Greg Clark, the Business Secretary has said the UK would forever regret losing its status as a world leader in car making (HERE). How easily people forget the British car industry was rescued by membership of the EU in 1973. The government pamphlet sent to every household before the 1975 referendum talked on page 5 (HERE) about Europe having "vast resources of skill, experience and inventiveness". We probably didn't realise quite how much of this would be needed to rescue British car manufacturing, which was on its knees at the time.
The separate manufacturers were already beginning to struggle financially in the late 1950s and BMC (British Motor Corporation) merged with Jaguar in 1966 to become British Motor Holdings. This was eventually merged again in 1968 with Leyland Motor Corporation to become British Leyland. It was losing money on many of the cars it produced and for those of us old enough to remember, the cars were not very good anyway. Even The Times mistakenly thought we had turned the corner, "£410m British Leyland group to storm the world market The Times, Thursday, 18 January 1968; pg. 17; Issue 57152
The world market wasn't stormed, at least not by the Metro or the Allegro. The opposite in fact, they were complete dogs. Domestic market share was slowly being lost to foreign competition. The industry had to be nationalised to save it from bankruptcy in 1975, the year we had the first referendum on Europe.
The EEC and later the single market gave access to continental suppliers and expertise for parts and a ready market of 250 million customers. It was this that attracted the Japanese who, with Margaret Thatcher's encouragement, showed us how it could and should be done. Nissan's early success brought BMW, Tata, Toyota and Honda and led to the resurgence of the UK as a significant player in car making. Much of this, if not all of it, is built on highly efficient just-in-time manufacturing.
So, we drank in the last chance saloon in the 1970s.
Does anyone believe that leaving the single market, with the inevitable return to friction and border delays in the supply of parts in one direction and possible tariffs on the destination of the majority of the final products in the other direction, is attractive to a manufacturer?
Let's think about this. Would you build a plant in a location where a hard border provided disadvantages both in getting parts to the plant and then selling the finished product into the biggest market? Of course you wouldn't. The UK market would be better served by plants in the near continent. Frictionless availability of parts and nicely inside the main market for the greater part of your output. Cars destined for the UK market would face tariffs but only on the minority of the finished vehicles. Car makers are rational not emotional.
So, if we lose the car industry - and Brexit represents a massive threat - who will rescue us the second time? And more importantly, how?
Yesterday in The Guardian (HERE) Mrs May was being warned:
".... that for some businesses a Canada-style deal is little better than crashing out of the EU with no agreement in place. [Caroline] Fairbairn [of the CBI] said that companies were already acting to minimise the impact of trade friction at Britain’s borders.
“Among car manufacturers, we have heard of one CEO who has been flown out on private jets to meet Macron about relocating his entire business,” she said. “You have got tens of millions being spent by firms on preparing for friction at borders.
Macron has an incentive to block Chequers. Brexit is driving us perilously close to the cliff edge. We can only hope that peering over and looking at the jagged rocks below will bring people to their senses. But such is the madness gripping those in power I wouldn't hold my breath.
The idea that a free trade deal (as the IEA, ERG and BoJo suggest) or WTO terms would provide seamless trading is for the birds. It gives no reassurance to the car makers. It's a bit like saying to someone about to be thrown off a cliff, "Don't worry, you won't fall very far - the rocks will stop you".
WTO terms represents ground zero, rock bottom, the minimum you can get by on but an FTA is only slightly higher. The difference is immaterial. Either will be very painful. Better not to go over the cliff at all. Future historians will have great difficulty understanding how we ever got to this point.
One thing is for sure, if we break the car industry, we will never get another one.
The idea that a free trade deal (as the IEA, ERG and BoJo suggest) or WTO terms would provide seamless trading is for the birds. It gives no reassurance to the car makers. It's a bit like saying to someone about to be thrown off a cliff, "Don't worry, you won't fall very far - the rocks will stop you".
WTO terms represents ground zero, rock bottom, the minimum you can get by on but an FTA is only slightly higher. The difference is immaterial. Either will be very painful. Better not to go over the cliff at all. Future historians will have great difficulty understanding how we ever got to this point.
One thing is for sure, if we break the car industry, we will never get another one.
