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Blame Brexit? UK faces threat of 8,000 lost car manufacturing jobs

Alanna Petroff
Senior Economics Correspondent at Yahoo Finance UK
Jaguar Land Rover is cutting 4,500 jobs, or about 10% of its workforce. Photo: Oli Scarff/Getty Images

Thousands of car manufacturing jobs are expected to disappear in the UK in the coming years and industry insiders say Brexit is a big part of the problem.

At the start of 2019, Jaguar Land Rover announced plans to cut 4,500 jobs, or about 10% of its workforce. Ford (F) said at the same time that it would cut thousands of jobs in Europe, but did not provide UK-specific plans. Now, Honda is looking to shutter its Swindon factory, with expectations that this could affect another 3,500 jobs.

Honda (HMC) declined to confirm that it was planning to close its UK hub, which was first reported on Monday by Sky News. But local North Swindon MP Justin Tomlinson said on Monday that Honda was moving its production back to Japan in 2021.

They are clear this is based on global trends and not Brexit as all European market production will consolidate in Japan in 2021,” Tomlinson said on Twitter. 

That statement rings hollow when another Japanese car company — Nissan (7201.T) — said this month that it wouldn’t build its X-Trail SUV in the UK as planned and Brexit was “not helping” the situation.

Nissan’s Europe chairman Gianluca de Ficchy said at the time that “continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”

The new X-Trail would have created roughly 740 new jobs at Nissan’s British factory.

The Society of Motor Manufacturers and Traders (SMMT) has been warning for years about the damaging impact of Brexit uncertainty, saying it was hurting business sentiment and investment.

Business needs certainty so we now need politicians to do everything to prevent irreversible damage to this vital sector,” the SMMT warned in January.

Car manufacturers are concerned about the risk of new border checks and tariffs between the UK, EU, and other trading partners after Brexit.

Oxford professor Matthias Holweg, who specialises in manufacturing and operations management, told Yahoo Finance UK earlier this month that the industry could see “death by a thousand cuts.”

“The real danger is, in the long run, we’re going to see ‘death by a thousand cuts’ and the industry becomes, essentially smaller and smaller, and thereby loses scale and competitiveness,” Holweg warned. “It’s an immediate, logical consequence of the continued uncertainty surrounding Brexit.”

The British car industry directly employs roughly 186,000 people in the UK, with a total of 856,000 jobs dependent on the sector, according to recent SMMT data.

Other UK-based automakers have also been vocal about their Brexit concerns and the threat of a no-deal Brexit.

“With a no-deal [Brexit], we would have stop-start production for weeks, possibly months. It would be very, very difficult for us to cope,” Tony Walker, Toyota Motor Europe’s deputy managing director, warned MPs at a parliamentary committee hearing last year.