Ford Motor Company is attempting to convey to its 14,000 employees in the UK the importance of remaining in the European Union as the country prepares to vote on whether to remain a member this Thursday.
According to The Street, Ford wrote a letter to its UK employees stressing that a British exit – or “Brexit” – could cost the automaker “hundreds of millions of dollars every year” through higher tariff rates and other lost allowances. “The UK exiting the EU could… result in a default to World Trade Organization tariffs of up to 2.7% on our engine exports and import tariffs of up to 10% on incoming vehicles,” read Ford’s letter. “The time taken to renegotiate trade agreements with the EU and other countries also risks leading to a prolonged period of uncertainty.”
Ford might also face complications with regard to Ford Credit Europe, reports The Street, which is registered as a UK bank. “Of the 19 European markets FCE serves, 12 are branches of its UK headquarters,” Ford’s letter stated. “This is known as ‘passporting,’ and withdrawal from the EU could result in this freedom being withdrawn, posing a threat to this business model.”
The British referendum on whether to remain a part of the European Union comes at a time when Ford Europe is still fighting to increase its profit margin to a sustainable level. Last year, the automaker posted its first profit in Europe since 2011; currently, the regional Ford division is targeting a margin around 6 to 8 percent.