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Ford Could Get Slapped With $1 Billion Brexit Bill

Industry News / 9 Comments

There's only one way to avoid it.

The date is getting closer. On March 29, 2019, the UK will officially leave the EU and as of now there's no post economic deal in place. Brexit is turning out to be a very messy divorce. And it could potentially get messier. According to Reuters and The Times, Ford has informed British Prime Minister Theresa May that it's preparing to shut down its UK operations because it's looking more like there will be no post-Brexit deal before the deadline. "This isn't about contingencies any more – we are taking steps because of the uncertainty. It's real," said a participant who was on the private call between Ford and May.

Ford currently has two engine plants in Britain and in order to avoid higher tariffs, supply chain disruptions, and other economic woes, it could shift operations to the European mainland.

The automaker could also face up to a $1 billion bill if there's no deal. If Ford were to shut down its two UK plants and go elsewhere, around 3,800 workers will be out of a job. Ironically, a majority of the residents of the two towns where the plants are located voted to leave the EU.

Britain also happens to be Ford's third-largest market. In fact, one in three cars made at its facility in Cologne, Germany is exported to Britain. Needless to say, its departure would not be good for anyone. Well, except for those would wind up taking those people's jobs. Ford isn't alone with its pending post-Brexit plans.

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Only last week Nissan announced it has ditched plans to build its new X-Trail SUV in Britain. Instead, production will happen in Japan. Given the previous times Prime Minister May failed to secure a deal between her government and the EU and the looming deadline, automakers and companies, in general, will do what they must in order to protect their financial and long-term interests.

Other carmakers, such as Aston Martin and McLaren, have already set contingency plans for a hard Brexit, but Bentley and Rolls-Royce, whose parent companies are VW Group and BMW, respectively, may not be so committed to that island nation.

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