Full speed ahead or a car crash? The post-Brexit future of the UK in Europe
The seismic implications of the UK’s cliff-hanger referendum vote to leave the European Union – triggering the resignation of Prime Minister David Cameron and bitter party leadership battles – are still working their way through. And will do so for a long time yet to come. The shock-waves are being felt across Europe and beyond. Bank of England Governor Mark Carney said the nation was suffering an economic version of ‘post-traumatic stress disorder’ after the vote.
The fall-out from 33million UK voters polling 52% to 48% in favour of ‘Brexit’ in a 72% turn-out dominated proceedings at the Society of Motor Manufacturers and Traders’ (SMMT) International Automotive Summit attended by more than 350 top UK and European automotive executives and policy makers and Business Secretary Sajid Javid on Wednesday June 29.
EU ‘will not bite its nose to spite its face’ by taking revenge on Britain over Brexit, say car bosses
Britain’s biggest car maker Jaguar Land Rover insisted no jobs would be shed in the wake of the Brexit vote to leave the European Union as motor industry chiefs insisted it would be ‘business as usual’. Jaguar Land Rover’s group strategy director Adrian Hallmark said he did not believe the EU would impose punitive tariffs against the UK premium car-maker – a rival to Germany’s BMW, Audi and Mercedes-Benz – noting: ’It would be cutting off European noses to spite their faces.’
Toyota’s European chief too said jobs and production were safe in the ‘short to medium term’ as it vowed ‘continue to support our business in the UK. The views were voiced at the Society of Motor Manufacturers and Traders’ (SMMT) International Automotive Summit in London.
Europe has more to lose than Britain if it jacks up the cost of exporting UK cars to the Continent by adding heavy taxes, he said – because any retaliatory action by the UK would have a far bigger impact on their exports to Britain.
It was in their own self-interest to keep open trade flowing, he said adding it was time for ‘cool heads’ and ‘common sense’ to prevail.
Jaguar Land Rover and Toyota both insisted there would be no impact on jobs or production in the short to medium term. But the longer term prognosis will depend on whatever trade deal is thrashed out between the UK Government –under a new Prime Minister – and the European Union.
Jaguar Land Rover’s Mr Hallmark insisted: ’The short term challenge that Brexit presents does not change our overall strategy.
‘We will face up to the challenge.
‘I can’t imagine there would be any overly punitive measures. It would be cutting off European noses to spite their faces’.
Asked directly how many of JLR’s 40,000 jobs could be hit because of Brexit, Mr Hallmark said bluntly: ‘From today’s perspective – none. There is no Brexit-led need to change our strategy.’
President and chief executive of Toyota Motor Europe, Dr Johan van Zyl, also insisted that his company did not foresee job cuts in the short to medium term – which he defined as around ‘six years’ – or the life-cycle of a new car model.
He stressed: ’We will continue to support our business in the UK. We have been here since 1997’.
In the UK Toyota employs 2,600 people building up to 190,000 Avensis and Auris cars a year, including hybrids, at its Burnaston car factory in Derbyshire, with more employed at their engine factory on Deeside.
Mike Hawes, chief executive of the Society of motor Manufacturers and Traders (SMMT) said: ’It’s business as usual for the foreseeable future.
‘The priority for business is access to a single market.’
He believed the UK could still sell a record 2.7million cars this year – beating last year’s record of 2.63million – but continued consumer confidence was key.
Business secretary Javid vows to fight tariffs to save jobs
Business Secretary Sajid Javid told the SMMT conference he would press hard for the UK to secure a deal that meant ‘tariff-free’ access to the European market – so that UK car exports would not be penalised.
But there could be no ‘backtracking’ on a Brexit from the European Union because UK voters have ‘issued their orders’ to the Government which must follow them, he said.
‘The UK will be leaving the European Union. I have to make sure it does so in a way that will work for British business.’
But he stressed: ’Top of my list will be tariff free access to markets so important to the UK automotive industry.
‘We cannot afford to turn our backs on the world.’
The British vote to leave the EU ‘was not a vote to put up a closed sign’ adding: ’Britain remains open for business.’
We need tariff-free access to Europe to preserve jobs’, say carmakers
Ahead of the referendum vote, the Society of Motor Manufacturers and Traders (SMMT) said that remaining in Europe was ‘critical to future of UK automotive industry’ and warned of ‘widespread concern that a ‘Brexit’ could jeopardise current jobs and investment success’.
A poll of SMMT member companies showed that 77% favoured remaining in the EU, with 9% preferring to leave.
Within hours of the exit vote, Mike Hawes, SMMT chief executive, said: ‘The British public has chosen a new future out of Europe. Government must now maintain economic stability and secure a deal with the EU which safeguards UK automotive interests.
‘This includes securing tariff-free access to European and other global markets, ensuring we can recruit talent from the EU and the rest of the world and making the UK the most competitive place in Europe for automotive investment.’
£72billion boost to UK motor industry
The UK automotive industry achieved a record £71.6 billion turnover last year – up 7.3% on 2014. Jobs in the sector increased by 17,000, with 814,000 people now employed in the wider UK automotive industry. Those employed directly in manufacturing grew from 161,000 to 169,000, with the average manufacturing worker generating more than £110,000 in value-added to the British economy.
Vehicle production is up 5.2% to 1.7 million units and average new car CO2 emissions down by a third since 2000, falling 2.6% in 2015.
SMMT chief executive Mike Hawes urged the UK government to keep Britain ‘open for business’ noting: ‘This success has been due to unrestricted access to the single market, input to EU legislation to safeguard the interests of UK Automotive, and the ability to recruit talent from abroad.’
Continued growth depended on ‘certainty and continued open and reciprocal access’ to 100-plus markets.
‘Any risks and uncertainty to these fundamental benefits need to be addressed head on by UK government.’
UK motor manufacturing continues to rise – for now
UK car manufacturing output rose by a quarter (26.4%) to 150,802 cars in May, according to latest figures published by the Society of Motor Manufacturers and Traders. But will it beat last year’s record of 2.63million vehicles?
Commercial vehicle production in May rose 13.8% to 7,748 units with the home market up 23.5% driving the growth.
UK engine production rose 14.6% in May to 218,674 units as major factory investments came on-stream. Domestic demand grew 41.4% to 98,076 units to , off-setting a small -0.7% fall in production for export. Overseas markets took the lion’s share of output, with 631,782 engines exported in the year to date.