Brexit has many implications and it is bound to affect every industry, as all those treaties and agreements signed over the years are going to be rendered void once the UK leaves the EU. Unfortunately, the car manufacturing industry is no exception, as we can see from the latest decision of Jaguar Land Rover’s management team.
A red light turns on when one of the largest car manufacturers in the country announces that it is going to shut down production for a week, due to the many unknown Brexit implications that might or might not affects JLR vehicle production and sales. A serious company such as JLR cannot continue working as usual when there are so many factors that are not accounted for.
Brexit was scheduled for 29th of March 2019. The companies knew in advance when it was going to hit. This gave them time to adjust and make contingency plans. JLR laid out the foundations of their Brexit plans in January 2019.
"We had to make some plans to protect the business as best we could and we started talking about this in January.”, said Mick Graham, a Unite’s convenor at Solihull production facility. He also added: "We knew we had to take reactive action to mitigate the potential effect of a bad Brexit or no-deal Brexit. Suppliers need notice to get their parts across to us... It was a prudent thing to do."
The challenges JLR has to face seem to never stop coming. Let us remind you that during that very January 2019, JLR announced its plan of cutting 4,500 jobs by 2021. Also, JRL had to recall almost 50,000 vehicles due to faulty CO2 emissions.
Brexit had nothing to do with this. According to JLR, the company was forced to reach such a decision because of the consistent decline in the popularity of diesel engines in the car market. Considering that JLR employs 39,000 workers and the majority of them are from the UK, the 4,500 figure is not a small one.
JRL is the owner of several facilities across the UK. Sadly the shutdown is going to affect thousands upon thousands of staff employed in all the JLR facilities in the UK. The following plants are facing a shutdown:
Solihull Plant. Architected by the British Government in the 1930s, the Solihull plant is located in Lode Lane, Solihull, UK. It is one of the plants with the longest history. The first car in the Land Rover Series was produced here back in 1948. Today there are more than 10,000 employees working here. This is where both Land Rover Discovery and Range Rover Sports are produced and assembled.
Castle Bromwich Assembly. This factory is located in Castel Vale, Birmingham, UK. This is where the majority of Jaguar sports and saloon cars are manufactured both for the UK and export markets. This includes Jaguar XE, Jaguar XF, Jaguar XJ, and Jaguar F-Type. There are more than 3,000 employees here, and the decision to shut down the factory is going to affect all of them.
Jaguar Land Rover Engine Manufacturing Centre. JLR engine manufacturing center is located in Wolverhampton, conveniently near the M54 motorway. It is one of the newer facilities owned by JRL. Her Majesty opened it 2014 and this is where all JLR Ingenium diesel and petrol engines are manufactured. There are approximately 700 employees coming to their posts in this facility every day.
Halewood Body & Assembly. This is another JRL production facility affected by the shutdown decision. It is located in Halewood, Merseyside, UK. A large number of Land Rover Range Rover Evoque and Land Rover Discovery Sports come out of the doors of this facility each day. There are more than 4,000 employees working in this factory.
This means that almost 18,000 people’s jobs are at stake. It is becoming really hard for the UK to face the Brexit challenges. This has an effect on companies, and as a result, they are forced to make decisions that will protect them, as well as their suppliers.
The UK was due to leave the EU on 29 March 2019. This date has long passed and there are still no developments of any kind. Some of the UK officials even pushed for the “no-deal” Brexit. A “no-deal” Brexit implies that the UK leaves the EU on 29 March 2019 without any further negotiations.
This means that there won’t be any agreements to regulate the relationship between the UK and the EU. The Prime Minister of the UK, Theresa May received a letter signed by several hundreds of MPs asking her to rule out a “no-deal” Brexit.
At the same time, JLR reacted by announcing that a “no-deal” Brexit would have devastating consequences for the company, costing it more than £1 billion in annual profit.
In fact, Ralf Speth, JLR chief executive addressed the issue with an official statement: "A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year. As a result, we would have to drastically adjust our spending profile.
We have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five. This would be in jeopardy should we be faced with the wrong outcome."
He also added: "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."
A recent decision to close the 4 plants one week before the scheduled closure for Easter is a sign that JRL is facing many challenges. Some of them may be connected with the decline in diesel motor demand in the global market, but the crucial ones have a great deal to do with Brexit.