Author: Jack
POSTED ON 20 Feb 2019

Brexit Brexit Brexit – Is it Really That Bad?

Lately it seems that the term ‘Brexit’ has been used to describe every possible negative attribute going on in the car world. Well that and the US – China trade war but that is for a different time. With the March 29th deadline fast approaching and no real exit plan still in place, many manufactures and companies are fearful that a no deal would cause a massive disruption in the supply chain.

Since the UK would no longer be apart of the EU, goods between the two countries could be subjected to tariffs  under the rules set by the World Trade Organizations if a trade deal isn’t negotiated by the deadline. This also could lead to long delays at port entries as the goods coming into the UK would now be subjected to inspections. It’s this potential combination that have businesses quite worried.

If there is any delays getting parts into the UK, the efficient work flow could be disrupted and cost companies millions. Thus, companies are starting to look outside of the UK to move so that they can continually trade freely with the renaming EU nations. The immediate side effect of this is people are losing jobs.

Honda just announced that it will be closing its factory in Swindon in 2021 – putting 3,500 workers out of a job. Nissan has already begun production changes as the next generation of X-Trail SUV will no longer be built in Britan, and Toyota is planning a similar post-Brexit factory shutdown.

Even Jaguar Land Rover is planning to stop all three of its UK factories for a week in April in anticipation of a no deal Brexit. Hell, even Aston Martin, perhaps one of the most British car companies out there, warns it may move depending on the outcome of the Brexit deal.

So in a nut shell – yeah, Brexit could be really that bad.

However it would be somewhat irresponsible to pin all the blame on Brexit. Take the situation with Honda for example. A lot of the workers in Swindon fear that Brexit concerns was what cause the Japanese maker to close its factory. It’s true that Brexit probably played a certain role in Honda’s decision, but the new trade agreement between Japan and the EU is more likely the culprit. The new trade agreement between Japan and the EU essentially makes trading between the two nations free of tariffs and removes ‘unnecessary’ trade barriers. With this new deal in place, Japanese companies have less incentives to stay in the UK. If they can enter the EU market cheaper with this new deal, and bring jobs back to Japan where they can easily control things, why wouldn’t they?

With the unprecedented changes in the global automotive industry happening along side of Brexit, the UK might be in for a bumpy ride if a deal can’t be struck by the end of March.