Will a No-Deal Brexit Cause Trade Mayhem? BMW Isn’t Taking Any Chances

September 19, 2018, 10:44 AM UTC

German carmaker BMW (BMWYY) will put its British Mini production into neutral next April, when Brexit takes effect, it announced yesterday.

The 4-week shutdown of the Oxford (U.K.) factory was originally scheduled for summer 2019, to perform annual maintenance and some upgrades. Summer shutdowns are common in the car industry. Instead, the company is moving next year’s production pause forward to minimize the odds of supply chain disruptions.

Last year Aston Martin officials told U.K. lawmakers that uncertainty over obtaining supplies could force them to halt production in the absence of a Brexit deal. Opel also predicted Brexit-related cuts in production at its German factories. Many factories have so-called just-in-time production systems that depend on friction-less borders between countries—something that would be disrupted by some versions of Brexit.

This spring, however, French-owned Vauxhall took a more positive note, announcing a £100 million ($132 million) expansion of its factory. A £9 billion subsidy from the British government may have helped.

Earlier this year, the European Automobile Manufacturers’ Association (ACEA) called for the EU and U.K. to continue to recognize one another’s car certifications, to avoid having to re-certify models in both markets. “We are therefore calling on the European Commission to clarify how existing approvals can be transferred from an EU27 authority to the U.K., and the other way around,” ACEA Secretary General Erik Jonnaert told Deutche Welle.

The labor union representing the 4,500 workers at the plant told the Financial Times, “The [auto] industry is one of the country’s crown jewels, and ultimately it will be the workers that lose out.”