Britain’s biggest carmaker, Jaguar Land Rover, has warned that a hard Brexit will cost £1.2bn a year in trade tariffs and make it unprofitable to remain in the UK.
Ralf Speth, JLR chief executive, spoke out ahead of a key meeting on Friday as Theresa May tries to finalise her plans for the UK’s future relationship with the EU.
As well as the cost of trading under World Trade Organisation rules, Mr Speth said:
- JLR needs certainty before investing £80bn over five years, including into new and electric cars
- The company has already spent £10m on Brexit contingency plans
- JLR is struggling to attract international talent to UK
“I don’t want to threaten anybody, but we have to make transparent the implications of the move. We want to stay in the UK. Jaguar Land Rover’s heart and soul is in the UK,” said Mr Speth.
“We have to decide whether we bring additional vehicles, and electric vehicles with new technology with batteries and motors into the UK,” he added. “We have other options. If I do it here and Brexit goes in the wrong direction, then what is going to happen to the company?”
Mr Speth said JLR would only move if it were the only option “to save the company”.
He said: “If I’m forced to go out because we don’t have the right deal, then we have to close plants here in the UK and it will be very, very sad. This is hypothetical, and I hope it’s an option we never have to go for.”
Mounting corporate concern
JLR employs 40,000 people in the UK and exports £18bn of goods a year. Its decision to speak out comes after other leading businesses have warned of the peril of a no-deal or hard Brexit. Both Airbus and BMW have said they may have to scale back in the UK or even leave.
The warning also comes as Mrs May faces down her critics over customs and Britain’s future trading relationship.
We built up this company over eight years. All that will be undone. It can go down the river so quickly
JLR has recently moved the entire production of its Discovery sport utility vehicle to Slovakia, a new plant that has the capacity to build several hundred thousand vehicles a year.
JLR was bought by India’s Tata Motors from Ford in 2008, with Mr Speth joining as chief executive two years later. The group has spent more than £50bn in the past five years, and now produces more than 600,000 cars a year.
“We built up this company over eight years. All that will be undone. It can go down the river so quickly,” said Mr Speth.
He estimates that JLR also supports more than 300,000 UK jobs through a network of British suppliers that are dependent on the carmaker.
Electric and hybrid models at risk
One-fifth of JLR’s sales are in mainland Europe, while 40 per cent of the parts the carmaker uses are from Europe.
Mr Speth said Britain could be a world leader in developing the next generation of electric vehicles and technology.
Jaguar produced a long-distance electric car, the I-Pace, before any of its mainstream German competitors BMW, Mercedes or Audi. But although the car was designed and engineered in the UK, the vehicle is made in Austria by a contractor because JLR did not have the capacity to make it in Britain.
The company will have to launch several new electric or hybrid models in the coming years to comply with tightening rules on air quality and CO2 emissions across Europe.
“At the end of the day we’re in a cycle plan that means I have to make a decision. I can’t just wait, wait, wait, wait.”
He said the company needed a deal that secured free and frictionless trade with Europe, unrestricted access to the single market and the ability to hire talented employees from overseas.
“Nobody asks for a deal that at the end of the day increases bureaucracy, and reduces the productivity and competitiveness of the UK industry,” he said.
Mr Speth said uncertainty over Brexit was already putting off electric car experts from joining the business. In interviews, the first question candidates always asked was about Brexit, and whether they would be able to work in the UK, he added.
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