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Workers leave the Ford Bridgend Engine plant in south Wales on June 6, 2019, following confirmation that the plant is to close next year.GEOFF CADDICK/AFP/Getty Images

The growing uncertainty over Brexit has hammered the British car industry, which has seen production fall by 22 per cent this year and two major car plants shut down in a matter of months.

The latest blow came on Thursday when Ford Motor Co. Ltd. announced plans to close its engine plant in Bridgend next year, putting around 1,700 people out of work. The 40-year-old facility is one of the largest employers in south Wales. The company said falling demand and high costs made the plant economically unsustainable. ”Residual demand out of Bridgend is really not viable,” said Stuart Rowley, president of Ford of Europe. “It’s very difficult for [employees]. This is one of the most difficult decisions we make.”

The news hit many workers like Len Jones hard. “When we found out, everyone was just silent,” he told the Press Association. “They gave us letters and we just all went home. It’s hard to take in really, even though we expected it. Now it’s official, it’s a bad thing, really.”

It’s the second big car plant closing announced this year. In February, Honda Motor Co. Ltd. said it was shutting its plant in Swindon, England, affecting 3,500 jobs. Earlier this year, Nissan Motor Co. Ltd. pulled production of a new model from its facility in Sunderland, and Toyota Motor Corp. has said it is reviewing its British operations. Jaguar Land Rover Ltd. is also cutting 4,500 jobs globally, with most coming from its sites in the United Kingdom.

Overall car production has fallen for 11 straight months in the United Kingdom and dropped nearly 45 per cent in April compared with a year earlier, according to the Society of Motor Manufacturers and Traders. So far this year, production is down 22 per cent from last year.

Much of the slowdown has been due to the uncertainty surrounding Britain’s departure from the European Union. The U.K. was supposed to leave the bloc on March 29, but that deadline was recently extended to Oct. 31 because the government couldn’t finalize a withdrawal agreement with the EU. Several car plants temporarily shut down in March to prepare for Brexit, and it’s still not clear if a deal will be reached or if Britain will crash out of the EU in October.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation,” said Mike Hawes, the chief executive of the SMMT. Thursday’s announcement “is another crushing blow for U.K. automotive manufacturing.”

Ford officials have been highly critical of the Brexit turmoil, and the company has estimated that a no-deal Brexit would cost the car maker up to US$1-billion. That’s because most of Ford’s production in the U.K. is exported across Europe, and those exports could face stiff tariffs from the EU if Britain leaves without an agreement.

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The Unite union called the closure a 'grotesque act of economic betrayal.'GEOFF CADDICK/AFP/Getty Images

Mr. Rowley insisted on Thursday that the decision to close the Bridgend plant was not directly related to Brexit. “A hard Brexit would not be good for our business, but as far as this decision is concerned, it has nothing to do with Brexit,” he told reporters. “The simple question is, if Brexit had never happened, would this decision be different, and the answer is no.”

Nearly one-third of the plant’s current production has been for Jaguar Land Rover, but that contract is coming to an end, which means the annual output will fall below 125,000 units. That compares to a high of nearly 700,000 a few years ago. Mr. Rowley added that the closing was part of a US$14-billion restructuring at Ford, and he said the company will keep two other plants in the U.K. – an engine facility in London and a transmission plant outside Liverpool.

U.K. car output

Rolling year totals, in millions of units

1.8

1.7

1.6

1.8

1.4

April, 2019

1,392,200

1.3

1.2

1.1

1.0

2013

2014

2015

2016

2017

2018

2019

CARRIE COCKBURN / THE GLOBE AND MAIL, SOURCE: SMMT

U.K. car output

Rolling year totals, in millions of units

1.8

1.7

1.6

1.8

1.4

April, 2019

1,392,200

1.3

1.2

1.1

1.0

2013

2014

2015

2016

2017

2018

2019

CARRIE COCKBURN / THE GLOBE AND MAIL, SOURCE: SMMT

U.K. car output

Rolling year totals, in millions of units

1.8

1.7

1.6

1.8

1.4

April, 2019

1,392,200

1.3

1.2

1.1

1.0

2013

2014

2015

2016

2017

2019

2018

CARRIE COCKBURN / THE GLOBE AND MAIL, SOURCE: SMMT

His explanation didn’t sit well with labour unions or Carwyn Jones, a former Welsh Government leader who represents Bridgend in the regional assembly. "I do know that Ford said themselves in October, publicly, that a no-deal Brexit would mean they would rethink their investment strategies for the U.K.,” Mr. Jones told reporters. “Is this part of that re-think? They will have to explain.” Madeleine Moon, the member of Parliament for the area, was more blunt: “For me, it’s Brexit.”

Len McCluskey, the general secretary of the Unite labour union, called Ford’s move to close the plant “a grotesque act of economic betrayal.” He added, “Ford has treated its U.K. workers abysmally, and they could do so because the fact remains that it is cheaper, easier and quicker to sack our workers than those in our competitor countries.”

The auto sector isn’t alone in reeling from the impact of Brexit. British Steel went into receivership last month putting 4,500 direct jobs at risk and affecting nearly 25,000 jobs at various suppliers. The company’s owner, private equity firm Greybull Capital, said Brexit turmoil had caused a fall in orders from Europe.

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