German manufacturer Schaeffler has said Brexit is a factor in its decision to close two UK plants, with 500 jobs expected to be lost.
The company, which employs just over 1,000 staff in the country, said uncertainty over the terms of the UK’s future relationship with the EU had helped shape a review of its global interests.
Schaeffler announced the decision a week after it issued a profit warning on the basis of “increasing market volatility in the global automotive business”.
It said it planned to shut its production sites in Plymouth, which makes spindle bearings and machine parts, and in Llanelli, where automotive products are manufactured, over the next two years.
That work, the company said, would be transferred to existing sites in the United States, China, South Korea and Germany.
While its biggest plant, in Sheffield, will be retained, Schaeffler said the work of its two logistics centres in Hereford and Sutton Coldfield would be combined at Hereford.
The statement said its review “focused on how best to structure the business in the UK based on various factors including economic conditions, supply and demand, and the decisions OEMs (original equipment manufacturers) are making”.
“It also took into account that only 15% of the goods Schaeffler produces in the UK remain in the country, while the vast majority is exported to continental Europe,” it added.
“The uncertainty surrounding Brexit was one factor amongst others in the analysis of the UK market.”
The company’s regional chief executive, Juergen Ziegler, added: “A global business needs to regularly review market conditions and strive to optimise its footprint across different regions.
“The proposed measures we have taken for the UK reflect this business reality. However, we remain committed to keeping certain activities in the UK, a country that will continue to be important to us.”
Greig Littlefair, managing director of Schaeffler UK, said: “We are committed to having transparent and fair discussions with the employees affected by these proposals.
“We will also ensure our customers continue to be served and that these proposed changes create minimal disruption for them.”
The decision was made at a time when UK business groups such as the CBI and BCC are warning that time is running out for the government to provide clarity over future trading relations with the EU after March 2019.
The Northern Ireland border issue remains the biggest stumbling block to negotiations.
In the meantime business investment has slowed – with international firms under pressure to bolster their EU operations in case of a “no-deal” scenario.
German business groups had warned firms operating in the UK to be prepared for such an outcome.
However, the number of jobs leaving the country to date has so far fallen well short of initial estimates with announcements mainly limited to financial services work.