Brexit car crash . . . motor investment plummets
Job fears deepen with industry giants on course to curb spending by HALF
I NVESTMENT in t he car industry is on course to crash by half this year with major manufacturers drastically cutting back amid Brexit uncertainty.
Vauxhall has already put the brakes on decisions relating to UK investment and there are growing fears that Ford may be preparing to follow suit.
Last year saw £1.66 billion invested in the industry, but figures from the Society of Motor Manufacturers and Traders (SMMT), seen by The Mail on Sunday, show just £647.4 million of investment has been tracked by the body so far this year. A significant shortfall is now expected on last year’s total.
Vauxhall revealed last week it would be slashing 400 of 1,800 jobs at Ellesmere Port in Cheshire by Christmas, citing falling customer demand. And despite the company saying it is committed to the site, industry sources have suggested more UK cuts could be on the way. Workers are nervously awaiting news on whether it will continue to make the Astra at Ellesmere Port from 2021.
The decision was expected by the end of this year but PSA Group – the French company which bought Vauxhall this year – has said it is not in ‘a position to consider future investments’, in part because it does not have ‘enough visibility on the future trading relationship with the EU’.
One senior industry source said: ‘I think there will be some bigger decisions to come from PSA and quite possibly – or even probably – that would involve some plant closures.
‘I hope to goodness they’re not i n the UK, but at the moment the uncertainty around Brexit is not helping.’ SMMT chief executive Mike Hawes said: ‘What we’re hearing anecdotally is that manufacturers are waiting as long as they can to see what the relationship is going to be with our biggest market,’ he said. ‘ The indications I have are that some investors are sitting on their hands.’
The SMMT has warned that a hard Brexit – under which the UK would have to trade with the EU under World Trade Organisation rules – would cost the industry an extra £2.7 billion a year on imports and £1.8 billion on exports.
The Unite union is also worried about jobs at Ford’s plant in Bridgend, South Wales, where 1,765 workers are based. The future of the factory was thrown into doubt last month when the US carmaker confirmed that a contract to make engines for Jaguar Land Rover would be terminating early – in September 2020. David Bailey, professor of industrial strategy at Aston Business School in Birmingham, said he was concerned that Ford had yet to commit to replacing this contract and safeguarding jobs.
‘Nothing has been announced to replace it in terms of a sizeable engine production,’ Bailey told The Mail on Sunday. ‘I would have expected that to have been announced by now and I think the uncert ai nty around Brexit has played into that.’
Steve Nash, chief executive of the Institute of the Motor Industry, said future UK motor industry investment would ‘ almost inevitably’ go into reverse without an EU deal.
Pro-Brexit economist Gerard Lyons said it was ‘not a surprise’ that the auto sector is pressing the Government on t ariff- free access. But he added that the Government could ease adjustment costs for the industry using savings from leaving the EU.
He said: ‘Of the areas that trade with the EU, naturally it’s the auto sector that has greater concerns, because the nature of the Customs Union was always to protect the auto industry across Europe.’