April 8, 2019 / 10:02 AM / 6 months ago

Jaguar Land Rover begins Brexit-linked UK plant shutdowns

LONDON (Reuters) - Jaguar Land Rover (JLR) shut its UK plants on Monday for five days over Brexit, adding to other shutdowns to leave at least half the country’s car production off-line in what could be a pivotal week for Britain’s divorce from the EU.

FILE PHOTO: Signs are seen outside the Jaguar Land Rover plant at Halewood in Liverpool, northern England, September 12 , 2016. REUTERS/Phil Noble/File Photo

The move was intended to prepare for any Brexit-related disruption at Britain’s biggest carmaker, which on Monday also reported a fall in global sales.

The decision was taken a few months ago at a time when the departure date - since extended to April 12 - was March 29.

Automotive firms face several possible risks under a disorderly Brexit, including delays to the supply of parts and finished models, new customs bureaucracy, the need to recertify cars and an up to 10 percent tariff on finished vehicles.

Prime Minister Theresa May’s efforts to obtain a longer extension have also ruined contingency plans for some of them.

Shutdowns are generally organized far in advance so staff holidays can be scheduled and suppliers adjust volumes, making them hard to move.

With Britain’s political leaders still deadlocked over Brexit and some EU states questioning a further departure delay, culture minister Jeremy Wright said May would continue talks with the opposition Labour Party to try to find a compromise solution.

BMW’s UK Mini and Rolls-Royce plants are also shuttered this week, as is Peugeot’s Vauxhall car factory, which brought forward summer shutdowns to April.

Together JLR, Mini, Rolls-Royce and Peugeot’s Vauxhall, branded as Opel in the rest of Europe, built over 750,000 of Britain’s 1.52 million cars last year.

Honda has also scheduled six “non-production days” in April but has declined to say exactly when.

Britain’s car sector has posted sharp falls in sales, output and investment since 2017.

JLR had to cut output last year, and in the year to March 2019 its global sales fell nearly 6 percent to 578,915 vehicles, hit by a sharp decline in China. UK sales rose 8.4 percent, however.

Overwhelmingly foreign-owned, the Britain-based car industry has become increasingly frustrated as a stable investment environment becomes mired in a political crisis that could lead to trade restrictions.

At least 25 percent of Britain’s automotive engine capacity is also closed as BMW’s central English Hams Hall factory continues a four-week shutdown while JLR’s Wolverhampton site stops production this week as part of Brexit preparations.

Honda engine production will also stop on six days this month.

Reporting by Costas Pitas; editing by John Stonestreet

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