The UK’s largest bus manufacturer has joined the growing list of companies to issue warnings about the risks of a hard Brexit, saying it could damage future growth.
Alexander Dennis, which makes almost half of all the buses built in the UK, said the impact of Brexit on the currency markets was already driving up costs of production.
The company is the last major automotive manufacturer in Scotland and employs about 1,000 people at its factory near Falkirk – as many as the Ineos refinery at Grangemouth and the Dalzell steelworks in Motherwell combined.
Alexander Dennis CEO Colin Robertson said that with components imported from the EU making up around half of every bus rolling off UK production lines, failure to agree a tariff-free customs deal after Brexit would harm its business.
Robertson also warned the government against creating further immigration barriers between the UK and the EU, saying that the company was already struggling to recruit enough skilled engineers, and needed access to talent from across Europe to ensure posts remain filled.
Opposition parties called on the government to “wake up before it is too late” to prevent damage to “one of Scotland’s proudest companies”.
His comments come in week where major UK employers sounded the alarm over the growing likelihood of a no-deal Brexit that would send trade with the EU over a cliff-edge into damaging World Trade Organisation tariffs and restrictions.
Aircraft manufacturer Airbus, which employs 14,000 people across the UK, said that it could cease operations altogether in a no-deal Brexit scenario, while Siemens and BMW also issued warnings about the course of Brexit negotiations.
The UK’s car industry called on Theresa May to abandon one of her key red lines in Brexit talks and keep the British economy inside the EU customs union “as a minimum” or condemn the sector to “death by a thousand cuts”.
Alexander Dennis, which has nearly half of its 2,500-strong global workforce employed at its base in Larbert, is a global success story, growing its turnover in a decade from just over £100 million to more than £600m, half of which is generated overseas.
Much of that international production takes place at manufacturing hubs in North America and Asia. However, all buses destined for the European growth market are built in the UK.
Alexander Dennis reached a deal to supply 13 buses to Switzerland earlier this month – only the second order from continental Europe in the company’s history, following a contract in 2017 to supply 19 buses to another Swiss client.
“We have some protection in that Alexander Dennis operates on a model where our production is spread around the world,” Robertson said. “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.”
The Prime Minister insists the UK will get a deal that ensures trade with the EU remains “as frictionless as possible” after Brexit, but a summit of European leaders in Brussels passed without agreement on the future relationship.
May will bring her cabinet together at Chequers next week in a bid to reach agreement on post-Brexit trade and customs policy, before a white paper setting out the government’s plan is published.
With the summer recess period approaching, it leaves just weeks before a deal with Brussels must be signed off at the next meeting of EU leaders in October.
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.”
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.”