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At risk

Auto sector stellar success needs single market
Hajera Blagg, Thursday, January 26th, 2017

The UK auto sector has surged to a nearly two-decade high, with the latest figures from industry body the Society of Motor Manufacturers and Traders (SMMT) showing an 8.5 per cent rise in the number of vehicles made in the country, reaching 1.7m vehicles.


The majority – 1.35m vehicles – were shipped abroad, with half being sold to countries in Europe.


But this sterling success may be threatened post-Brexit if the UK does not retain access to the single market or customs union, or else does not secure a good trade deal with the EU.


The trade body highlighted that a record number of car models are now being produced in the UK – ten models were produced last year alone, nine of which were premium brands making the UK the second largest producer of premium brand cars after Germany.


SMMT chief executive Mike Hawes was quick to point out that the latest success of the UK auto industry was not attributable to some “post-Brexit bounce” but was instead the result of years of past investment and a highly skilled workforce using state-of-the-art technology.


“The tremendous growth in UK production is testament to the global competitiveness of the UK automotive sector,” he said. “High class engineering, advanced technology and a workforce committed to quality have helped turn around the industry, making the UK among the most productive places in Europe to make cars.


‘Right deals’

“Significant investment in new plants and products over the past few years has driven this growth, not a post-Brexit bounce. We want trade deals but they must be the right deals, not rushed deals. Failure to do so could damage UK automotive manufacturing beyond repair.”


Hawes gave evidence to the Treasury Committee earlier this week (January 24), warning MPs that despite the years of strong investment that has made the UK auto industry what it is today, it is apparent that firms are now halting investment decisions amid Brexit uncertainty.


“I sense certainly that the amount invested over the last 12 months will not be as high as the preceding one, two, three years,” he said.


“I believe that companies have been at least sitting on their hands for the last four or five months, waiting for a bit more clarity [over Brexit negotiations],” Hawes added.


Indeed, the SMMT’s latest figures have shown that across the automotive sector, firms made committed investments of £1.66bn last year, down from £2.5bn in 2015.


Car manufacturer Nissan’s move in October to commit to producing two new models in the UK even amid Brexit uncertainty did not seem to square with the idea that firms are halting major investment decisions, one MP pointed out.


But Hawes cautioned that “each individual manufacturer will be in a different position”.


“You cannot draw conclusions from one manufacturer,” he said.


And even so, last week Nissan CEO Carlos Goshn was reported as saying that “when the [Brexit deal] package comes, you are going to have to re-evaluate the situation, and say, ‘OK, is the competitiveness of your plant preserved or not?’”


Aston Business School professor of industrial strategy David Bailey said that continued uncertainty over a post-Brexit trade deal must end as soon as possible if the auto industry is to continue on its path of unprecedented success.


“Plants and jobs could be at risk if that uncertainty isn’t ‘nailed down’ as quickly in the form of clear parameters for a trade deal – and preferably one that is as close as possible to existing single market arrangements,” he said.


Unite assistant general secretary Tony Burke agreed.


“Dozens of decisions, including new models to UK plants, must be made in the coming months,” he said. “These crucial investment decisions will determine the future of the UK’s car industry and wider manufacturing supply chain.


“While many workers voted to leave the EU, they didn’t do so to be out of work or see their living standards suffer and rights at work torn up through a hard Brexit,” he added.


“The government needs to give the UK automotive industry certainty to unlock investment and ensure it continues to be a world leader.”


Unite general secretary Len McCluskey hailed the latest figures showing that the UK auto industry is riding a wave of success.


“This is further confirmation that the automotive sector is a cornerstone of our manufacturing industry,” he said. “It brings wealth to this country, and good skilled jobs to working class communities.


‘PM must think again’

“That is why the prime minister must think again on her threat to turn her back on the single market which supports the UK car industry,” he added. “Like it or not, Europe is a major market but also our biggest support because car manufacturing in this country relies on a supply chain stretching across the EU.


“Worryingly, investment is drying up, a sure sign that the industry is bracing itself for the threatened hard Brexit.


McCluskey went on to say that Unite will fight for access to the EU’s single market “all the way”.


“To do anything less is to turn our backs on hundreds of thousands of UK workers, which is unthinkable,” he said.


“Our members have worked tirelessly to turn this industry around, to make it a badge of pride for this country.  I will not accept that their futures and the future of this great industry will be thrown into doubt because the hard right of the Tory party and UKIP are ideologically opposed to the single market.”





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