If you spoke to the industry experts, academics, and the companies themselves after the Brexit referendum result, they would tell you very quietly and off the record, that it meant that the British mass industry was a dead man walking.
Now the Stellantis (Vauxhall) car plant at Ellesmere Port is under threat, that is unless the UK government can renegotiate the Brexit trade deal, which let’s face it, the EU has no real reason to do.
The problem is over rules of origin: how much of a car is really made in the UK or the EU. If it falls below a set level then tariffs (taxes) of 10% are applied on cars made in the UK for sale in the EU.
This is a problem because an electric vehicles’ major component is the battery and there is only one battery maker in the UK – Nissan. Other car makers have to start making batteries in the UK. If they do not, they will either have to import them from the EU, or they will have to import them from somewhere else and then pay a 10% tax when they export the car into the EU.
Our Brexit negotiators apparently didn’t see this one coming and as a result, the whole basis of mass car making in the UK is now at risk.
But it is not the only problem. Border controls, red tape and government meddling with rules, regulations and standards are a nightmare for a “just in time” manufacturing industry. It is obvious that the industry is under intense pressure to go somewhere else, where the borders are open, the tariffs are non-existent, the rules are set in stone and the market is huge. In short – the EU.
This means that an industry that provides 800,000 well paid jobs, cutting edge technology, highly productive foreign investors, massive amounts of research and development, is now threatened by Brexit.
The old saying is that “it takes a Continent to make a car”. The size of the production run necessary to make the huge investment in a factory worthwhile, the number of components, the competition between thousands of suppliers, the logistics and a dozen other factors are only possible on a continental scale. But the UK has left the continental supply chain, placed barriers in the way of the industry and added costs to every car maker in the country.
The government has failed to help. The car industry – in fact, the whole of Britain’s manufacturing sector – is desperate for a government strategy. Just this week, France attracted billions of pounds worth of investment from Taiwan for a new battery plant in Dunkirk, and Germany attracted another one from Sweden, seeing off intense competition from the US.
The EU is relaxing subsidy rules, coordinating investment in the car industry, and in batteries and green technology. It has to, as the US government is throwing billions at this problem, trying to force whole industries to take up green technology and invest in the States.
Meanwhile the UK government can only stand on the side-lines wringing its hands. There is no scheme, no strategy, no plan, very little money, and very little interaction with industry. Even Sir Keir Starmer is wittering on about “removing barriers” and “making Brexit work for business”. He really needs to listen to the car industry, which must feel it is screaming into a vacuum.
Remember the negotiations were led by people who thought the German car industry would gallop to our rescue or we would get a “better deal” outside the club? Well, now we are yielding the results of that miscalculation.
So, what will happen now?
The EU has little or no incentive to be nice to UK car makers. They are foreign competitors now, and Brussels has little incentive to reopen the talks. After all, they are winning investments and jobs at our expense.
This is a zero-sum game – every factory, car model, battery plant and investment they win is one we lose. At present, it looks as if it is the UK that will end up with zero.