Automakers warn millions of jobs at risk in no-deal Brexit

BERLIN -- A month before Britain is due to quit the European Union, the bloc's automakers have warned of billions of euros in losses in the event of a no-deal Brexit -- with production stoppages costing 50,000 pounds ($62,355) a minute in Britain alone.

Britain is scheduled to quit the EU on Oct. 31 but businesses have grown increasingly concerned at Prime Minister Boris Johnson's apparent lack of progress towards a new withdrawal deal to replace the proposals of his predecessor Theresa May, which the British parliament rejected three times.

In a statement, groups including the European automakers association ACEA, the European suppliers body CLEPA and 17 national groups warned of the impact of "no-deal" on an industry which employs 13.8 million people in the EU, including the UK, or 6.1 percent of the workforce.

"The UK's departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel," they wrote in Monday's statement.

"The end of barrier-free trade could bring harmful disruption to the industry's just-in-time operating model, with the cost of just one minute of production stoppage in the UK alone amounting to 54,700 euros (£50,000)," the statement said.

Without a deal, Britain would quit the EU's 500 million-strong single market and customs union overnight, falling back on World Trade Organization rules, which could mean many import and export tariffs. There would be no transition.

Automakers, the country's biggest exporter of goods, have been one of the most vocal opponents of a no-deal Brexit, warning that production would be hit with tariffs, border delays and new bureaucracy, ruining the viability of many plants.

The automotive groups warned that the necessary tariffs will add 5.7 billion euros to the EU-Britain car trade bill.

The European auto industry is dependent on heavily integrated cross-border supply chains, which rely for their effectiveness on a zero-tariff, almost border-free environment within the EU's custom union.

Britain's car industry, which is almost entirely foreign-owned, is exceptionally vulnerable, as it is dominated by factories owned by German, French and Japanese automakers

Japan's ambassador to London, Koji Tsuruoka, said Japanese companies and investors would be forced to reassess their four-decade bet on the UK if there is a disorderly exit from the EU that shattered supply chains and cut off access to the bloc.

Nissan, Toyota and Honda were encouraged by former Prime Minister Margaret Thatcher to use the country as a launchpad into Europe. Of the just over 1.5 million cars produced in Britain last year, the three Japanese automakers built about half.

Japanese companies have expressed concern in private that a disorderly exit could turn upside down the entire business case for investing in British manufacturing.

Japan is one of the biggest sources of foreign direct investment in Britain, which its companies have long seen as a pro-business, liberal gateway into the rest of the EU.

"If those conditions drastically change and make it impossible for companies to adapt, they will have to consider very carefully how they will go about continuing business here in the UK," Tsuruoka said.

"They like it here and they are happy being here," he said. "The only hope that they are now wishing is that they will be allowed to continue to do good business here in the UK."

Tsuruoka said he was hoping for an orderly exit. Nearly 1,000 Japanese companies based in Britain employ more than 150,000 people. "The UK has provided Japanese companies and investors with very important business opportunities, which they have profited from now for three or four decades," he said.

"The question really is whether this will drastically changed or will there be a continuity of the sound business environments they have enjoyed," Tsuruoka said. "There are not too many answers that are available today and therefore they are watching very carefully."

Japanese companies have invested over 81 billion pounds ($101 billion) in Britain, making its FDI the fifth-largest after the United States, Germany, France and the Netherlands, according to UK statistics.

"The Japanese companies that are investing are global operators and they are watching it very carefully," Tsuruoka said. "If none of the predictability is there, then you cannot plan, so you will have to stop and then consider when things are clear."

More than three years of political squabbling over Brexit have left allies and investors puzzled by a country that for decades seemed a confident pillar of Western economic and political stability.

It is still unclear on what terms the UK will leave the European Union. Options range from a last-minute exit deal or delay to an acrimonious split that would knot up the networks of trade.

Prime Minister Boris Johnson has repeatedly said he wants to strike a deal at an Oct. 17-18 EU summit, but if the EU turns down British demands he will lead the UK out without a deal on Oct. 31.

In a visit to Tokyo, British trade minister Liz Truss called for a new post-Brexit trade agreement with Japan as soon as possible. "I am in Tokyo today to deliver one very clear message: the UK is ready to trade," Truss said. "The UK is an open, welcoming country and we are the perfect place to do business.