Indian companies, which have a significant presence in the United Kingdom, are preparing for Britain’s exit from European Union on Friday by cutting jobs, relocating plants and staff. CEOs said they have time till December to finalise strategy for minimising supply chain disruption and sales. Britain plans to complete negotiation for a new trade deal with the EU by December to remove uncertainties linked to tariff.
Tata Motors-owned Jaguar Land Rover (JLR) has announced it would cut 500 jobs from the UK operations due to Brexit. The company manufactures 77 per cent of its global shipments in the UK and has relocated manufacturing of Defender brand of SUV to Slovakia.
“We now need to see how the negotiations till the end of December pan out,” said PB Balaji, chief financial officer, Tata Motors Group, at a conference call with reporters on Thursday. The fears that the company had expressed earlier regarding a hard Brexit are not there anymore, he added.
JLR’s sales in the UK have been under pressure due to uncertainty around Brexit for the past several quarters. The UK accounted for 23.1 per cent in the company’s total sales at the end of December quarter. The EU contributed 29.7 per cent in the same period, according to a presentation on Tata Motors’ website.
In October 2018, Ralf Speth, chief executive at JLR, had flagged concerns about a hard Brexit. Such an outcome would have resulted in closure of plants and major job losses. At that point, he had said that exposed industries would have “no way to survive a hard Brexit”.
Analysts said the lower utilisation of its UK plant due to Brexit would lead to higher production cost for each unit and squeezing its margins.
A source in the know ruled out any Brexit impact on Tata Steel customers or supply chain as status quo would continue till December. That’s the time available for both governments to negotiate new terms for trade.
Officials at Essar Oil UK Ltd, which operates a 10 million tonne per annum oil refinery in Stanlow, said they were not expecting any disruption in business due to Brexit. “We have time till December and hope to sort out all the pending issues,” said a top official.
The IT sector is also gearing for Brexit with Tata Consultancy Services (TCS), India’s largest software exporter, saying it would relocate 1,200 workers from the UK. The Indian software sector would be hit if the easy movement of skilled workers between the EU and the UK if there’s no deal between the two trade partners.
Infosys officials had indicated last May that Brexit was turning out to be worse than the Y2K fear due to uncertainties surrounding the actual exit. “It is something which is a huge concern to all our clients. What they’re telling us is that the uncertainty is really affecting them, and the uncertainty is affecting their investment plans,” Mohit Joshi, co-president at Infosys Ltd, said in an interview to Bloomberg in Singapore.
The Brexit, however, can be a blessing in disguise as more digital solutions will be needed as a new set of customs and border control kicks off between the UK and the EU. As most companies would try to minimise supply chain disruptions, Indian firms can offer software solutions to manufacturing companies.
(With inputs from Shally Seth Mohile in Mumbai and Ishita Ayan Dutt in Kolkata)
via Job cut, staff relocation: India Inc gears for Brexit as UK set to leave EU | Business Standard News
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