Carmakers spend £330m on Brexit stockpiling and warehousing

Will Green is news editor of Supply Management
31 July 2019

Carmakers have spent more than £330m on no-deal Brexit contingency plans, according to an industry body.

The Society of Motor Manufacturers and Traders (SMMT) said the cash had been spent stockpiling materials and components, securing warehousing space, additional insurance, training in new customs procedures and investing in new logistics solutions.

“A no-deal Brexit would mean the immediate imposition of tariffs costing some £4.5 billion a year and an end to the seamless movement of goods,” said the SMMT.

“Any potential disruption at the border would throw just-in-time manufacturing into chaos, undermining the sector’s competitiveness and putting profitability and jobs at risk.”

The SMMT said UK car manufacturing fell by a fifth in the first half of 2019, to 666,521 cars, with June marking 13 months of negative growth.

Investment into the sector “effectively stopped” in the first half of the year. Newly-pledged investment was down more than 70% to £90m, compared to average annual investment of £2.7bn over the previous seven years. The SMMT said Jaguar Land Rover’s decision to build electric cars at its plant in Castle Bromwich, starting with the next-generation electric XJ, was “something of an outlier as the vast majority of manufacturers have suspended plant and product spending in the UK amid ongoing uncertainty”.

Mike Hawes, SMMT chief executive, said: “Today’s figures are the result of global instability compounded by ongoing fear of no deal. This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation – money that would be better spent tackling technological and environmental challenges.

“The industry’s foundations are fundamentally strong, however, and we’re ready to work with the new government to build on these through the industrial strategy. We need an internationally competitive business environment to encourage more investment, more innovation and more growth. That starts with an ambitious Brexit deal that maintains frictionless trade and we look to the new administration to get a deal done quickly so manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.”

Separately, the CBI has said “neither side is ready for no deal on 31 October” and “although businesses have already spent billions on contingency planning for no deal, they remain hampered by unclear advice, timelines, cost and complexity”.

The Freight Transport Association has urged supply chain managers to “recognise the change of government policy and accelerate their preparations for a no-deal Brexit”.

The Road Haulage Association has written to Michael Gove, chancellor of the Duchy of Lancaster and responsible for no-deal planning, calling on him to “act urgently so that goods can continue to flow across borders if there’s a no-deal Brexit”.

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