prime Minister Theresa May a no-deal seemed increasingly likely. Nine months later, and shortly before the deadline, this demand is probably more topical than ever.

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