If the Brexit debate is over, the car industry’s problems are just beginning
Boris Johnson’s hefty majority may have changed the game in parliament, but manufacturers could be forgiven for withholding their judgment. Nothing has changed, to coin a phrase: a hard-Brexit threat still looms over any company that exports to the EU or beyond.
Carmakers are at the forefront of the continuing uncertainty amid an investment freeze and a slump in manufacturing – even as the race towards electric power heats up. Car manufacturing at British factories has fallen by 14% to 1.12 million vehicles in the year to October compared with the same period last year. The November update on car production, due on Friday, is not expected to offer any signs of respite. As well as a general downward trend over recent months, output could be further dented by short production pauses from Jaguar Land Rover, Toyota and BMW in preparation for a no-deal Brexit deadline that was delayed for a second time in October.
Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the new government with a request that it “restore business and economic confidence and re-establish the UK’s reputation as a great place to invest”. The other side of that otherwise banal statement is that the UK is still not a good place to invest for the foreign owners upon whom any British automotive future depends. Only Indian-owned Jaguar Land Rover has announced a major investment this year, and its deci
dedly British brand would surely suffer if it saw its future outside the UK.
Margaret Thatcher – the last Tory prime minister to enjoy a majority the size of Johnson’s – made attracting international investors to revive British car manufacturing a key part of a legacy otherwise marked by brutally rapid deindustrialisation. Her charm offensive encouraged Japanese manufacturers – Nissan, followed by Honda and Toyota – whose lean manufacturing methods injected new energy into an industry in decline.
Membership of the EU’s forebear, the European Economic Community, was an explicit part of Thatcher’s pitch to the auto industry. In that context it is easy to see why Johnson’s wildly successful election mantra, “Get Brexit Done”, remains anathema to carmakers. Nissan has said that a hard Brexit would threaten its entire European business model.
Complex cross-border supply chains, just-in-time deliveries of parts to factory lines that churn out 1,000 cars a day – three years after the EU referendum, the description of the difficulties facing carmakers almost sounds hackneyed. Yet they bear repeating, not least because of the near-1 million people employed by the British automotive industry as a whole, according to the SMMT.
The Conservatives have an interest in preserving these jobs beyond boosting a national industry. Even before Johnson’s new MPs swept away Labour in many industrial areas, a large proportion of the car industry’s employees worked in constituencies with Conservative majorities.
Of the 30 constituencies that contain major automotive manufacturing sites, Conservative MPs represent 20, many of them in the Midlands automotive heartland. Tory MP Justin Tomlinson increased his majority in Swindon, where Honda’s factory is due to close in 2021. Jamie Hamilton Wallis has pushed out Labour in Bridgend, where Ford will close its engine plant by September.
The number of threatened plants and jobs, which also includes Vauxhall’s Ellesmere Port in Labour territory, could increase if Johnson pursues an exit without an EU trade deal on 1 January 2021. He promised last week that the UK would protect carmakers from damage when leaving the EU and that departure would provide new growth opportunities for British industry. Yet British automotive executives, eyeing a prime minister newly emboldened on Brexit, will face the same existential terror for some time yet.
Tory MP Justin Tomlinson increased his majority in Swindon, where Honda’s factory is due to close in 2021