Jaguar land Rover (JLR) said a bad outlet UK the deal has cost the company more than 1.2 billion pounds in annual profits. How is that possible?
Disruptions in the import and export components
The auto industry is making better use of free and frictionless trade, the proposed European common market than any other sector: every car off the Assembly line to the British plant consists of tens of thousands of parts, which between them will be hundreds of thousands of movements on the continent.
Leather chemicals and dyes used in the formation of the mentioned seat trim kits for Jaguars and Land Rovers are bought in Germany and Italy, and imported into Scotland, where they are used for raw material tan of the UK. The skins are then shipped to Poland where they are cut and sewn in sets of seat before sending – at a time when they are needed – in the British plant of JLR.
In addition, the seat frame begins with German steel pressed in sub-heading of spare parts in the Czech Republic. The parts are then painted and are welded to the seat frame in the UK, gathered, and finally re-exported for installation in a car at a new plant in Nitra, Slovakia.
part of the journey
The numbers involved are huge: JLR, which is more than 600 000 cars a year, says it often takes 10 cars a day on each of the routes specified above, in order to support production. More than 40% of its parts are imported from Europe.
Eight out of 10 cars built in Britain are exported, so any financial costs to export products to the EU – whether components or finished products is a challenge for the industry. The tariff is introduced in a country or economic bloc on imports from abroad, and is calculated as a percentage of the value of imported goods. Industry experts estimate that falls back on the tariffs of the world trade organization, in the case that Britain will leave the EU with no free trade agreement, will add 10% to the cost of assembling cars in the UK. This is a significant amount in a low-margin business such as the production of cars – enough to convince some individuals to consider creating in a different place.
Ian Henry, in the automotive industry analyst, puts the total possible period, quarter, and month rates for the UK automotive industry to £3 billion a year, of which JLR, which makes one of three cars exported from the UK would be about a third.
In any case, the increase in tariff barriers will be the main consequence of a bad outlet UK online. The high cost of doing business across borders, tend to come from non-tariff barriers: rules of origin audits; customs control; compliance with different standards and regulations for products between the countries.
These barriers do not exist as long as Britain is in the EU, and in order to remove their trading partners must agree on the rules and laws that both can accept. The automotive industry has warned that at least he should ensure Britain remained part of the Customs Union with a deal that “provides all the benefits of the single market”.
Critically, any post-quarter and the month delay in the UK and Continental ports will also mean the end of just-in-Time delivery, requiring large investments in labor and storage of all goods that can come for a long time. Honda stores enough parts to keep your Honda civic plant in Swindon will be within 36 hours and will need a warehouse the size of 42 football fields last only nine days.
JLR in Solihull plant is 1,500 vehicles per day using the components 15m; any delay in the delivery of parts would cost it £1.25 m per hour, if he was forced to suspend production. Henry believes that the total cost of the post-British exit from the EU non-tariff barriers in the automotive industry in the UK can range from £ 1.5 billion to £4.5 billion a year, of which, again, JLR will have about one-third.
Subscribe for daily business today email or follow the business Guardian on Twitter @BusinessDesk
“Short-term impact of bad leaving the UK the transaction will be losing sales in the UK, the cars will be less competitive and the prices will rise,” he said. “In the longer term will be deindustrialization. Not overnight, but it will happen.”
The automotive industry is one of the leading companies in the UK, responsible for 856,000 jobs – 186,000 of them on production lines. Friction boundaries can only be achieved by maintaining membership in the Customs Union to something resembling a single market, but it will limit the freedom of Britain had to discuss other trade deals independently of the EU, and a key objective of the British exit from the EU.