BRITISH FIRMS FACE UP TO EURO CHANGE
Industry bosses are upbeat despite country’s future challenges
Leading lights in British motorsport have issued a rallying call, insisting the industry is prepared to face any potential economic trouble brought about by the country’s exit from the European Union.
The United Kingdom last week voted to leave the European Union by just a 1.9 per cent margin after an historic referendum. The verdict has divided the nation, and led to unsettled financial forecasts for the country’s economy going forward, as well as political disruption in the wake of Prime Minister David Cameron’s decision to resign.
The pound dropped sharply when the verdict was announced last Friday morning, plunging to its lowest level for 31 years against the US dollar and share prices in both banking and housing developers suffered big hits. Motorsport is one of the UK’S leading exports, with an estimated 4,300 companies providing 41,000 jobs and boasting an annual turnover of £9 billion.
Despite the short-term turmoil, key motorsport industry figures have called for calm and insist trading can continue as usual.
Britain has yet to trigger the Article 50 agreement, which formally begins the two-year legal withdrawal process from the EU, meaning the UK will remain a part of the EU and function under its current laws for at least the next 24 months.
Chris Aylett, head of the Motorsport Industry Association which networks engineering companies around the world, told Motorsport News: “It’s very easy to find the negatives, but we’re on the edge of change and with every change there is an opportunity, as well as difficulty. This is now about rolling up our sleeves and finding the best direction to go in. It’s hard work, but we start from a very good base. We are companies that have proved ourselves to be world class. That doesn’t change at all.”
Aylett added that leaving the EU doesn’t mean trade will be immediately restricted, pointing out other markets in which exports are strong.
“Britain is a £10bn business in motorsport and we export globally, not just to the EU,” added Aylett. “Europe is a significant market, but it is not the only market. One of the securities that took us through the 2008-’09 period relatively comfortably is we have an international order book from South Africa, Australia, the Far East and so on.
“As long as we can say our industry continues to make products or services to a winning formula then people will buy them. There may be a premium in the future, Europe may decide to put taxes on British motorsport products, but then our winning products will simply get more expensive for the Europeans. They could buy them cheaper elsewhere, but we know that doesn’t win. I would suggest people will want to continue buying British products.
“We could look to increase trade in America for example, the largest single market geographically. No NASCAR race takes place without British-made parts in the cars, same with Indycar. America could be an opportunity, with the lower pound value we are very competitive price-wise, which helps exports. Hopefully alongside that our friends in Europe will want to continue a confident relationship with us.”
Brands at the fore
Should Britain leave the EU entirely, it will be necessary for the country to negotiate fresh trade deals with EU member countries and beyond in order to sustain the economy.
The changes to import and export rules will have implications for all businesses, with manufacturers likely to be the most impacted. Global automotive giants such as Nissan, Toyota and Honda all have manufacturing plants in the UK, using it as a gateway to trading with Europe.
Motorsport manufacturers are split on whether the move away from the EU single market is a wise one. M-sport manufactures Ford rally cars of all levels from its base in Cockermouth. Company head Malcolm Wilson said: “Given that 80 and 90 per cent of our business is export, you can understand that this decision is far from ideal.
“OK, we’ve seen movement in the exchange rate which would be favourable to the market [with the Pound dropping], but what happens when I come to buy my next batch of transmissions or whenever we try to buy anything from abroad?
“One of the biggest problems is indecision. Who knows what trade restrictions other countries might place on dealing with the UK now? This is a real worry for us, nobody can say they’re not going to place a 20 per cent tax on anything brought from Britain.
“Motorsport folk, history has shown, are resilient and, of course, we’ll get through this, but last week has thrown a very big spanner in the works.”
In contrast Lawrence Tomlinson, chairman of the LNT Group which owns Leeds marque Ginetta, insists the decision is good for business. Tomlinson was an active campaigner for Brexit.
Tomlinson said: “I have many friends in Europe who I will continue to trade with, and it is important that we stay friends with the people in the EU, but we must not end up with a poor deal. We must remain firm because remember, they need us just as much, if not more, than we need them.
“Business is held back by Brussels and we could, as a nation, function better and more efficiently outside of the EU. We are constrained currently. We want to compete on a global scale, growth is coming from the US, from China, from India, and we can’t grow into these markets because the EU legislation constrains us. I don’t think [tax] tariffs will be put up because other nations want access to our market.”
The prospect of an independent UK could also provide challenges for race organisers, especially those operating within Europe as well as domestically.
The Stephane Ratel Organisation is based in London and runs both British GT and the pan-european Blancpain GT classes.
Company head and founder Stephane Ratel told MN: “For the moment we have to stay positive about this as I don’t think it’s fantastic for business. But the key thing is nobody knows what will happen now – it is far too early. Some are doom and gloom, but we do not know this is the case.
“Things now depend on what deal the UK can get and how far ‘out’ it becomes. If it will remain in the EU in some way, like an associate in a similar way as Norway or Switzerland then I don’t see much changing. But if it withdraws completely it could be very difficult to run things in Europe due to the tax situations.
“I don’t think motorsport is the most exposed thing. We’ve traditionally not run events outside of the EU as it makes things difficult with customs, imports, visas and documentation. I don’t foresee the UK withdrawing that heavily to make that a big issue.
“The worrying thing is if the withdrawal brings a recession, then it will affect racing no doubt. Last time we ended up with 10 cars in British GT  and it hurt. But I feel British GT is now better equipped to deal with this.”
British GP safe
The British Racing Drivers’ Club has denied that Britain leaving the EU would have an impact on the running of the British Grand Prix, or the sale of Silverstone to Jaguar Land Rover.
The BRDC is still in talks with JLR over the purchase of the track lease. BRDC chairman John Grant said: “There is a risk that impetus to make new investment will be slowed. But we’re going ahead with negotiations and we’re keen to get a deal, so long as it is beneficial to the club.
“I don’t think the Brexit vote will have any impact on the British GP. It’s as safe as any GP can be.”
Grant also said he didn’t foresee trouble in the general operation of Silverstone: “One of the things we are trying to do is attract more visitors from the continent, so if the sterling remains weaker we could see a benefit. But the bigger concern is that, if we go into an economic downturn, people will be less well-off and spend less.” Additional reporting by David Evans, Scott Mitchell and Kevin Turner.