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Why British Car Plants Are Reviving Brexit Disaster Plans

A new wrinkle in balancing inventory and production
#facilities #europe #Nissan

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When the U.K. voted in 2016 to bail out of the European Union, British carmakers came up with disaster plans to cope with expected supply chain disruptions.

Britain is still easing its way out of the EU. In the meantime, those emergency plans are turning out to be useful in dealing with the coronavirus crisis, says the London-based Financial Times.

Parts Keep Coming

Here’s why. The British auto industry imports about 56% of the parts it uses to make vehicles, and it exports 80% of the cars it produces. Everyone knew that a no-deal Brexit would roil the flow of imported components and exported vehicles as the U.K. lost the free trade deals that went along with EU membership.

Image: SMMT

The Society of Motor Manufacturers and Traders, Britain’s auto industry trade group, warned that the disruptions of a “hard” Brexit would cost the British auto industry $64,000 per minute.

Facing turmoil caused by a widely expected lack of new post-Brexit trade pacts, manufacturers stockpiled parts, extended scheduled downtime for routine retooling and braced for the transition.

Repeated delays in Brexit made a mess of the industry’s plans. But the concept, turned upside down, is staging a comeback.

Same Plan, Different Driver

This time, production rather than supply is the immediate problem. The pandemic abruptly shut down manufacturing. But imported parts already in the pipeline are still streaming in—and will continue to do so for as many as six more weeks.

Because Brexit is still in a grace period, customs requirements haven’t yet changed. So carmakers are again renting warehouses near their British plants. But now they’re doing it to store ordered parts that suddenly aren’t needed quite yet.

“It makes perfect sense,” one industry director tells FT. “In a way, Brexit means we are prepared for this.”

Parts Glut

The flood of parts requires temporary storage facilities, because the factories themselves are set up to accommodate no more than a two-day supply of components.

FT says some producers, such as Nissan, are stashing the continuing inflow of material in rented facilities at shipping ports or near their plants. Others, such as Honda, are parking truck trailers full of parts in rented parking lots.

Bentley says it has more than doubled its normal warehouse space and is packing those structures more densely than usual. Parts destined for BMW’s Mini plant in England are being redirected for storage in Germany.

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