Ford and Vauxhall warn of investment issues over Brexit

07 March 2018

Ford and Vauxhall warn of investment issues over Brexit

7 March 2018

Bosses at Ford and Vauxhall have added their voices to ongoing concerns over Brexit, calling for clarity as their companies make key investment decisions.

Of 2.7 million engines produced in the UK, half are built by Ford at its facilities in Dagenham and Bridgend. The company also makes engines for Jaguar Land Rover at the site in Wales, however, this is scheduled to end, and without investment, around 1,000 jobs may be at risk.

Ford said it is in discussions over future investment but, like many of its peers, called for certainty as soon as possible over what future trading conditions will be between Britain and the European Union.

"We will continue to work with the various stakeholders to look for what the opportunities are,” Steve Armstrong, head of Ford Europe told Reuters during an interview at the Geneva motor show. "The sooner we have the clarity, the easier the decisions become to make, positive or negative, so that clarity is the important part of this.’

The automotive industry is worried that should a ‘hard Brexit’ happen, without a deal on free trade and customs, tariffs on imports and exports would be imposed. A recent report by the Business, Energy and Industrial Strategy committee suggested that tariffs could lead to production moving out of the UK, especially if profit margins drop to around 4%. Honda is one company that has already suggested it could not absorb costs of import and export, suggesting it would either look to increase vehicle prices or move production.

Armstrong has already warned 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.

‘If we went to WTO levels of tariffs plus the other costs that would come into the system through the increased inventory and the friction at the border and everything else, the annual cost to us would be getting up toward $1 billion worth of tariffs,’ he said.

Meanwhile, PSA Group CEO Carlos Tavares has said that a lack of clarity over Brexit threatens the future of its Ellesmere Port plant, which produces the Astra model for its Opel and Vauxhall brands.

Speaking to the BBC, Tavares said that uncertainty undermined Ellesmere Port's chances of getting more work after 2021. ‘We cannot invest in a world of uncertainty," he said. ‘No one is going to make huge investments without knowing what will be the final competitiveness of the Brexit outcome.’

Tavares also suggested that a decision on whether the plant will be given more work would need to be taken ‘very soon.’

The facility has already seen a number of job losses as it fights to address low efficiency, while suggestions have been made in the past about moving Astra production to one of PSA’s European facilities.