Brexit and the Automotive Sector
On 13th November 2019, Elon Musk, co-founder and CEO of Tesla, announced that, because of Brexit-related fears, Tesla would construct its first European megafactory (or "Gigafactory") for car manufacture in Germany rather than the UK. He said that it was now "too risky" to build the factory in the UK, even though as early as 2014 he had talked about building a European research and development facility in the UK as a precursor to the proposed Gigafactory.
This disappointing news from the British perspective follows on the announcement in February 2019 by Honda that it would close its plant in Swindon with the loss of 1700 jobs and the announcement in June 2019 by Ford that it would close its engine-making factory in Bridgend, by 2021 with the loss of 1700 jobs. Jaguar Land Rover has also announced that it is cutting 6,000 jobs in the UK.
The Society of Motor Manufacturers and Traders ( SMMT) , the trade association for automotive sector in the UK, has been unequivocal in expressing its fears about the risks of a " no deal" Brexit for the sector. Its official website says that "a "no deal" Brexit would have a devastating impact on the sector and the hundreds of thousands of jobs that it supports".
The SMMT has asked the UK Government to focus on 5 major areas in negotiating the best possible trade agreement with the EU, should Brexit take place - preserving the benefits of the Single Market and the Customs Union , guarateeing the ability to recruit the best Talent , ensuring compatibility of Regulation for the sector within the UK and the EU and finding solutions to Trade- related problems such as issues around Rules of Origin. A tall order and, some might think, really a call to scrap Brexit in the first place!
However, for the automotive sector, Brexit is not just a UK problem and on 22nd September 2019, in an unusual joint statement, leaders from 23 automotive business associations across Europe combined to warn against a "brutal exit" from the EU by the UK, where auto giants such BMW, Peugeot PSA , Nissan and Toyota have factories.
Other commentators , however, say that Brexit is not necessarily the main problem for the UK automotive sector (or indeed for the automotive sector worldwide) and that restrictions on the use of diesel cars for climate change - related reasons as well as the move from petrol cars to electric cars , coupled with the generalised choking congestion of cars on the road, are just as much problems, if not more so, for the sector than the localised issue of Brexit.
Everybody is undoubtedly telling the truth as they see it but , whatever the truth is, complacency cannot be the answer and it is incumbent upon everybody to focus on industrial policies which do not replace free trade by bureaucratic nightmares!
Tesla boss Elon Musk has said Brexit uncertainty made the UK "too risky" an investment after he announced his new electric car factory would open up in Germany.”
