BMW would close UK plants if Brexit hurts supply chain, exec says

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Mini production in Oxford, England, would be under threat if components were delayed at a UK-EU hard border.


Reuters
June 25, 2018 18:04 CET

LONDON — BMW would have to close its British factories that make Mini and Rolls-Royce cars if Brexit leads to serious supply chain disruption, a top company executive told the Financial Times on Monday.

“We always said we can do our best and prepare everything, but if at the end of the day the supply chain will have a stop at the border, then we cannot produce our products in the UK,” BMW customs manager Stephan Freismuth said.

Around 60 percent of the 378,000 Minis made by BMW last year rolled off the production line in Oxford. Its factories in Swindon, Hams Hall and Oxford currently employ around 6,300 workers to make BMW engines and Mini vehicles.

Freismuth said BMW wanted to keep its British plants open and was working on contingency plans, but that any disruption to imports of components would increase costs and damage its ‘just in time’ manufacturing model.

About 90 percent of the parts used in BMW’s British factories come from mainland Europe. “If you have a stop for one day, it costs a lot of money, but at the end if there are more stops our management have to decide how this can be sorted,” he said.

A BMW spokeswoman said: “We remain committed to our manufacturing operations in the UK and continue to operate business as usual, as we work through a range of possible Brexit outcomes and their potential impact on our business.”

BMW warned that the lack of clarity surrounding future customs arrangements remains a cause for concern. “As previously stated, the ongoing uncertainty surrounding the Brexit negotiations is not helpful when it comes to making long-term business decisions,” BMW said.

BMW’s just-in-time production system requires the free movement of parts and goods. “Clearly if parts cannot physically get to a factory at the expected time, that factory will not run as smoothly and reliably as is desirable,” BMW said.

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