PSA to close Vauxhall factory in UK if Brexit derails
French car group PSA, owner of Opel-Vauxhall, will close down its factory in Ellesmere Port near Liverpool in the UK and move production of the new Astra to southern Europe if the Brexit ‘derails’ under new Prime Minister Boris Johnson. CEO Carlos Tavares says in the Financial Times, “he has no other option if conditions are bad.”
Johnson, who is shouting from the rooftops that he will get a newly negotiated deal with Europe or a hard Brexit, got a letter of the British Society of Motor Manufacturers and Traders (SMMT) last Friday stating frankly “No-deal Brexit is simply not an option.”
Tavares said in the FT: “For us, it’s quite simple; we need visibility on customs, that’s all.” For the factory at Ellesmere Port, it is crucial to know whether spare parts coming from the EU factories or elsewhere in the world will be taxed, as for the completed cars exported from the UK.
Today’s Vauxhall and Opel Astras are built in the UK and Gliwice (Poland). The Ellesmere Port factory, with some 1.000 employees, is threatened most of all UK car plants, as 75% of spare parts are imported, and 80% of finished cars are exported.
Already 900 jobs cut
After PSA buying Opel in 2017 from General motors, Tavares previously imposed the UK plant to go from two shifts to one shift and laying off nearly 900 people to make the factory competitive again to win the assignment for the new Astra.
PSA announced last month it would produce the new Astra at the Opel headquarters in Rüsselsheim, with the UK factory as the second plant needed to cope with the expected demand.
Alternative in southern Europe
But if he can’t assure profitability of the UK plant after Brexit, Tavares says having an alternative in ‘southern Europe’ for the second plant. And that would drop the curtain for Ellesmere Port.
It’s the such-a-such a warning from the British car industry that can no longer bear to watch the never-ending saga of the Brexit. According to the Financial Times, new investments by car manufacturers in the UK have dropped by 80% since 2016.
After Ford and Honda announcing closing factories in the UK, and Nissan creating uncertainty of employment at its giant factory in Sunderland after announcing 12.500 jobs to be cut worldwide, also BMW’s new CEO Oliver Zipse said the company is moving engine production to prepare for Brexit.
For the UK car manufacturers federation SMMT the situation is becoming critical with Brexit hardliner Boris Johnson at the helm. In a letter published on the website on Friday, the SMMT urges the Prime Minister to back up the industry.
By supporting “the transition to zero-emission vehicles by investing in infrastructure, incentives, and securing a giga-factory in the UK,” making the UK attractive to investors and, above all, ensuring the sector continues to enjoy preferential trade with critical markets around the world, including the EU.
18,6 billion pounds contributing
According to SMMT, the British car industry “contributes £18,6 billion (20,7 billion euros) to the UK, employs hundreds of thousands, and makes the most significant contribution to UK trade of any manufacturing sector, helping balance the economy right across the country. In short, when automotive succeeds, so does the UK.”
“We cannot, however, continue to deliver these benefits or take advantage of new opportunities, if the UK leaves the EU without a deal. A no-deal Brexit presents an existential threat to our industry.”
Not an option
“We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production, as well as further undermining international investors’ confidence in the UK. We need a deal with the EU that secures frictionless and tariff-free trade. No-deal Brexit is simply not an option.”