Automotive companies divided over Brexit
UK manufacturing firms are optimistic after greater international competition from a weaker pound and the prospect of an export and manufacturing economy. But messages from automotive firms continue to vary.
Recent Confederation of British Industry (CBI) surveys have shown strong optimism among British manufacturers, supported by a weak pound that is expected to boost output and help the economy reprioritise towards an export and manufacturing-based system and away from a consumer-focused model.
The automotive sector looks likely to benefit, with car manufacturers McLaren (see Materials World, April 2017) and Toyota declaring strong signs of support. Toyota recently announced a £240m investment to upgrade its Derbyshire plant, backed by £21m of government funding. However, with automotive companies standing to significantly lose out should the UK fail to negotiate a deal with the EU, potentially being subject to up to 10% tariffs under World Trade Organisation rules and disrupting established supply chains, Toyota Motor Europe CEO, Johan van Zyl, was keen to point out that ‘continued tariff- and barrier-free market access between the UK and Europe, that is predictable and uncomplicated, will be vital for future success.’
Similarly, despite high-profile yet unspecified reassurances from the Government, Colin Lawther, Senior Vice President of Manufacturing Supply Chain at Nissan, has stressed that the company will ‘constantly review’ whether to commit to building two new car models at its Sunderland plant. This echoes coverage from German newspaper Handelsblatt that claims that BMW is considering moving production of the electric Mini away from Oxford, with Germany and the Netherlands among potential replacements.
The CBI is not the only organisation releasing reports on the potential impact of Brexit on manufacturing, with a February 2017 report from PA Consulting Group warning that a hard Brexit could increase the cost of assembling a car in the UK by £2,370. Lies, damn lies and statistics, perhaps – the impact of leaving the EU remains intangible to all but the most capable of economists, analysts or clairvoyants.