Why the U.K. Auto Industry Is Stalling Over Brexit Risks

Uncertainty caused by Brexit has launched the U.K. auto industry into crisis. Global automakers are pulling back on their investments in the country, and widespread shutdowns and relocations are in the works. In an industry that until recently employed 860,000 people, layoffs are beginning to take place. Thus far, the country’s largest automaker, Jaguar Land Rover, has announced 4,500 layoffs, more than a tenth of its total workforce.

For automakers producing within the U.K., uncertainty over tariff barriers has made it more difficult to ship internationally. PVMI director John Paul MacDuffie reflects on the nature of the industry. “Auto companies are very global in their orientation — they have to be,” he said. Companies operating globally will be moving their production out of the U.K. and into countries with more stable economic environments.

A no-deal Brexit, which the EU’s chief negotiator Michel Barnier called “very likely,” would mean the industry would suddenly face new tariffs and customs checks. “That would make a mess of very integrated just-in-time arrangements and supply chains across borders,” said David Bailey, professor of industrial strategy at Aston University’s business school in Birmingham, U.K. Overall these effects could result in a hit of $3 billion in revenue to the industry, he noted.

Read the full article here.