If the United Kingdom government does not provide a coronavirus support package, one in six jobs in the country’s car industry will be at risk of redundancy, warned an industry body.
This was disclosed in a survey conducted by the Society of Motor Manufacturers and Traders (SMMT), an industry body that represents more than 800 automotive companies in the UK. The industry has so far lost £33.5 billion because of the economic impact of the pandemic, said the trade organization body, adding that it would not be until 2025 that vehicle production will reach pre-pandemic levels.
The industry has already lost about 6,000 jobs since the start of the crisis while the uncertainty surrounding Brexit having already played havoc with the industry which has one of the most internationally integrated industries in the world with a very complex supply chain. This has prompted the SMMT to urge the government to seriously consider allocating the industry “unfettered access to emergency funding” as well as a reduction of VAT and business rates. The body also demanded incentive schemes for stimulating demand among copnsuemrs for new vehicles.
While dealers in England of cars have reopened since the beginning of June, businesses of dealers have just started to open up in Wales. Showrooms in Scotland are due to start business by the end of the month. On the other hand, production at many of the car makers of the UK had started in May even though there are some that have said that they will remain closed till September.
Recovery has been slow because of a significant drop in consumer demand in dealerships and social distancing measures in manufacturing units, the SMMT says. The industry representative body has however suggested that “permanent short-time working” could be a possible solution address the issue of a reduction of production and demand. Redundancies could be reduced by reduced by implementation of short-time working strategies because it will reduce working hours and thus salaries. This implementation of such a strategy however will require a national level agreement among the industry because this practice is only allowable under some specific circumstances or in the case that is stipulated in contracts.
“A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy,” said Mike Hawes, chief executive of the SMMT while he recognized the “unprecedented” government support that has been provided so far. The trade body has also warned that the end of the government imposed furlough scheme in November will be an end to a “lifeline” for the industry.
While the fundamentals of the auto industry in the UK stiller mains strong, “the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid,” said Hawes while speaking at the SMMT’s annual summit.
“Covid has consumed every inch of capability and capacity and the industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit”, Hawes said. “That’s why we do need to ‘turbo charge’ the negotiations to secure a comprehensive Free Trade Agreement with the EU that maintains tariff and quota free trade… With such a deal, a strong recovery is possible, we can safeguard the industry and our reputation as an attractive destination for foreign investment and a major trade player.”
(Adapted from AutoExpress.co.uk)