Why hard Brexit may push Vauxhall Astra production out of the UK

Vauxhall parent company PSA could move the production of the carmaker’s Astra model outside of the UK if its Ellesmere Port facility in Cheshire becomes “unprofitable” after a hard Brexit.

In an interview with the Financial Times, Carlos Tavares, head of French motoring giant PSA, said the company had established a new facility in southern Europe that could be used for Vauxhall Astra production, but only if Britain cannot come to a deal with the EU ahead of the Brexit deadline on 31 October.

“Frankly I would prefer to put [the Astra car] in Ellesmere Port but if the conditions are bad and I cannot make it profitable then I have to protect the rest of the company and I will not do it”, he said. “We have an alternative to Ellesmere Port.”

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The Cheshire-based factory employs around 1,000 workers and produced about 80,000 Astras last year, The Sun reports.

Some 80% of Astras manufactured at Ellesmere Port are exported to mainland Europe, while around 75% of the components used to build the Astra are imported from the Continent, says Autocar.

If the site were to close, it would leave the company’s Luton facility as its last remaining factory in the UK.

Will Brexit force PSA to pull Astra production?

Not necessarily. Tavares told the FT that it isn’t a matter of when the Britain leaves the EU, but the company is concerned about how the divorce is settled.

“For us it’s quite simple: we need visibility on customs. That’s all,” he said. “We need visibility on customs for parts coming from continental Europe or from the rest of the world, and we need visibility on the customs for cars coming out of the UK to continental Europe.”

“Those are the only things we need. Everything else we’ll take care of”, Tavares added.

Tavares’ concerns stem from the possibility that a no-deal Brexit could lead to costly tariffs and checks at the border, the FT says.

However, Michael Gove wrote in The Sunday Times yesterday that the Government, under the leadership of new prime minister Boris Johnson, is now “working on the assumption” that Britain will leave the EU without a deal.

There’s still a few months to go until Britain leaves the EU, leaving plenty of time for a deal to be reached. But with a Boris-backed Government looking to leave the Bloc with or without a deal, it puts the workers at the Ellesmere facility in a period of uncertainty.

How are other carmakers fairing?

Vauxhall is by no means the only manufacturer planning to move operations out of the UK, but it is one of only a few companies that attribute Brexit uncertainty as a driver behind the move.

In February, Honda announced that it would be closing its Swindon production facility in 2022, resulting in around 3,500 job loses.

Last month, Ford confirmed that it 1,700 jobs would go as it plans to shut down its Bridgend plant in South Wales by September 2020.

Unlike PSA, neither Honda nor Ford attributed Brexit to the shut downs. Instead, both firms cited drastic changes in the market, such as dwindling diesel sales, as key factors behind the closures.