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Prolonged Brexit uncertainty riles Japanese companies

  • October 27, 2019
  • , Jiji Press , 10:30 a.m.
  • English Press

Tokyo, Oct. 27 (Jiji Press)–Japan’s industrial world is responding to the likelihood of yet another delay for Britain’s withdrawal from the European Union with irritation, as the prolonged confusion forces companies to stay on high alert for disruption to their business on the island nation.

Britain is expected to postpone their withdrawal, previously slated for the end of this month, avoiding a “no-deal” Brexit scenario that would disrupt the flow of goods between the Britain and the EU.

Many Japanese companies had been stockpiling goods in anticipation for the worst-case scenario, as supply chains for manufacturers would be severely affected by a no-deal Brexit.

Automakers were especially wary of a no-deal scenario, as some 20,000 to 30,000 parts are necessary to build an automobile. To combat this, Honda Motor Co. <7267> increased its stock of parts in its British factories ahead of the end of October to about three days’ worth of goods more than usual.

Toyota Motor Corp. <7203> also increased its parts stock, and will suspend operations at its British plants on Friday, Nov. 1, to prepare for unexpected turns of events. However, Toyota sees limits to its ability to deal with a potential crisis, as the company employs a production system that makes it hold as few auto parts as possible for the sake of efficiency.

“It is possible that a no-deal departure would halt our British plants for several weeks,” a company official said.

Japanese drug maker Eisai Co. <4523>, which has a factory in Britain, increased its stock to about double the standard amount, or up to six months’ worth, at its locations across Europe to deal with a potential no-deal Brexit.

“We are doing whatever we can to ensure our supplies of goods to British and EU patients do not halt,” a public relations official of the company said.

The trade ministry and the Japan External Trade Organization, or JETRO, set up a hotline earlier this month to support companies affected by Brexit. The initiative gives advice mainly to some 200 small companies, including parts makers, on ways to deal with potential disruptions to the flow of goods following Britain’s departure from the EU.

“We listen to individual worries (from companies) and introduce to them measures taken by other companies or experts on policies,” a trade ministry official said.

The prolonged confusion on the fate of Brexit also threatens to impair companies’ abilities to craft strategies in the European market.

“We are waiting for a clear announcement on trade relations between Britain and the EU,” a Nissan Motor Co. <7201> representative said, calling for clarity amid growing uncertainty over Brexit.

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