SMMT boss Mike Hawes has warned that the UK’s car manufacturing industry risks a ‘death by a thousand cuts’ if firms invest elsewhere following the Brexit decision.
The organisation’s chief executive made the stark prediction yesterday while giving evidence to the House of Lords select committee inquiry into future goods trade between the UK and the EU in the wake of the vote to leave the European Union.
Last week, Nissan pledged to not only keep manufacturing in Sunderland, safeguarding 7,000 jobs, but also bring production of two more models there, as reported by Car Dealer.
According to The Guardian, Hawes told the EU external affairs sub-committee that it was ‘encouraging’ news but Britain faced a continual battle to both bring in and keep investment.
He said: ‘It’s never going to be immediate. You wouldn’t wake up on 24 June [the day after the referendum] and say “OK, that’s the end of Sunderland”. But what you would see is a gradual reduction.
‘If a decision was taken that [a company is] not going to build model X in that particular plant, or potentially it was going to be split between two sites, then production capacity will go down. Your competitiveness may be affected, and then the next decision is taken, so it would be more like death by a thousand cuts rather than just shutting the gates overnight.’
The SMMT had wanted Britain to stay in the EU, and Hawes told the select committee that SMMT members were mainly worried about the possibility of tariffs being slapped on parts that were bought in from the EU following Brexit.
There are approximately 6,000 components in the typical UK-built car, with most of them coming from the EU, and Hawes told the committee that sometimes they went through four countries before arriving here.
“The margins the industry operates on are wafer-thin,’ he said. ‘So any tariff is immediately going to be a critical challenge to a company, especially when their competitors may not be subject to those tariffs.’
The committee plans to publish its report early next year.
Main picture: Daniel Leal-Olivas PA Wire/PA Images
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