Has Brexit played a part in Schaefflers decision to shut two UK factories?

Has Brexit played a part in Schaeffler's decision to shut two UK factories?

Schaeffler says it is proposing to shutter two UK plants as uncertainty continues to swirl surrounding the UK's trading arrangements with the European Union (EU) after Britain exits the 27-strong grouping next March (2019).

The German supplier employs around 1,000 staff at three British locations, but has announced plans to close its Llanelli (Wales) and Plymouth (South West England) sites in the medium term and relocate production to existing plants outside the UK, in the US, China, South Korea and Germany. 

Schaeffler did not immediately return calls to just-auto but reports are circulating around 500 UK jobs could be at risk.

At present, the Plymouth site mainly produces spindle bearings and machine parts for Schaeffler's Industrial division and additionally specialised bearings for the aerospace and defence industries. At Llanelli, mechanical tappets and special-purpose bearings are made for automotive OEMs and selected Industrial customers.

Schaeffler's news caps a grim two days for UK manufacturing, following Michelin's announcement it intends to close its Dundee plant in Scotland with the loss of 845 jobs and as the French manufacturer partly blames cheap Asian imports.

As well as the Plymouth and Llanelli sites, Schaeffler also has a further factory in Sheffield, assembling car and tractor clutches, which will be retained. The company also has two logistics centres, in Hereford and Sutton Coldfield in the UK Midlands region, which will merge.

The two logistics centres in Sutton Coldfield (Industrial products) and Hereford (Automotive Aftermarket), are located 77 miles apart and the proposal is to combine operations at the latter site, enabling synergies. The majority of office-based employees from the Sutton Coldfield location will be relocated to a leased office in the vicinity.

Schaeffler, which employs more than 92,000 people worldwide, is planning to reorganise its UK business activities as part of its Agenda 4 plus One programme. This includes a global footprint initiative examining the economic competitiveness and long-term sustainability of all Schaeffler locations worldwide. As part of this initiative the board has decided to reorganise its activities in the UK.

Following the proposed reorganisation, the company says it will "retain a meaningful presence in the UK," but will reduce its overall footprint and relocate some of its UK production to other existing sites outside the country. It is anticipated reorganisation plans will take up to two years to implement.

The global footprint analysis focused on how to structure the business in the UK based on various factors including economic conditions, supply and demand, and the decisions OEMs are making. It also took into account only 15% of goods Schaeffler produces in the UK remain in the country, while the vast majority are exported to continental Europe. The supplier also cites "uncertainty surrounding Brexit" as one factor among others in the analysis of the UK market.

"A global business needs to regularly review market conditions and strive to optimise its footprint across different regions," said Schaeffler regional CEO, Juergen Ziegler.

"The proposed measures we have taken for the UK reflect this business reality. However, we remain committed to keeping certain activities in the UK, a country that will continue to be important to us."

Schaeffler is now entering into statutory consultations with elected representatives for all employees at the locations affected.

"The changes to our UK footprint are designed to make us more efficient by relocating parts of our production closer to where our products are used," added Ziegler.

"What we are planning for the UK delivers on our Agenda 4 plus One programme. Brexit is clearly not the single decisive factor behind our decision-making for the UK market, but the need to plan for various complex scenarios has brought forward the timing."

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