BMW Starts Building the Ultimate Form-Filling Machine for Brexit

(Bloomberg) -- BMW AG makes cars that accelerate to 62 miles per hour in 3.4 seconds, park themselves, and let you crank the volume on your radio by waving your hand. But as Brexit approaches, BMW is working on something far more prosaic: teaching suppliers to fill out customs forms.

The German automaker has held training days for suppliers near its factories in Munich and Oxford, England, to make sure they’re ready for the customs clearance procedures BMW suspects they’ll need to move parts between the U.K. and the European Union. It’s a process that many haven’t spent much time on because they operate only within the EU.

About 400 people attended the Munich session in April and 150 went to the Oxford day in May, the company says, and it’s considering more sessions elsewhere. Suppliers are being trained on “the basics of customs clearance,” BMW’s customs manager Stephan Freismuth told an auto industry conference in June.

BMW is far from alone in developing Brexit contingency plans as fears about the impact of a bad deal or no deal escalate. Jet-engine maker Rolls Royce is moving design approval for most of its power plants from the U.K. to Germany in what it describes as a “precautionary” Brexit safeguard. Planemaker Airbus SE says it may stockpile parts at a wing factory in Wales. And Jaguar Land Rover, which warned the U.K. government last week that a “bad Brexit” would jeopardize as much as 80 billion pounds in outlays over the next five years, has spent 10 million pounds ($13 million) on preparations.

Need for Support

BMW says it needs to offer the training sessions because many vendors across Europe have little or no experience moving goods in and out of the EU. A survey of suppliers found that about half had a “clear need for support” with customs. 

“It doesn’t matter how the future trade relationship looks,” Freismuth said at the June conference. “In the end we will have a customs border where we have clearance for customs even if we don’t pay customs duties.”

The company manufactures Mini cars near Oxford, produces engines at a plant near Birmingham, and owns Rolls-Royce Motor Cars Ltd., which makes its luxury sedans in southern England. BMW declined to give details of the training or say how much it’s spending to help suppliers prepare for Brexit.

Most auto manufacturers receive parts at their factories just before they’re needed to reduce warehousing costs, but the practice leaves the industry vulnerable to any delays at the border.

Penny Todd, U.K. customs supervisor at Ford Motor Co., told the June industry conference that it’s also been thinking about how to help suppliers who’ve never had to deal with import and export declarations before. Ford, which has engine plants in England and Wales, says it hasn't yet run any training sessions. But if Brexit causes tariffs to hit levels allowed by the World Trade Organization, the company says it would face an extra $1 billion in annual costs.

To contact the editor responsible for this story: David Rocks at drocks1@bloomberg.net, Anthony Palazzo

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