Brexit: Ford warns UK it will take 'whatever action is needed' after profits hit

The car company blamed withdrawal from the EU for a £760m drop in profitability in 2017

Joe Watts
Political Editor
Sunday 19 August 2018 12:16
Comments
Bob Shanks CFO at Ford, explains how Brexit is weighing on the car giant's profits

Car manufacturer Ford has issued a Brexit warning to British politicians that it will take “whatever action is needed” to protect its business.

The ominous words came after the American car giant blamed uncertainty over Brexit for a colossal £760m drop in its European earnings in 2017.

The firm pointed the finger at plummeting confidence in the UK since the Brexit referendum and raised fears of long-term damage from European Union withdrawal.

The pointed comment, amid the growing prospect of a no-deal Brexit and increasing doubt Theresa May can win parliamentary backing for any deal, represent a major turnaround just months after Ford suggested it thought negotiations were “positive”.

Mike Flewitt, the chief executive of flagship UK firm McLaren Automotive, has also said he is increasingly concerned by the looming possibility of a no-deal Brexit.

The warnings from business comes as support for a new referendum is growing, with The Independent having launched its own Final Say campaign with a petition that has attracted more than 670,000 signatures.

Bosses attribute £470m of the £760m loss to the drop in the value of the pound since the Brexit referendum.

What does a no-deal Brexit mean?

As a result, Ford said that it is prepared to “take whatever action is needed” to keep its European business profitable, something likely to be seen as a warning that it could scale back UK operations.

It was only in April that one of Ford’s top bosses Jim Farley, executive vice president of global markets, insisted the car giant was “sticking with Britain” through Brexit, adding that the UK was a “fundamental part” of its operations.

What will happen on the first day of no deal How will we be able to import components? Export cars? Well…we don’t actually know how to trade with each other under those terms

McLaren chief executive Mike Flewitt

At that point, Mr Farley said there were “positive” signs in Brexit negotiations, and that he was hopeful that “frictionless trade” could be achieved.

But since then the EU has refused most plans put forward by the UK, which has attempted to secure access to the single market without accepting all of its rules, while Brexiteers will not countenance compromise on Britain’s part to gain greater access.

Separately, Mr Flewitt – once also vice president of manufacturing for Ford – shared deep concerns over Brexit, pointing out that the loss of frictionless trade between Britain and the EU could lead to delays and extra costs.

Governor of the Bank of England Mark Carney says Brexit no deal risk high

In an interview with the Mail on Sunday, he said: “What will happen on the first day of no deal?

“How will we be able to import components? Export cars? Well… we don’t actually know how to trade with each other under those terms.”

The former Ford executive dismissed those who accuse motor industry leaders of joining in “project fear” for expressing their Brexit concerns. He said: “These are genuine fears. The people I feel most sorry for are some of the car companies that came and invested in the UK through the 1980s and 1990s to make Britain their base for trading in Europe.

“If all of a sudden their trading terms change, that whole investment is almost called into question.”

Fiat Chrysler Automobiles and Tata Motors, which owns Britain’s Jaguar Land Rover, have also raised Brexit fears in recent filings to investors in the US.

The European Research Group of Tory MPs is expected to publish a policy paper ahead of the Conservative Party’s annual conference in Birmingham next month, highlighting the benefits of a no-deal Brexit.

It will challenge the prime minister’s proposals set out before the summer recess, which led to the resignations of the then Brexit secretary David Davis and the foreign secretary Boris Johnson.

Meanwhile, in a significant development in the drive for a new referendum, The Independent and the People’s Vote campaign are also joining forces for a mass march through central London on 20 October.

An exclusive poll carried out by BMG Research last week found that 48 per cent of the public would now back a vote on any deal struck between the UK and the EU – up from 44 per cent just four weeks ago. Just 24 per cent opposed the idea, down three percentage points over the same period.

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