In the latest sign that Brexit might upset the apple cart more than we’ve been led to believe, Jaguar Land Rover chief executive Ralf Speth today warned that a “bad” Brexit deal would have serious ramifications for the company’s £80bn investment plans for the UK.
Crucially, JLR is one of the single biggest employers of contractor workers in the country. The prospect of curtailing their UK operation as a result of Brexit, therefore, would have severe implications for a large number of contractors currently working there.
Though JLR, owned by India’s Tata Motors, have been at pains to state that their “heart and soul is in the UK,” it noted that without frictionless trade its UK investment plans would be in “jeopardy.”
Although the above comments might seem rather good-natured given that we’re talking about £80bn and thousands of jobs, we should not be mistaken. In the language of big business, this is both a stern rebuke and a stark warning to the UK government. JLR, with around 40,000 employees in the UK, will be well aware that such a public statement will not be taken lightly in the corridors of power.
Without adopting a particularly combative tone, they have made it very clear that anything but a favorable Brexit deal will more than likely lead to them packing up and leaving. It is very much a shot across the bows, a high-stakes warning fired toward Theresa May and the Conservative Party from one of the UK’s corporate behemoths.
Speth estimates that a bad Brexit deal would cost JLR more than £1.2bn in profit each year – significantly more than pocket change, even for a company that large.
Prior evidence strongly suggests that this is more than just sabre rattling. Uncertainty over Brexit, as well as the future of diesel cars, has already led the carmaker to announce a series of changes to its UK business. With production cuts in Liverpool and 1,000 temporary worker contracts not being renewed in Solihull, as well as the shifting of some production to Slovakia, any further warnings must be taken seriously.
Following on from the likes of Airbus, BMW, and Nissan, all of whom have said that further investment in the UK is under review for the same reasons as JLR, today’s announcement will put even greater pressure on the shoulders of government officials. A smooth economic relationship with the UK’s largest market is, to put it bluntly, essential.
Many business leaders have compared the deal pushing for frictionless trade to a “cliff-edge scenario,” and the consequences if we fall are dire. With a little under 9 months to go until the transition phase begins in earnest, it is clear that a solution needs to be reached, and quickly.
