Aston Martin triggers Brexit contingency plans
Car producers fret about border delays, trade disruptions
British carmaker Aston Martin has triggered contingency plans to cope with a potentially disorderly Brexit, including hiring a new supply chain chief and preparing to fly in components as well as use ports other than the UK’s Dover.
Britain, the world’s fifth-largest economy, is due to leave the EU shortly but a negotiated withdrawal agreement looks set to be voted down by UK lawmakers, making a “no deal” exit – and disruption to trade – more likely.
Britain’s car industry, which employs more than 850,000 people and is one of the country’s rare manufacturing success stories, has warned that leaving the world’s biggest trading bloc without a deal would add costs and could halt output due to snarl-ups.
Chief Executive Andy Palmer said the luxury automaker, which outlined its contingency plans in October, had no choice but to authorize them at a board meeting in December.
“I don’t think we’ve been in a position in the last two years where we’ve been further apart from understanding where we’re going to end up,” Palmer said, declining to put a figure on the “accumulating” cost of the plans. “We program a car to align and order all the parts for those cars 12 weeks in advance. You don’t need to do the math to know that therefore takes us across the Brexit period. We have to prepare for the worst case scenario.”
Aston Martin, preferred by fictional secret agent James Bond, joins a growing list of companies readying for a no deal Brexit. Recent figures showed manufacturers adding to inventories in preparation for potential border delays.
Aston is signing deals with supplier DHL to allow for the use of ports other than Dover – Britain’s busiest and so most likely to be disrupted by any customs delays – and has authorized its supply chain team to make air freight bookings.
The government has said it will prioritize the movement of key supplies such as medicines if the flow of goods is hit after Brexit, so it is unclear what would happen to other items.
“We don’t have any assurances,” said Palmer. “One assumes if you’re putting parts onto a standard chartered plane, no one’s going to kick you off.”
Aston Martin, which built more than 6,000 top-end models last year at its central English plant in Gaydon, its only factory, is also holding a stock of cars in Germany.
“It’s an inventory to some extent that we put in place during the course of 2018 ... and depending on what happens in the next few weeks, may or may not increase,” Palmer said.
Different challenges
Carmakers fear their just-in-time production will grind to a halt if there are delays imposed after Brexit, but different manufacturers face different challenges.
Volkswagen Group, Britain’s favorite carmaker accounting for more than 20 percent of sales, builds only 11,000 Bentleys in the country. Ford counts Britain as its third-largest market but makes no cars there.
Nissan, which builds about 500,000 cars at its northern English Sunderland plant, and Toyota export the overwhelming majority of their British-built vehicles to the rest of the EU.
While mass-market brands are most worried about potential trade tariffs, smaller, high-end players such as Aston and McLaren believe their affluent customers could absorb extra costs and are more concerned about customs checks and delays.
Aston has hired John Griffiths, who has worked for Nissan and aerospace firm Rolls-Royce, as interim vice president for the supply chain, in a role Palmer said “there was a nagging need [ for] which has been confirmed with Brexit.”
Palmer criticized politicians on both sides of the Channel.
“Both the European and the UK politicians are not discharging the duty for which they are put in place, which is basically to plan and bring certainty to allow the country to thrive,” he said.
As carmakers prepare for multiple Brexit eventualities, they are also dealing with stricter emissions rules and a slowdown in China.
While some automakers have reported falling demand, Aston, which has seen its share price fall by more than one-third since it listed in October, said it had a record 2018.