Ford warns of UK investment withdrawal should country pursue a ‘hard’ Brexit

29 November 2017

Ford has warned that a ′hard’ Brexit could lead to a withdrawal of investment in UK facilities and manufacturing in another stark warning about the impact of the situation on the automotive industry.

Since the announcement that the UK is to leave the European Union in 2019, car makers have been vocal in their fears that unless a deal for free trade with the continent is reached, there will be difficulties integrating any import and export tariffs into their budgets. Honda recently announced it would struggle to do so, while others have called for the UK Government to paint a clearer picture of the situation.

Now Ford of Europe President Steven Armstrong has told Channel 4 News that the UK market leader could rethink its plans to invest in the country if the UK does not remain competitive. Tariffs could cost the company up to €845 million a year, while the impact of Brexit on sales has already seen the manufacturer post-European losses, as sales of new cars in the UK plummet.

′A no deal would be a disaster, not only for my business but for industry in general,’ Armstrong told the channel. ′We’ve spent 40 years putting together a supply chain that uses the open European market, and it would be very difficult for us to unwind that. Even without tariffs, if there were a hard border or anything similar that would stop supplies at customs checks, and that adds cost to the business.

The company imports all its vehicles into the UK from mainland Europe, while its plant in Dagenham produces around 900,000 diesel engines a year, which are built using parts from the continent, and then shipped to factories around the EU. The company’s plant in Cologne receives 600 engines a day alone. With any delay in customs or additional costs, the efficiency of plants in Europe would suffer, and the financial outlay would be large.

′The amount of money spent on tariffs is a large number, and of course, we would want to take action to mitigate that,’ Armstrong added. ′The decision will be taken on the basis of how competitive the UK is to do business. It’s too early to say we would shut our facilities but it would make us question our future investments.’

“Competitiveness comes hard won; it can be easily lost,” Society of Motor Manufacturers and Traders (SMMT) President Tony Walker said at the lobby group’s annual dinner in London on Tuesday, where Greg Clark, the secretary of state for business, energy and industrial strategy, also spoke. “A hard Brexit would undermine all that we have collectively achieved.”

Sluggish negotiations have already hurt the sector, Walker added. ′We have huge challenges,’ he said. ′Consumer confidence has fallen, leading to a downturn in sales. Uncertainty about Brexit and market confusion over diesel are taking their toll.’

Japanese manufacturers Toyota and Nissan have increased their investment in UK plants following assurances by the UK Government. However, this has done little to allay fears over the final impact of Brexit.

Photograph courtesy of Ford