Engineering news
Brexit preparations have already cost the sector £735m, according to a new survey from the Society of Motor Manufacturers and Traders (SMMT), with more than £235m spent in 2020.
As companies prepare for new processes from 1 January 2021, two-thirds (60%) have spent “significantly” on stockpiling, the SMMT said. More than half (52%) have employed customs agents as they prepare for disruption or delay to supply chains.
Despite preparations, the SMMT said “significant gaps” still exist in the industry’s ability to plan, with a lack of clarity on the future UK-EU relationship hampering the efforts of almost nine in 10 (86%) firms to prepare.
“Critical questions remain unanswered,” the trade body said. It said the industry’s competitiveness relies on ‘just-in-time’ deliveries, which could be threatened by changes to customs procedures.
“Moreover, even if the UK and EU do conclude a Free Trade Agreement (FTA) from the end of 2020, there is uncertainty as to how companies will prove origin of products,” the SMMT said. “If firms cannot do this then they will not be able to benefit from preferential trading terms.”
The organisation warned of the “devastating” impact of ‘no deal’, or an “unworkable” deal, claiming the UK automotive sector could lose up to £47bn in lost trade in cars and vans over the next five years – adding to the £27.5bn cost of the Covid-19 pandemic.
SMMT chief executive Mike Hawes said: “As the UK-EU FTA negotiations enter the endgame, now is the time for both sides to deliver on promises to safeguard the automotive industry. Securing a deal is absolutely critical but it cannot be any deal. To work for UK automotive it must deliver for UK products and that means securing the right terms and conditions that allow our exports – now and in the future – to be zero-tariff and zero-quota trade. A deal that failed to achieve this would be the equivalent to no deal at all, devastating jobs and slamming the brakes on the UK’s ambitions to be a world-leading manufacturer and market for electrified mobility and battery technologies.”
The £78.9bn automotive sector exports more goods than any other industry, supporting roughly 180,000 jobs.
Want the best engineering stories delivered straight to your inbox? The Professional Engineering newsletter gives you vital updates on the most cutting-edge engineering and exciting new job opportunities. To sign up, click here.
Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.