BMW is preparing for a worse-case Brexit where the UK quits entirely the EU’s customs union and the single European market. The automaker’s priority is to ensure that its Mini, Rolls-Royce, engine and stamping factories in England receive parts on time despite potential bottlenecks at the border. BMW’s purchasing chief, Markus Duesmann, discussed Brexit implications with Burkhard Riering, editor of Automobilwoche, Automotive News Europe’s sister publication.
What are BMW's Brexit preparations?
We’ve set up a company-wide Brexit task force. One of its important aspects is the preparation of our suppliers. The situation is that there will be a boundary that wasn’t there previously, and its function is unclear. We are expecting a bottleneck at the border, and we have to anticipate delays in the supply chain. The processes will become much more complicated. We will need far more goods on the road so we can have a buffer and ensure that deliveries to plants are never interrupted. Delays are inescapable. Even if we are paying zero customs duties, we have to go through the processing at the border.
What are your bottom-line priorities?
Priority one: reliable deliveries to the factories. Priority two: safeguarding jobs. The supplier situation in the UK is a third major issue. The supplier market is not as highly developed there as in continental Europe. Brexit is saddling us with a huge expense.
BMW has plants in the UK and on the European mainland. These factories work closely with one another. What impact will Brexit have on them?
We need to closely analyze the plant network and the flow of goods between the island and the continent. A number of components cross the English Channel as many as four times before a vehicle is fully built and reaches dealers. With every border crossing, a customs clearance and duty will be due. We naturally want to keep this cost as low as possible.
Will your UK plants help offset some Brexit effects?
If there is a hard Brexit with high customs duties, we can turn to the four factories that we have there. That is a positive. We built more than 220,000 cars in the UK last year. That is almost as many as we sold there – that figure is 243,000. They certainly aren’t the same models, but this shows that we have room to maneuver.
Could you build BMWs in Mini’s plant in Oxford, England?
We have a flexible architecture, in this case for front wheel-drive vehicles. Converting the plant for BMWs would be expensive, but it could make sense at some point. Nedcar in the Netherlands is already producing the Mini and the BMW X1 in the same plant. That could theoretically be transferred elsewhere. Whether it makes sense depends on various circumstances – including customs duties.
Does BMW want a soft Brexit and a free-trade agreement?
Of course. But we are preparing for the worst case. Another important point is the free choice of workplaces. Many of our employees and those at our suppliers are not British. The reorganization of the labor market was one of the main demands of the Brexit advocates. We have many BMW employees in the country who do not hold British citizenship. It would be hard to replace them.
How are you dealing with suppliers?
Many of them have not been exporting from the EU so far. They lack the required experience. So we have to ensure that each individual supplier has the capacity to export. We have held informational events on this issue with nearly 300 suppliers in Munich and Oxford. They were glad to receive this information and can now adapt to the situation.
