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Exclusive: Aston Martin considers flying in components, changing ports to handle Brexit

Stock MarketsOct 22, 2018 11:21AM ET
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© Reuters. FILE PHOTO: An Aston Martin logo is seen on a car at a dealership in central London

By Costas Pitas

LONDON (Reuters) - Aston Martin is considering flying in car components and moving more parts through UK ports other than Dover to avoid possible border friction after Britain leaves the European Union, its boss told Reuters.

Chief Executive Andy Palmer said changing to alternative ports or flying in parts would add costs compared to sticking with Dover, where there are concerns among firms that the port may not be able to cope with new customs checks after Brexit.

London and Brussels hope to reach an agreement soon on Britain's exit from the EU. The automotive sector, however, is worried that if there is a hard Brexit or no Brexit deal port and motorway snarl-ups could disrupt production, affecting the movement of thousands of components and vehicles to and from the continent every day.

With just over five months until Brexit day, carmakers have triggered contingency plans such as moving shutdown periods, certifying models abroad and redrawing production schedules.

At stake is Britain's car industry, which employs roughly 850,000 people and is one of its few manufacturing success stories since the 1980s.

Aston, which this month became the first British carmaker in decades to list on the London Stock Exchange, predominately uses Dover for moving components.

"The European-sourced parts, which include the engine and the gearbox as a complete assembly, come back in from Europe so an alternative port is one way, predominately for lorries, and then reserving space on aircrafts for one-off shipping," Palmer told Reuters.

"You can get a few days of engines and gearboxes relatively easily into the cargo decks of a plane so whilst it's relatively expensive that is probably our primary backup," he said, adding the company only did so in an emergency at present.

Coventry and Birmingham airport, near the firm's central English Gaydon plant, and the port of Sunderland are among the locations the firm is considering for such contingencies.

'BETTER THAN NOT MAKING CARS'

With Britain due to leave the European Union on Mar. 29, Palmer said the plan would have to be approved by the board by the end of the year, in an example of decisions executives are needing to take without clarity on what Brexit will mean.

"There is undoubtedly a cost associated with it, but it's cheaper than not building cars," he said.

"I simply work to the worst and hope for the best."

After earlier this year switching its car approvals from Britain's vehicle agency to Spain's due to uncertainty over the validity of such licenses, Palmer said its crossover DBX will also be approved there.

"You're forced to make a change," he told Reuters. "Once you set in place a process, you tend to stick with that process because it works."

The United States is also due to overtake Britain in 2018 as the firm's single biggest country market as the firm continues a strategy to mitigate Brexit risk with a U.S. sales drive, reducing its reliance on the EU.

Prime Minister Theresa May on Friday sought to reassure business leaders that the EU was still committed to a deal this autumn, which would avoid disruption next year.

Britain's biggest carmaker Jaguar Land Rover has warned that the wrong Brexit deal could cost the firm 1.2 billion pounds ($1.6 billion) per year with the firm's boss saying he still did not know whether his plants could still operate.

Despite the Brexit uncertainty, Aston successfully floated earlier this month but its share price has since fallen by over 20 percent.

Palmer said most shareholders knew the firm would deliver long-term value as it rolls out a series of new models.

"When we made the pitch to investors, I think almost all understood that this is basically a long-term story and it is all about value creation... and that's what we are going to deliver," he said.

($1 = 0.7708 pounds)

Exclusive: Aston Martin considers flying in components, changing ports to handle Brexit
 

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