As negotiations over the UK's withdrawal from the European Union (EU), which expires at the end of this month, are in the process of being squeezed, there is increasing tension among Japanese companies operating in the UK. It is because it is still fluid whether it will be a withdrawal that suppresses economic turmoil. We are also preparing for an “emergency” that assumes the worst case, such as increasing inventory. (London = Shinya Wake)
Automakers are most concerned about the impact of withdrawal. Nissan, Honda, and Toyota have entered the European market as production bases, and have become the mainstay of the economy and employment that account for half of all production in the UK.
Currently, parts and finished vehicles can be imported and exported without tariffs, but if they leave, a 10% tariff will be incurred until a new trade agreement is signed. If the agreement is not settled, the customs inspection will be reinstated on the 1st of next month without the “transition period” for maintaining the status quo, which was planned until the end of next year. It is also assumed that logistics will be disrupted and it will take up to 2 days to pass through the Dover Strait, the logistics aorta linked to the European continent.
Genka Defissi, Senior Managing Executive Officer, who oversees the European division at Nissan, expressed a harsh expression at the interview held at the Sunderland plant on the 10th, saying that “If you leave without agreement, your business model in Europe may not be sustainable.” . The UK's largest plant produces 440,000 units a year and exports 70% of finished vehicles to Europe. Two-thirds of parts will be procured from 14 European countries. This is because the major premise of the business may be destroyed.
In May, Honda announced that it would close the UK's Swindon plant, which employs about 3,500 people, in 2021 in the face of prolonged negotiations for withdrawal. Although explained as “to review excess production capacity,” ripples spread in the UK and abroad.
The British Automobile Manufacturers Association estimates that the stagnation of logistics causes the automobile industry to lose 50,000 pounds per minute (about 6.9 million yen). In September, a joint name with the automobile industry associations of the EU countries appealed to the governments of each country to avoid “no withdrawal”.
While the British government's response has not been finalized, Toyota has decided to suspend operation on the 1st of next month to avoid confusion in logistics. Nissan and Honda are scheduled to operate as usual, but it says, “Hold parts inventory for three days” (Honda).
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