Academic Report Reveals Most UK Automotive Sector Has ‘No Mitigation Plans’ for Brexit

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December 3, 2018

By Graeme Roberts

A new report analyzing Brexit’s potential impact on the UK automotive sector revealed most companies have no mitigation plans in place and that the uncertainty is stifling investment into the industry.

The research, conducted by Birmingham City University’s Center for Brexit Studies, took in discussions with senior managers in the sector and also found that business leaders believed there was very little they could currently do to prepare for Brexit.

The report revealed all current trade scenarios would create barriers for the sector which could lead to increased costs and make the UK a less attractive place for automotive manufacturing.

Other findings drawn from the paper show that organizations needed greater understanding of their supply chain, as Brexit would impact all tiers of the industry, and the “just-in-time” “just-in sequence” nature of the industry made increased cost and longer processes near inevitable.

The report found while some organizations have dedicated teams in place to manage Brexit-specific issues, there was little connection between these groups and the wider organization, and they lacked a strategic output to direct the focus of their companies.

Professor Alex de Ruyter, director at Birmingham City University’s Center for Brexit Studies, said: “Automotive manufacturing has long been a key part of the UK’s economic output and that is particularly prevalent in areas like the West Midlands where the car industry lies at the heart of the regional economy.

“This report looks at the impact Brexit is likely to have on the sector and precisely how business leaders feel. It is telling to see that the uncertainty means most feel unable to prepare for the impact and that the inward investment needed for growth is not coming.

“The report also shares some key considerations and recommendations for businesses, which could be vital in helping them to understand how different trade scenarios may change how their organization’s function, as well as their supply chain.”

The report made a number of recommendations which automotive companies should take in order to effectively manage the risks associated with Brexit.

These include:

  • Plan for skills development and future workforce needs to negate restrictions on the supply of immigrants.
  • Improve understanding of supply chains ahead of new documentation or requirements which may be introduced.
  • Implement robust governance strategies to cope with new regulations or checks.
  • Digitize contracts, supply chain details.

The report also assessed the potential impact on the automotive sector in various possible Brexit scenarios such as reversion to the “backstop” arrangement, the Canadian model, the Turkish arrangement—which would keep the UK in a customs union but outside of the European Economic Area—or World Trade Organization status.

Each scenario was outlined alongside the potential short, medium and long-term impacts on the automotive industry.

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