Germany’s Association of Supply Chain Management, Procurement and Logistics (BME), is warning of a ‘poisonous’ effect of the UK leaving the European Union (EU), with the risk of contagion potentially spreading to other Member States.
The supplier body was reacting following British Prime Minister, Theresa May’s speech in London yesterday (17 January) in which she confirmed for the first time the UK would quit the Single Market, but seek access to it through a Free Trade Agreement, which she says could see the automotive sector trading using Single Market “arrangements.”
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The UK Premier specifically referred to the auto industry in her wide-ranging discourse yesterday, which sets in motion the first stage in Britain’s departure from Brussels to be shortly followed by the triggering of Article 50, which will subsequently see further light shed from the remaining 27 Member States as to their bargaining positions.
May said it “made no sense” with exporting cars and lorries for example, to start again from scratch when existing Single Market arrangements for the auto industry had been in place for so long, but the BME, whose 9,200 members represent purchasing volume totalling EUR1.25tn (US$1.3tn) cautions of the perils of navigating uncharted waters.
“For us it concerns a precedence with incalculable results – we have all no experience with it if a Member State leaves the EU,” BME general manager, Christoph Feldmann told just-auto. “This lack of clarity is a poison for any enterprise decision. “
“Now [those] responsible for purchase have to appear [in] a long phase of insecurity in which Great Britain must meet new commercial arrangements with the European Union. Every new barrier will affect negatively the reliability of supply chain structures.”
The BME added it feared the UK’s decision to strike out on its own could see other countries follow suit, with the end of free trade as it sees it, causing higher costs for the procurement of raw materials, components and other imports.
“Therefore, [those] responsible for purchase [ing] will adapt themselves to different possible scenarios and risks in the value added chain,” added Feldmann.
Germany’s automotive industry exports more to Britain than to any other country in the world, with 810,000 passenger cars built in 2015, shipped to the UK. The 2015 British passenger car market reached a record volume of 2.6m new cars, with half of them having a German group badge.
The German auto association, the VDA added the British automotive market depends heavily on imports: 86% of new passenger car registrations are of vehicles not produced in the UK, but which but which are imported. A large proportion of them come from EU countries.
“Following British departure from the EU, it will be in nobody’s interest to make the international flow of goods more expensive by erecting customs barriers between Britain and the European continent,” said VDA president, Matthias Wissmann last year.
The VDA president was not immediately from Germany to update his comments following the British Prime Minister’s speech.
