Just weeks after sealing the good news of a second lucrative deal to supply Switzerland with buses, the chief executive of Alexander Dennis has expressed concern over placing more barriers between Britain and the continent – and warned Brexit could hit very close to home.
Colin Robertson, CEO of the bus builder, which has factories in Larbert and Camelon, spoke out about the implications of what is being called a‘hard Brexit’ deal and increasing costs on buying parts for the in-demand vehicles.
He claimed import tariffs from the EU would only compound difficulties in securing skilled engineers which is already troublesome for ADL, and further difficulties would inhibit Britain’s largest bus manufacturer which employs around 1000 people in the two sites within the local district.
A manufacturing success story, Alexander Dennis has seen turnover grow from £100m a decade ago to more than £600m – though half of this is generated overseas with international production in Asia and North America. That is at risk with a ‘hard Brexit’, the CEO claims.
“We have some protection in that Alexander Dennis operates on a model where our production is spread around the world,” Robertson told our sister title Scotland on Sunday. “Operations in those countries won’t be affected by any tariffs the UK might face after it leaves the EU.
“However, our ability in the UK to source precision-engineered components such as axles and gearboxes from within the EU is a concern. Depending on the specific model, up to half of the components in each vehicle are sourced from outside the UK, and most of that comes from the EU.
“With the fall in the value of the pound, the exchange rate has already pushed up prices. We’ve been able to guard against that to an extent through foreign exchange hedging, but if those costs continue we will eventually have to pass them on to our customers.
“That comes against a backdrop of purchasers already becoming more conservative and spending less as they prepare for the impact of Brexit on their own businesses and budgets.”
Robertson added: “We also already face a significant challenge in sourcing engineering expertise, and we expect that to get more difficult if it becomes harder to recruit from the EU.
“There are currently shortages in specific skills, so further immigration barriers will make it even more difficult to get the talent we need. All of this has the potential to limit our ability to grow.”
John McNally, the SNP MP for Falkirk, said: “The Tories and Labour must stop ignoring the concerns of our business community and get real about the catastrophic harm their hard Brexit plans will cause to our economy, and the incomes, livelihoods and living standards of millions of people.
“We cannot afford to see important employers, like Alexander Dennis, damaged or held back by Brexit. Short of staying in the EU, as Scotland voted overwhelmingly for, it is clear that the only way to protect jobs and prosperity is to remain in the single market and customs union – and it is vital that we do.”
Alexander Dennis is the latest firm, inckluding Airbus, Siemens and BMW to issue warnings as negotiations in Brussels continue.
Labour MP Ian Murray said: “We have seen dire warnings from Airbus and BMW this week and now one of Scotland’s proudest companies has continued to emphasise the concerns of businesses with regards to the impact of a hard Brexit.
“The EU has issued a ‘last call’ to the government to get on with it, but while the Cabinet fight with each other, nothing can be agreed to protect jobs, investment and future prosperity.
“The government needs to wake up before it is too late and irreparable damage is done to some of our largest employers.”
Liberal Democrat MP Christine Jardine said Robertson’s comments represented “another horrific warning about the impact of Brexit”.
“The threat to high-skill and high-wage jobs is very real,” she said.
“Alongside Airbus and many other companies this news from Alexander Dennis must make MPs from all parties stop a hard Brexit.”
Prime Minister Theresa May has insisted a deal where trade between the UK and EU will be as “frictionless as possible” is still possible. Negotiations are still on-going.