Jaguar, Diageo warn staff about Brexit
Companies cite market access among reasons that leaving EU would be ‘highly damaging’
Jaguar Land Rover and Diageo Plc joined a growing number of companies warning employees of the risks of a withdrawal by the U.K. from the European Union.
Leaving the EU would be “highly damaging” and make the U.K.’s biggest carmaker less competitive in Europe, JLR chief executive officer Ralf Speth said in a letter to employees on Monday.
Remaining in the EU means Diageo benefits from trade agreements the bloc negotiates with other countries, CEO Ivan Menezes wrote in a letter to staff.
In a Brexit, “it would become more difficult to buy components and sell our products in our largest market,” Speth wrote to employees, warning of “increasing and higher tariffs” in Europe. “This is not just an employer’s view or that of ‘big business.’ It is also the conviction of the unions who represent you.”
The luxury-car unit of Tata Motors Ltd. and the world’s biggest distiller join Toyota Motor Corp. and other companies with operations in the U.K. in underlining the risks they face before a vote on Thursday over whether the country should remain in the EU.
While the International Monetary Fund has warned the U.K. could slide into a recession if it leaves, manufacturers are concerned such a move would hurt exports and erode their competitiveness.
The effect of a Brexit could ripple beyond the U.K. Earnings for the global car industry are set for a drop of more than
€ 8 billion ($11.6 billion) as car sales in the U.K. tumble, depressing production in Western Europe, Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note.
The U.K. car market, one of the most profitable in Europe, would probably decline by about 14 per cent next year, he said. PSA Group, Volkswagen AG and Ford Motor Co. would be hardest hit by the economic downturn.
Ford joined other carmakers including Nissan Motor Co. in writing to employees to warn of the negative impact of leaving the EU. Ford, which employs about 14,000 workers in the U.K., said a Brexit could cost the business “hundreds of millions of dollars every year.”
Nissan, which operates a large factory in Sunderland in northern England, said “we prefer stability to a collection of unknowns.” Nissan said it initiated legal action against the Leave campaign to halt its use of the Japanese carmaker’s logo.
A poll taken since the killing of proEuropean lawmaker Jo Cox on Thursday and published over the weekend showed 45 per cent of voters backed the “Remain” camp, while 42 per cent were in favour of a so-called Brexit — a turnaround from early last week when a slew of surveys put the “Leave” group ahead.
Remaining in the EU gives Diageo access to the single market, and the company benefits from free trade agreements negotiated with other countries, Menezes said.