The job losses announced yesterday at JLR and Ford (HERE) and (HERE) are obviously highly regrettable and probably not wholly down to Brexit. I expect we will hear a lot in the coming years of job losses and factory closures that 'are nothing to do with Brexit'. However, I didn't expect that narrative to come from The Guardian.
Larry Elliot, the Guardian's economics editor, writes (HERE) that we shouldn't blame Brexit for these job losses but he admits it's something the industry could do without. Perhaps he's right, I don't claim that Brexit' has to carry the can for everything negative. But Ralf Speth, CEO at JLR, lays at least some of the blame on the uncertainty of Brexit.
Elliot says:
"All that said [the companies warnings over a no deal Brexit], the job losses announced by the two companies
had precious little to do with what’s been going on in the UK over the
past two and a half years. No question, Brexit is something they could
do without, but it is much less significant than the four big structural
issues facing the global automotive sector".
Elliot identifies global overcapacity, the fall in the Chinese market, the
diesel issues and the need for more investment in electric cars as the
main problems. Restructuring the UK car industry is
going to be difficult and expensive whatever happens but doing it during
Brexit, risking separation from your biggest market and major suppliers
is asking for trouble. One might say it could not have come at a worse
time.
If
the car industry was a ship heading into a storm, Brexit is equivalent
to deliberately opening the bilges and snapping off the rudder. The
storm obviously isn't caused by either action but does it help? No.
Britain is physically on the edge of the European market and nothing is going to change that. Imagine you are one of the big car makers. You have too many plants, ageing models, unpopular diesel engines and the need for large investment in battery technology and electric vehicles. Where do you put the money?
The UK is already on the perimeter and will soon be totally outside of the huge and lucrative European market altogether. Our productivity, perhaps with the exception of Nissan, is not as good as other countries and transporting parts halfway around Europe is expensive.
Even without Brexit, British plants must be on the list considered barely viable. Factor in the risk that no trade deal will ever be agreed with years of uncertainty in the run up to a possible eventual breakdown of talks and it doesn't take a genius to see that the investment will almost certainly go into mainland Europe, close to the main suppliers and closer to the centre of a market which buys around 8.7 million cars every year. The UK share is 1.4 million (HERE).
Brexit could be the straw which will break the camel's back.
I note Dr North at EU Referendum partly covers this topic today (HERE). But his post also shows how incredibly complex and multi-faceted Brexit is. He is probably the best source of detailed information but I see this morning he says:
"From CBI director general Carolyn Fairbairn, who will be speaking today on the subject, all we will get is generalised whiffle, with no detail to support the eight percent claim [fall in GDP on no deal Brexit]. What we need, therefore, is "project reality" – a determined effort to put factual evidence before the public, setting out costs and detailed information of what mitigation measures might be needed".
I could have told him the 8% figure Ms Fairbairn used almost certainly comes from a Bank of England study (HERE) released only at the end of November. It shows how hard it is for anyone to keep up with everything.
I note Dr North at EU Referendum partly covers this topic today (HERE). But his post also shows how incredibly complex and multi-faceted Brexit is. He is probably the best source of detailed information but I see this morning he says:
"From CBI director general Carolyn Fairbairn, who will be speaking today on the subject, all we will get is generalised whiffle, with no detail to support the eight percent claim [fall in GDP on no deal Brexit]. What we need, therefore, is "project reality" – a determined effort to put factual evidence before the public, setting out costs and detailed information of what mitigation measures might be needed".
I could have told him the 8% figure Ms Fairbairn used almost certainly comes from a Bank of England study (HERE) released only at the end of November. It shows how hard it is for anyone to keep up with everything.
