LONDON — Some car manufacturers will idle their factories. The police are advising store owners to hire more security guards. Trucks have been sent to the coast to practice with artificial traffic jams. And exasperated business lobbyists are warning of supply-chain calamities.
Britain remains politically paralyzed ahead of a contentious vote in Parliament next week on a plan to withdraw from the European Union, or Brexit. But businesses are plowing ahead and preparing for the possibility that the country crashes out of the bloc without an agreement at the end of March — a no-deal Brexit.
Honda, the Japanese auto company, which produces about 150,000 cars a year in its factory in Swindon, in southwest England, said on Friday that it would stop production for six days in April to assess its supply chain and possible disruptions from border delays after Brexit. The company said its 4,000 employees would go to work but would be training or handling maintenance.
BMW has already said it will shut its Mini factory in Oxford for maintenance for a month beginning April 1, in case a no-deal outcome disrupts its production.
Honda was the most high-profile company to make its Brexit contingency plans known this week, and a diplomatic visit prompted the revelation. Shinzo Abe, Japan’s prime minister, flew to London to meet with Prime Minister Theresa May on Thursday and emphasized that he hoped a no-deal Brexit could be avoided.
Other Japanese companies, too, are not waiting for reassurance. “There are preparations underway,” Koji Tsuruoka, Japan’s ambassador to Britain, told the BBC on Friday, adding that Japanese companies were prepared for “all contingencies.”
If Britain leaves the European Union with no deal, it could wreak havoc on just-in-time manufacturing that relies on goods crossing the British border from France and arriving at factories within minutes of final assembly.
“That’s the system that makes them survive in this very competitive environment,” Mr. Tsuruoka said of companies' manufacturing processes. “If that is no longer available, then of course they have to think twice as to how do they continue to be operative in this environment.”
Retail businesses were also being advised to prepare for uncertain times. On Friday, the Metropolitan Police said they were advising stores to consider hiring extra security just in case shortages created by a no-deal exit prompted a rush of shoppers.
“We are having these conversations in order to minimize the demands on policing from any resulting large crowds or queues at shops and as part of our regular civil contingency engagement with businesses and partners,” the police said in an emailed statement.
Although businesses have been wary of wading into the politics of Brexit, some are now more willing to declare that a no-deal Brexit would be disastrous.
The Confederation of British Industry warned on Friday that the government needed to be as specific as possible about how it would avoid a no-deal outcome.
“Make no mistake, no-deal cannot be ‘managed,’” Carolyn Fairbairn, the group’s director-general, said in a speech. “And it’s certainly not desirable.”
In what proved to be a less-than-convincing effort to ease public anxiety, the British government conducted an exercise on Monday to test how it would manage disruption at the border. It offered truck companies about $700 a truck to gather vehicles at Marston Airport, 20 miles west of the port of Dover, so it could test how effectively traffic backups could be managed if vehicles coming off ferries from Europe had to stop for customs checks.
Only 89 trucks turned up, compared with the 150 expected, and the operation was widely mocked as “window dressing.”
Radio and television news broadcasts this week were studded with commentary from people exasperated with the waiting game.
“The only lobbying taking place now is through the airwaves to make it very clear to the politicians and the government that they have to sort this out,” said Iain Anderson, the executive chairman at Cicero, a consulting firm. “The longer this Brexit political drama continues, the less and less attractive the U.K. is going to be” to investors.
Still, the vote in Parliament on the exit deal — set for Tuesday and anticipated to face strong opposition — is likely to offer some respite for businesses desperate for some clarity. Debate surrounding the vote will better define what politicians want and what the prime minister can take back for further negotiations with European officials.
“There will be some signposts for business that will give them some small degree of confidence,” said Mujtaba Rahman, the managing director, Europe, for the Eurasia Group. “There will be uncertainty, there’s still a lot of downside risk, but that’s inherent to Brexit, and it will remain inherent until a withdrawal agreement is ratified.”
Follow Amie Tsang on Twitter: @amietsang.
Source: Read Full Article