SMMT launches contingency programme for SMEs as Brexit nears

10 October 2018

As the UK heads towards Brexit with no deal currently in place, the Society of Motor Manufacturers and Traders (SMMT) has launched a new Brexit Readiness Programme to help the automotive industry.

A number of manufacturers have highlighted their concerns over the current situation with Brexit, as the UK and EU are yet to negotiate any trade deal between the two authorities. With less than six months to go, the SMMT is looking to provide support to small and medium-sized enterprises (SME) at this critical time.

The organisation says that while vehicle manufacturers and larger tier-one suppliers all face the significant challenge of Brexit, the vast majority of the UK’s automotive supply chain companies are SMEs, with 69% employing fewer than ten people. These firms represent the backbone of the entire sector, yet not all will have the resource to prepare adequately for the dramatic and immediate change to trading conditions between the UK and EU in the event of a ′no-deal’ Brexit.

In this scenario, there will be new, potentially unfamiliar requirements for businesses. Calculations as to the value and proving the origin of goods will have to be made, and there could be delays to the movement of components into and out of the UK which may require warehousing or changes to raw material stocks. New customs arrangements will present a particular challenge, not least the increased paperwork and time required to fill in more detailed customs declarations – customs guidance alone on moving goods outside of the EU stretches to some 88 pages. Furthermore, there could be cashflow implications associated with the payment of tariffs and other taxes.

Phase one of SMMT’s Brexit Readiness Programme sees five global brands from the legal and accountancy sectors join forces with SMMT to offer expert advice and consultancy services to members, including a free helpline for Brexit issues. These include trade and tax arrangements outside of the EU, customs procedures and adapting to regulation changes from chemicals to data protection, employment law and immigration. The latter is critical given the significant proportion of EU nationals employed by UK suppliers. The programme is available online.

Mike Hawes, SMMT Chief Executive, comments: ″A strong local supply chain is the backbone of any manufacturing sector, and ours has thrived thanks to massive reshoring efforts and the ability to trade freely and frictionlessly with the EU. A ′no-deal’ Brexit could have devastating consequences. With the clock ticking on negotiations, businesses must plan for all eventualities, including the worst. Our new support package seeks to mitigate the threat of ′no-deal’ by helping businesses navigate the complex trade realities of a post-Brexit landscape.″

The UK automotive supply chain, which supports 82,000 jobs and contributes £4.9 billion (€5.6 billion) to the economy, is deeply integrated with the EU. It has thrived on free and frictionless trade afforded by membership of the single market and customs union. Every year these companies export some £3.4 billion (€3.9 billion) worth of parts into Europe and significant efforts over many years have led to the restoring of component supply to Britain, with the local content of UK-made cars rising from 36% to 44% over the past seven years.