Jaguar Land Rover is the UK’s biggest car manufacturer directly employing more than 43200 people. Its boss, Ralf Speth delivered the starkest possible warning of the risk posed to his business by a bad outcome from the Brexit process. Speaking at the UK’s first “Zero Emission Vehicle Summit”, a conference held this week in Birmingham and attended by the British prime minister, Theresa May, Speth warned that a bad deal could destroy Jaguar’s profitability and result in massive job losses.
"Any friction at the border puts business at jeopardy. We are absolutely firmly committed to the UK, it's our home. But a hard Brexit will cost Jaguar Land Rover more than £1.2bn a year - it's horrifying, wiping our profit, destroying investment in the autonomous, zero-emissions, we want to share," Mr Speth told the conference.
By definition, leaving the customs union with the EU will expose the UK supply chain to the risks of delays, inspections and, potentially, tariffs. Even if car manufacturers were somehow exempt, inspection of foodstuffs, agri-products and livestock could lead to traffic jams at ports of entry on either side of the channel, trapping car component shipments within. The whole modern concept of mult-centre car component manufacture and assembly is predicated on the existence of frictionless customs.
Jaguar is owned by Tata Steel, so despite any patriotic British sentiment in its UK management, the decision on retaining a post Brexit UK manufacturing base will be a commercial one.
The risk is not just to Jaguar employees; it is estimated that up to a quarter of a million other jobs are directly or indirectly linked to Jaguar in the UK. The company estimates that a bad Brexit outcome could cost it more than £1.2 billion annually. The company is also affected by relatively poor levels of UK productivity which make production overseas (for example in Poland) more profitable and attractive.
A government spokesman repeated the tired line that they are seeking a deal which would protect the car industry. It is true that this would be the case if the UK proposals for a de facto single market for goods were to be accepted, but (with the possible exception of the cabinet) everybody accepts that the Chequers proposal is dead in the water which leaves companies such as Jaguar with a very pressing problem. Speth characterised the prospect of a cliff-edge Brexit ( a no deal scenario with no transitional period) as “horrifying”.