Tim Lawrence, global head of manufacturing at PA Consulting Group, discusses our new research which examines how the supply chain network could benefit and be disadvantaged once the UK leaves the European Union.
The article opens with reference to our research which finds that the cost of making a car in the UK could increase in the event of a so-called ‘hard Brexit’. It goes on to say that the report: “explained that the increased cost of manufacturing could be the case if the UK falls back on World Trade Organisation (WTO) rules post Brexit. It warned that the 10% tariffs on exporting and importing with the European Union (EU), could force some manufacturers in the UK to relocate outside the country.”
Leaving the EU will not necessarily be bad news for the UK car industry. Tim explains that “there could be both “upsides and downsides” and a lot would depend on the actual negotiations between the EU and the UK.”
Brexit: The impact on the automotive supply chain
The article refers to a recent quote in The Guardian from Tim: “The key point that has come out of [the report] for me is the potential impact if we don't come up with a trade deal and we don't come up with a solution. It all depends on the outcome of trade negotiations that will start in the next week or two.”
It also goes on to draw further on our report, noting that there are three possible scenarios for car and car part manufacturers in the UK and explores these in detail. Tim concludes: “Both the EU and the UK would benefit from keeping free trade and supply chains unaffected because any tariffs would be damaging for both sides based on today's complex supply chain arrangements.
“Car makers will have to review their manufacturing and supply chain network and investment decisions and plan for scenarios based on extra tariffs and charges/incentives on corporation tax. Some may consider investment options into the UK, but equally some may consider investing into the EU.”