Business

German manufacturer Schaeffler is closing two UK plants over Brexit

Posted November 6, 2018 10:44 a.m. EST
Updated November 6, 2018 10:49 a.m. EST

— A German engineering group has just delivered another blow to Britain's struggling automotive industry.

Schaeffler (SCFLF), which supplies automakers as well as the aerospace industry, said it was planning to close two plants in the United Kingdom.

It highlighted "the uncertainty over Brexit" as a key factor in its decision to shut a plant in Llanelli, Wales, and a second in Plymouth, in southwest England.

The company employs 585 people at the plants earmarked for closure. In total, it has more than 1,000 employees in the country, and will keep its biggest production site at Sheffield.

Schaeffler said only 15% of the goods it produces in the United Kingdom remain in the country and the vast majority is exported to the rest of Europe.

With Brexit less than five months away, UK-based manufacturers still don't know whether they'll face new barriers to trade with the European Union.

"The proposed measures we have taken for the UK reflect this business reality," said Juergen Ziegler, Schaeffler's regional CEO for Europe. "However, we remain committed to keeping certain activities in the UK, a country that will continue to be important to us," he added.

Schaeffler anticipates the reorganization will take up to two years to implement.

Putting the brakes on industry

The deadlock in Brexit negotiations in recent months has already seen car manufacturers such as BMW and Jaguar implement contingency plans.

BMW (BMWYY) said in September that it would shut its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs once the United Kingdom leaves the European Union in March 2019.

And the biggest carmaker in the country, Jaguar Land Rover, has cited uncertainty over Brexit as one reason for putting 1,000 workers on a three-day work week until Christmas.

Investment in the car industry has slumped this year. Investment in new models, equipment and facilities was £347 million ($460 million) in the first half of 2018, down 46% on the same period the previous year.

"Brexit is making Britain a less attractive place to operate and invest," said UK lawmaker Jo Stevens, a member of the anti-Brexit campaign group "Best for Britain."