October 17, 2018 / 10:33 AM / a month ago

Auto parts suppliers warn hard Brexit may set UK sector back 25 years

BRUSSELS (Reuters) - Failure to secure a trade deal for Britain when it exits the European Union next year could set the UK auto sector back two decades, leading parts suppliers said on Wednesday as they urged leaders to reach agreement at a summit in Brussels.

FILE PHOTO: An employee works on a 2013 Mini at BMW's plant in Oxford, southern England November 18, 2013. REUTERS/Suzanne Plunkett/File Photo

Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW (BMWG.DE) and brakes maker Brembo (BRBI.MI), jointly warned that a no-deal exit would be catastrophic for the industry.

The “just-in-time” industry model relied on frictionless trade between Britain and mainland Europe, they said.

“If we are continuing to be taken hostage by this situation, the flourishing UK auto industry could come back to the situation it was at 20-25 years ago,” said Roberto Vavassori, a management board member at Brembo and president of CLEPA.

The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world, he said.

Vavassori said he felt “betrayed” that Brembo’s manufacturing in Coventry, UK, would be a different prospect post-Brexit from the time of its investment 15 years ago.

ACEA said contingency planning by its members included a temporary production shutdowns and scouting for warehouse space to stockpile parts.

“No amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms,” ACEA said, referring to a no-deal scenario in which Britain would have no preferential access to EU markets.

Some 1,100 trucks arrive in Britain every day from elsewhere in Britain with parts for the UK auto sector, and storage space to cover more than a day or two of production was not feasible.

The EU leaders’ meeting from Wednesday had hoped to reach a provisional Brexit deal before signing off on a withdrawal agreement at a special Brexit summit in November.

The talks, stalled since Sunday, are stuck over the issue of how to avoid a hard border between the British province of Northern Ireland and the Irish Republic.

BMW said its survey of Brexit preparedness showed only 10 percent of British automotive suppliers and 41 percent of EU suppliers considered they were well prepared for Brexit, with many having little or no experience of customs clearing.

Stephan Freismuth, customs manager at BMW, said that at the Channel tunnel and ports such as Dover there was no customs infrastructure and, in some cases, no space for trucks awaiting checks to park.

Reporting by Philip Blenkinsop; Editing by Alissa de Carbonnel and Jan Harvey

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