LONDON — The U.K. government has granted a 500 million pound ($634 million) loan guarantee to Ford Motor Co. to support the automaker’s substantial exports of engines and transmissions from Britain.
The guarantee will help Ford to increase investment in electrification and protect jobs at its sites in Essex and Dagenham, the UK’s Department for International Trade said in a statement on Tuesday.
The guarantee covers 80 percent of a 625 million pound ($793 million) loan from commercial banks.
“This financing will help to maintain Ford as a key U.K. exporter,” said Graham Hoare, chairman of Ford in Britain, in a statement.
About 85 percent of the engines and 100 percent of the transmissions the company builds in the U.K. are shipped overseas. The value of Ford’s U.K. exports, including machined engine components, is around 2.5 billion pounds annually, Hoare said.
Ford and its automotive peers in the U.K. face an uncertain future, with the prospect of tariffs on sales to the EU looming in the event of a no-deal Brexit next year.
They also face extra red tape in the form of customs declarations, separate regulatory regimes and proving the origin of their goods.
The threat of border chaos with the U.K.’s largest export destination is another concern, given the lack of readiness among traders for new paperwork requirements and companies’ Brexit preparations being hampered by the coronavirus.
Ford announced plans last year to close its engine factory in Bridgend, Wales.
The automaker is a member of Britain’s automotive trade group that last month called for the government to support the industry’s recovery from the pandemic.
Despite these challenges, U.K. International Trade Secretary Liz Truss said the British government is focusing on the needs of carmakers.
“A thriving automotive industry is vital to the success of the U.K. economy,” Truss said in the statement. “We are putting its needs at the heart of our strategy to remove barriers to trade when negotiating free trade deals.”