Ford closes UK plant as Brexit chaos slams manufacturing

Automaker plans to close engine plant in Wales

By Charles Riley, CNN Business
William Walker via CNN

(CNN) - Ford has announced plans to close an engine plant in Wales, dealing yet another blow to a UK industry that is being ravaged by weak car sales and uncertainty over Brexit.

The U.S. automaker said it would shutter its plant in Bridgend by September 2020, when a contract to supply engines to Jaguar Land Rover ends. Some 1,700 people work at the factory.

Ford said Brexit did not influence its decision. But the company had previously warned that it may have to close plants if Britain leaves the European Union without protecting trade.

In January, the carmaker said that crashing out of the bloc would cost it $800 million in 2019.

"Ford have been quite clear that Brexit uncertainty raises big issues concerning their future in the United Kingdom," said David Bailey, a professor at Birmingham Business School.

Auto industry executives have warned that a disorderly Brexit would snarl supply chains and disrupt production. Continued uncertainty over the future terms of trade has caused investment to plummet.

UK factories have been battered as a result. A key survey published Monday suggested Britain's manufacturing industry is contracting for the first time since July 2016.

"[Companies] voiced their deep anxieties over Brexit's continuing impacts as some supply chains were re-directed away from the United Kingdom resulting in a drop in total new orders for the first time since October," said Duncan Brock, group director at the Chartered Institute of Procurement and Supply.

Honda said in February that it would shut down a major plant in England that employs 3,500 people in 2021. The plant in Swindon currently makes up to 150,000 Civics a year for over 70 countries.

Another Japanese carmaker, Nissan, scrapped plans the same month to build its new X-Trail SUV at its factory in Sunderland. It cited uncertainty over Brexit as one reason for the decision.

In March, Nissan said it would also end production of two luxury vehicles in Britain.

Companies have begged the UK government for clarity on Brexit, only to see the country slide into a political crisis. Prime Minister Theresa May is stepping down, and it's not clear when — or if — Brexit will happen, and on what terms.

Bailey said that Ford, which is reorganizing its operations in Europe, may eventually decide to close its last remaining major plant in the United Kingdom, a diesel engine factory in east London.

"We may see the end of all Ford manufacturing in Britain," he said.

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