Ralf Speth, chief executive officer of Jaguar Land Rover Plc. (Photographer: Gianluca Colla/Bloomberg)

Jaguar Boss Warns Hard Brexit May Cost JLR Thousands of Jobs

(Bloomberg) -- Jaguar Land Rover’s chief executive warned Prime Minister Theresa May that a bad Brexit deal could put tens of thousands of jobs at risk and cost the company more than 1.2 billion pounds a year ($1.6 billion).

The unusually frank warning by Ralf Speth was made to an audience that included May at a conference in Birmingham, England on Tuesday. He flagged the uncertainty faced by automakers as the clock ticks down to Brexit, scheduled for March 29.

“Currently, I do not even know if any of our manufacturing facilities in the U.K. will be able to function on the 30th," Speth said. Free access to Europe’s single market is "as important a part to our business as wheels are to our cars."

Speth is the latest company boss to adopt a harsher tone with May’s government over Brexit. Rolls-Royce Holdings Plc said in July it was moving the design approval for large jet engines to Germany to ensure it can continue operating whatever the Brexit outcome. In June, Airbus SE said it may have to pull its U.K. investments in the event of a no-deal Brexit.

Losing easy access to EU markets would mean "the bureaucracy of a customs official becomes more important than the craft of an engineer," Speth said. He warned that decisions were being taken by companies now that won’t be reversed -- whatever the final Brexit outcome. The company, which employs more than 40,000 people in the U.K., said its losses in the event of a no-deal Brexit would wipe out its profit.

JLR’s Footprint

A government spokesman said May’s Chequers plan for Brexit, which the U.K. is pursuing, would protect the auto industry’s supply chain and the prime minister is confident of getting a good deal. The plan involves tying the U.K. to a common rulebook with the EU on goods.

The auto industry is particularly vulnerable to any changes in trade or regulation post-Brexit because of the large number of components that are imported and exported between the EU and U.K. daily to build vehicles on a ‘just-in-time’ schedule.

JLR has four plants in the U.K. that produce 3,000 cars a day and use 25 million components. Any delays would cost the company 60 million pounds a day, according to Speth. The company already cut about 1,000 jobs this year in response to a slump in sales of diesel cars and the uncertainty around Brexit. The U.K. has announced a ban on new diesel vehicles from 2040.

"What decisions will I be forced to make, if Brexit means not merely that costs go up, but that we cannot physically build cars on time and on budget in the U.K.?" Speth said.

May also addressed the conference, the Zero-Emission Vehicle Summit, pledging 106 million pounds in funding for research and development in environmentally-friendly vehicles, including batteries for electric cars and hydrogen technology.

©2018 Bloomberg L.P.