Jaguar Land Rover boosts a UK car industry rattled by Brexit

Posted at 7:25 AM, Jul 05, 2019
and last updated 2019-07-05 09:25:18-04

Jaguar Land Rover is planning to make a new range of electric vehicles in Britain, a rare investment in an auto manufacturing industry that’s been slammed by uncertainty over Brexit.

The United Kingdom’s largest carmaker said Friday that its flagship luxury sedan, the XJ, would be the first electric model built at a plant near Birmingham. Work on an “extensive” overhaul of the factory will begin this month.

JLR did not respond when asked for details on the size of the investment. In January, JLR said it would slash 4,500 jobs around the world after coming under pressure from slumping demand for diesels and weak sales in China.

Unite, a union that represents auto workers, described Friday’s announcement as “trailblazing.” But it also warned that further industry investments depend on Britain leaving the European Union with a deal that protects trade.

Auto industry executives have warned that a disorderly Brexit would snarl supply chains, disrupt production and damage exports. Continued uncertainty over the future terms of trade has caused investment to plummet.

David Bailey, a professor at the Birmingham Business School, said that JLR had waited as long as it could for clarity about Brexit before making a decision on the new investment.

“They needed to make an investment decision,” he said. “They’ve run out of time basically.”

UK factories have been battered because of the uncertainty. Vehicle production has dropped for 12 consecutive months, with nearly 150,000 fewer cars being produced in the first five months of this year compared to 2018.

JLR, which is owned by India’s Tata Motors, itself warned in June 2018 that it faced an “unpredictable” future if Britain failed to maintain frictionless trade with the European Union and unrestricted access to its vast market.

More than a year later, companies are still begging the UK government for clarity on Brexit, only to see the country slide further into a political crisis.

Prime Minister Theresa May is stepping down, and it’s not clear when — or if — Brexit will happen, and on what terms. Her likely successor, Boris Johnson, has adopted a “do or die” approach to Brexit, saying it must happen on October 31 with or without an exit deal.

The UK Society of Motor Manufacturers and Traders said recently that delays caused by a disorderly exit would cost the industry £50,000 ($63,300) a minute.

“A brighter future is only possible if we secure a deal that can help us regain our reputation as an attractive location for automotive investment. No deal is not an option,” Mike Hawes, CEO of the SMMT, said last month.

Auto companies are under enormous pressure.

French carmaker PSA warned in late June that continued production of the Vauxhall and Opel Astra in the United Kingdom depends on the country’s terms of trade following Brexit.

Ford announced earlier the same month that it will close an engine plant in Wales by 2020. While the US company said the decision was not related to Brexit, it had previously warned of dire consequences from a messy exit.

Honda said in February that it would in 2021 shut down a major plant in England that employs 3,500 people. The plant currently makes up to 150,000 Civics a year for over 70 countries.

Another Japanese carmaker, Nissan, scrapped plans the same month to build its new X-Trail SUV at its factory in Sunderland. It cited uncertainty over Brexit as one reason for the decision.

In March, Nissan said it would also end production of two luxury vehicles in Britain.