Airbus. Siemens. BMW. Rolls-Royce. Jaguar Land Rover.
What do they all have in common? All have publicly spoken out against the government’s handling of Brexit in recent weeks.
All are also large-scale manufacturers, which is not incidental. Together they employ over 70,000 people in the UK. They have collectively warned that many of those jobs may be under threat.
“It’s undeniable that there’s been a big shift in businesses coming out to talk about Brexit, to warn against the dangers of no deal or a hard Brexit,” Nicola Sykes, head of EU negotiations at the Confederation of British Industry, tweeted on Thursday.
With the March 2019 deadline for Britain to leave the EU fast approaching and little palpable progress made, businesses are going public with fears that we could be heading off an economic cliff.
Airbus was the first to break cover. The aeroplane manufacturer, which employs 14,000 people in the UK, said in late June that a no deal Brexit could force it to leave the country. It said that its comments were not part of “project fear” — the term used by Brexit supporters to dismiss economic naysaying — but part of a “dawning reality.”
BMW board member Ian Robertson then said the car-maker needs clarity by the end of summer or it would have to start its contingency plans. The company employs about 8,000 people in the UK.
Days later Britain’s five biggest business lobbies united in an almost unprecedented move, writing to Prime Minister Theresa May to warn that “time is running out” for businesses and many are queuing up to move jobs out of Britain.
The CEO of Siemens UK followed with a call for the government to “get away from slogans” and provide clarity over the UK’s post-Brexit trading relationship with the EU.
This week Jaguar Land Rover warned that £80 billion of investment in the UK is threatened by the lack of certainty surrounding Brexit and engine-maker Rolls-Royce said it had begun to move some functions from the UK to Germany as part of Brexit contingency plans.
Airbus CEO Tom Enders returned to the fray on Friday, telling a press conference that the UK government has “no clue, no consensus on how to execute Brexit without severe harm.”
In the immediate aftermath of the Brexit vote, there was some noise from business but most executives quickly fell quiet. They decided to either deal with the government in private or keep quiet out of some sense of patriotic duty.
Clearly, the mood has changed.
The problem is companies need clarity and there is precious little of it. What will the trading rules with Europe be after March 2019? If they can’t be sure now, less than a year away, then there’s a real risk that trade could cease or production could stop if parts can’t be sourced.
Even if they do get certainty on future trading arrangements, it may come too late and not leave enough time to put in place the new systems needed. This is a particular problem for manufacturers, many of whom source parts form overseas before selling the final products in other foreign markets.
Executives have a duty to investors to guard against these risks. Shares in Tata Motors, the owner of Jaguar Land Rover, fell to a 5-year low this week after its subsidiary warned that a hard Brexit could cost it £1.2 billion in profit. It’s no wonder CEOs are talking about executing contingency plans and moving jobs.
The government has dismissed this rising cacophony as unhelpful meddling. In fact, business leaders are giving the government one last chance. Rather than simply moving jobs, they are pleading with the government to give them what they need to avoid that outcome.
It looks likely they will be disappointed. The cabinet retreated to Chequers on Friday to try to thrash out a Brexit deal proposal but Theresa May is in open conflict with her ministers. The Prime Minister faces an uphill battle to get her chosen vision of a “soft Brexit” backed by her cabinet. Businesses have already rejected the alternative being pushed by Brexiteers like Boris Johnson. It’s perhaps unsurprising given that the Foreign Secretary allegedly said “f*** business” when asked about industry concerns by an EU official at a party.
Expect to see more CEOs speaking out and moving jobs in the coming weeks.
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