German automaker BMW Group might have no choice but to close its British production plants and put thousands of jobs at risk, if the Brexit agreement hits the company’s supply chains for the Mini and Rolls-Royce.
BMW customs manager Stephan Freismuth stated that BMW would be pushed to reconsider production at its four UK plants, which manufactures Mini and Rolls-Royce vehicles, along with engines and body parts, if production set-up will have to stop at the border.
Brexit Threatens BMW Imported Components & UK Jobs
Like several UK car factories, the Munich-based firm relies heavily on imported components, with around 90 percent of the parts used in BMW’s British facilities coming from mainland Europe.
In addition, more than 80 percent of the Minis and 90 percent of Rolls-Royce cars are exported, while its engine plant in Hams Halls provides engines to a number of BMW factories in Germany.
Freismuth said BMW wanted to continue operations at its UK factories and that it was working on contingency plans. Since the year 2000, BMW has invested nearly £2 billion ($2.65 billion) in its British operations.
About 60 percent of the 378,000 Minis built by the group last year have been assembled at its flagship factory in Oxford.
However, Freismuth cautioned that any delays to imports of components would costs a lot of money and hurt the so-called, ‘just in time’ manufacturing method.
The just in time manufacturing strategy involved parts arriving at sites only hours before they are needed on assembly lines to prevent overloading of parts, therefore minimizing the costs.
If components from mainland Europe are caught up in customs queues after Brexit, factories would be unable to perform as efficiently and reliably as is wanted.
The delays could also prompt automakers to make some changes with their British operations, which may either be setting up bigger warehouses in the UK, or by seeking assistance from more domestic component suppliers.
A spokesman for the British government stated that it was confident of securing a good deal with the European Union (EU) that will grant the most free and frictionless trade with their European neighbors.
The government is working with the sector to put the UK at forefront of new automotive technologies to ensure they stick with the goal of choice for future investment, the spokesman added.
Still, BMW has cautioned that the ongoing uncertainty on future customs remains a cause for concern, and that the lack of clarity on Brexit negotiations is not helpful when it comes to making long-term business decisions.
Besides the potential threat of delayed imports of parts, there is also the prospect of 8,000 BMW employees in the UK being at risk of losing their jobs because of the Brexit deal.
The carmaker’s plant in Hams Hall, its metal pressing facility in Swindon, and manufacturing factory in Oxford, currently employs around 6,300 people.
A spokeswoman for BMW has said they remain committed to their manufacturing operations in Britain and continue run business as usual, while they assess a range of possible Brexit outcomes and their potential impact on their business.
FSMNews provides up to date information about forex, commodities, stocks, technology, economy and a lot more. Subscribe now to FSMNews and get updated with the latest market events.