Amsterdam — Dutch health-technology company Philips may move manufacturing out of the UK in the event of a hard Brexit, as its CEO warned that such an outcome would be a "serious threat" to the viability of its operations in the country.
"I am deeply concerned about the competitiveness of our operations in the UK, especially our manufacturing operations," Frans van Houten said.
His company became the latest in a lengthening list of big businesses, including Jaguar Land Rover, Airbus and BMW, to warn about the potentially serious consequences of a messy divorce.
Van Houten said that additional costs for exports from Philips’s babycare products factory in the UK, under any scenario that did not maintain the single customs union, would amount to the high single digits as a percentage of sales. The company’s plant is in the Suffolk village of Glemsford.
Worst-case scenario planning
"This is a serious threat to the competitiveness of this factory and we need to do worst-case scenario planning," Van Houten said. Philips employs 1,500 people in the UK.
The CEO’s comments were in response to an article in Het Financieele Dagblad published on Saturday, which said Philips could close UK factories and move production elsewhere if the UK did not achieve a good divorce deal with the EU.
A Philips spokesman confirmed that was one of the scenarios the company was looking at in the event of a hard Brexit.
Philips was already struggling with the volatility of the British pound following the UK’s decision to leave the EU, the CEO said.
The company was "absolutely committed to our current and prospective customers in the country", he said.
British Prime Minister Theresa May on Friday imposed her vision of a soft Brexit on her divided cabinet, pleasing businesses with a plan to keep close trade ties to the EU. Michel Barnier, the EU’s chief Brexit negotiator, welcomed the outcome of that meeting, while emphasising that he needed to assess the proposals to see if they were workable and realistic.