Rolls-Royce Could Halt Production

Industry News

Luxury carmaker considers drastic action due to chaos in Europe.

The uncertainty surrounding the UK’s Brexit strategy to leave Europe is giving a lot of automakers cause for concern - especially now that Theresa May's proposed deal has been declined by Parliment. Jaguar Land Rover is worried a "hard Brexit deal” could lose the company $1.5 billion a year in tariffs, while Aston Martin isn’t taking any chances and is planning to minimize potential border issues with parts since 60 percent of the company’s components are sourced from Europe. Rolls-Royce faces a similar issue. According to AutoNews, Rolls-Royce’s plant in Goodwood, England, could be crippled by a hard Brexit deal.

Like other automakers, Rolls-Royce operates a just-in-time production system. This means parts are usually held for no more than 24 hours, so this production method could be harmed if just one component becomes unavailable because of border delays.

To prepare for a potential no-deal Brexit on March 29 (the date the UK is set to leave the EU), Rolls-Royce has begun training suppliers in new import procedures, bringing forward an annual production halt to the first two weeks of April, investing in IT systems, and preparing to have some parts to be flown in if port deliveries are hampered by customs delays. But even with these procedures implemented, CEO Torsten Mueller-Oetvoes admitted the situation has left the company’s "super-fragile" logistics chain vulnerable.

"You can plan for whatever you want but you can't store up weeks of parts, and if the logistics chain breaks it will affect production," said Mueller-Oetvoes. "You only need to miss one component and you can't finish the car."

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Rolls-Royce sources 32,000 parts for its vehicles from more than 600 global suppliers, with only 8 percent produced in the UK. This requires 35 cross-Channel truck journeys a day, while the extensive level of customization available to customers means each car takes around 800 hours to build.

But while a no-Brexit deal could potentially cause chaos for Rolls-Royce, Mueller-Oetvoes ruled out the possibility of moving production outside of the UK. "This is a no go," he said, adding that Rolls-Royce is committed to Britain and that a third of its customers travel to its UK factory "sitting with engineers and designers to specify their dream and see how we craft and hand-build things."

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