Jaguar Land Rover (JLR) CEO Ralf Speth has issued a warning to the UK government that a so-called hard Brexit could cost the company £1.2 billion per year in tariffs and ultimately force it out of the UK.
Tariffs on £5bn-worth of imported parts for JLR (40% of the total number of parts used), as well as the 20% of the two brands' production volume, would mount costs for the company, threatening its future operations here.
Speth warned of the threat to JLR of a no-deal Brexit, saying: “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.”
If the only option to save the company post-Brexit were to be moving out of the UK, that would happen, 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.”
Speth highlighted the company’s progress since 2010, saying: “We built up this company over eight years. All that will be undone. It can go down the river so quickly. We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees."
JLR currently invests around £5bn per year in research and development and its production facilities. As the Jaguar and Land Rover brands grow their electric and autonomous offerings, this investment will grow.
Of particular note was Speth's warning about JLR's importance in fulfilling the Government's ambition for the UK to become a hub of electric and autonomous technology development. “Electrification and connectivity offer significant economic and productivity opportunities. Get Brexit wrong and British people, businesses and broader society lose the chance to lead in smart mobility”, he said.
JLR’s difficulties in recent months have included the decision to lay off 1000 of its 40,000 UK employees amid the diesel downturn and decreased domestic and European demand for its cars.
UK demand fell 21% in the first quarter and registrations fell by 9.3% for Land Rover and 11% for Jaguar across the first six months of 2018. This came despite a booming SUV segment well catered-for by the two brands, with new products in key markets.
Demand for some of the brands’ top models has blunted early in 2018, and the company blames Brexit and the diesel uncertainty for this instability in its sales. JLR describes this as a short-term problem, however.
Speth’s Brexit threat is just the latest issued to the Government by UK manufacturing giants. SMMT chief executive Mike Hawes has been outspoken on the issue since the referendum in June 2016, while a BMW executive recently called into question the future of Mini and Rolls-Royce in the UK, although this was quickly scaled back by the company's special representative to the UK, Ian Robertson.
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After BREXIT...
If JLR leaves the UK but wants to sell cars to the UK market then it will have to set up a factory in the UK with a UK owned company as a joint venture.
It accepts this type of rule in China. It will have to accept it in the UK too.
Brexit (Britain) Leaving and JLR
Wonderful cars they maybe, so speak's a company owned by India and a CEO 'Not an UK term' from Bavaria (Germany), all the talent was always here in GB but a lack of backing oursleves instead of giving away the Internet and the Genome, let's stop giving the world a freebie and cash in, no more free internet and new inventions, unless the price is right.
As I have pointed out before,
As I have pointed out before, Brexit isn't about economics, it's about politics. It's about a nation state having sovereign control over its legal system, it's trade tariffs, and its population level. It doesn't matter if it costs companies, and increases unemployment (which is pure conjecture, and you can argue about what may be as much as you like) it's about a nation state having sovereign control back...which we don't have at the moment. I run a small engineering business and we're not worried about the 'deal' as it's obvious that the EU will give Britain a great deal - they have to, and that's according to their own people! But it all doesn't matter anyway. We import stuff from Germany...and we're not worried! Deal with it.
EU and manufacturing
Spot on Bazzer.Anyone that wants their country to be slowly taken over politically by a non representative UNION will always scream.Europe as a whole is intrically linked through trade and I don't see this changing.If your company produces a widget at a price that a european company needs and it is commercially beneficial to import from the UK,they will.One thing the anti brexit people forget is that all companies are pragmatic and will source,produce or leave out product according to their requirements.For example,I was next to a Isuzu truck with an automated loading ramp fitted.The country of origin on the controller unit was "MADE IN ITALY". The sky won't fall in and life goes on,humans are very resilient.