Britain is awaiting a new Prime Minister, with Boris Johnson as front runner to take residence at 10 Downing Street on July 23rd. The fate of the automotive industry, just like the rest of the British economy, depends on his decisions on how the UK will leave the EU on October 31st.
The preparations for Brexit have been costly. Around March 29th, several automotive plants had closed for annual maintenance usually done during summer. Workers had to take their holidays outside of school vacation periods. But finally, it was all for nothing, because Brexit was postponed.
Nevertheless, the measures have taken their toll on the sector. In April, the production went down by 45%. While things picked up again in May, the pressure felt over a 12-month period is real. Over the course of the past year, 1,4 million vehicles were produced in the UK, compared to 1,7 million in 2017. For the automotive sector, the British government assures 10% of customs fees on imported vehicles following Brexit, as set by the World Trade Organization.
Mike Hawes, president of the British Society of Motor Manufacturers and Traders (SMMT), is stressing the need for a deal with the EU before the Brexit.
While the message is as real as it always has been, repeating it is starting to lose its effectiveness. Companies are tired of the Brexit. Until now, nothing has happened, despite numerous warnings.
“There is a real risk that companies will be less prepared for the Brexit on October 31st than they were for the original Brexit date, March 29th,” says Jill Rutter of the Institute for Government think tank.
“I have the impression of being a record stuck in a groove. The more things change, the more they stay the same,” says Olivier Morel, a foreign trade consultant and French trade lawyer at the law firm Cripps. “My feeling must be a reflection of the general sentiment of the public and the economy. We are in a constant post-Brexit mode, and nobody talks or wants to talk about it anymore. A mix of weariness and shame. Life goes on because the time people can wait for the ‘sword of Damocles’ to fall is limited.”
John Neill, director of the logistics expert Unipart Group, which also supplies the automotive industry, has had to close his plant for three weeks in May. “Will I have to do that again in November? It all depends on the decision of the big automotive manufacturers. If they close, we will have to close also,” he told New Mobility.
An air bridge could be a temporary solution. Neill is contemplating having parts delivered by helicopter. He is also concerned about a possible domino effect: “We are a big company and we have been able to prepare. But if an SME is not ready to face Brexit, and is suddenly out of the supply of one part, it could block the whole manufacturing process.”
The Brexit fatigue extends through all sectors of the economy. Paradoxically, passing time doesn’t make the situation any more transparent. In the case of a ‘no deal’, nobody knows what’s going to happen anymore.