Brexit is Killing the UK Car Industry

THIS week’s column is for petrol heads. For the first time in its 73-year history, Honda has decided to close a factory – in Swindon, the company’s only European production facility. According to Honda’s UK boss, Ian Howells, this has “absolutely nothing” to do with Brexit. And Jeremy Clarkson is not a male chauvinist!

Honda is to concentrate production of new electric vehicles (EVs) back in Japan because – says Howells – the European car market is much smaller than China or the US, so does not merit new investment. Besides, with the new Japan-EU trade treaty (from which Brexit Britain is excluded) Honda can export direct to Europe without incurring the current 10 per cent tariff.

The UK media blithely took Howells’ facile nonsense at face value. Of course, it’s true the European car market is smaller than China’s or America’s, but only by a cat’s whisker. In 2017, car sales in the European Economic Area amounted to 15.6m units compared to 17.25m in America and 24.7m in China. I wouldn’t call a market of 15-16 million units irrelevant.

Also, Europeans are buying EVs in large numbers thanks to government subsidies. There are now over one million EVs in Europe, after a surge in sales last year. True, Europe hit the million milestone a year after China. But sales of EVs in Europe are still ahead of those in the conservative US.

The stark reality is that Honda (and Nissan) are pulling out of Britain because Brexit has killed the UK as Japan’s cheap manufacturing base in Europe.

MRS THATCHER’S BACK SEAT DRIVING

Surprising as it may seem, in 1950 the UK was the world’s largest exporter of motor vehicles. But the industry was organised in a multiplicity of smaller companies and decades of under-investment by greedy owners destroyed its global competitiveness. Typically, as with other UK industries such as rail, shipbuilding, steel and mines, the state eventually had to step in to rescue what was left of car manufacturing, once it had been looted by private enterprise.

When Mrs T became Prime Minister in 1979, the bulk of the domestic UK car industry (in the shape of British Leyland, aka BL) was publicly owned. Union militancy in the industry had helped push up working class wages across the economy. Like the miners, the car unions became an immediate target for the Tories to smash.

Initially, BL’s pugnacious boss, Michael Edwardes, convinced Thatcher to put up cash to refresh the company’s range – as a launchpad for privatisation. Jaguar was indeed privatised in 1984. However, BL’s management was hopeless and the new Maestro and Montego failed to sell. In 1986, Thatcher tried to offload BL to Ford and Land Rover to General Motors. Understandably, the Americans simply laughed.

So Thatcher did to BL what she did to the UK mining industry: closed it down and fired its militant workforce. Edwardes was also fired, the company rechristened Rover Group, and sold for tuppence to British Aerospace in 1988. Of course, BAe knew nothing about cars but at least they were patriotically British. As patriots, BAe asset-stripped Rover and sold the rump to BMW.

But Mrs T wasn’t finished. Having destroyed the car unions, she provided millions in subsidies (refused to BL) to persuade the Japanese to set up screwdriver assembly plants for their cars in the UK. These factories were carefully located away from the old centres of militancy like Oxford. The new workforce was youthful and carefully screened to eliminate any hint of union militancy. These same, pro-Thatcherite workers – now in middle age – duly voted for Brexit 2016, blissfully blind to the inevitable consequences.

But the amazing thing is that to this day Britain runs a trade deficit in automotive products. Britain’s car industry is based on assembling sophisticated components imported from the rest of Europe, using cheap, pliant British labour.

Those workers are now being thrown on the scrapheap, yet another (if belated) legacy of Thatcherite economics.

VORSPRUNG DURCH TECHNIK NO LONGER WORKS

Back in 2015, at the height of Tory hype about the UK automotive industry, analysts were predicting Britain would soon break its all-time production record of 1.9m cars (set in the “inefficient”, “militant” days of 1972). By 2018, we were promised, UK car production would break through the two million barrier. Instead, car production fell last year by nearly 10 per cent last year, to a mere 1.5m.

We are not alone: premium German car exports to China are falling fast. Germany built its post-war industrial and export prowess on manufacturing world-beating car engines. But electric cars don’t have engines. Result: the EV revolution has, overnight, eliminated German capitalism’s technological advantage. “Vorsprung durch Technik” has gone into historical reverse with a vengeance.

I can’t think of another industrial nation with a looming competitiveness crisis greater than Germany’s. The UK is already de-industrialised and dependent on low-paid service jobs and financial chicanery. Germany has this transition to go through. Unless, of course, it retreats into Fortress Europe in alliance with Russia. Which leaves post-Brexit Britain marooned in the cold mid-Atlantic.

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Comments (19)

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  1. W.T.Low says:

    Once again you have nailed it, bang on George.

    Bill

  2. Blair says:

    Watching with baited breath as BREXIT BREAK looms. Deal or NoDeal Terresa is oncourse to accept Donald Trump as saviour. The devil will be in the detail. How will UK’s new and rapidly forming Independent Group rescue Great Britain?

  3. Alasdair Macdonald says:

    The car industry is destroying the car industry. Increasingly, people are becoming aware of the effect growing private car ownership has on air quality and the way in which congestion is destroying the ambience of our cities.

  4. Alex Krotowski says:

    Uninformed I’m afraid. If it was to do with Brexit surely Honda would have moved to the continent with massive EU-provided subsidies. But the EU couldn’t tempt them (sensible) and they didn’t. Honda were probably unwilling to get involved (tainted) in the highly fraudulent motors cabal that exists in Germany. Crooks. I live close to Swindon and know workers there. They would tell you that things have been slowing down ever since they stopped producing the Jazz model. UK Leavers were alleged to be ignorant unbelievers when someone in authority/academe made a pronouncement during the referendum run-up.. You (another expert no doubt) blithely dismiss the claims of the guy with the greatest knowledge of the situation. I hope BC’s readers are wise enough not to swallow this fake news.

    1. David McGill says:

      So its just a coincidence that Honda have announced they’re leaving the UK one month before Brexit

  5. Charles L. Gallagher says:

    George, if EV’s don’t have ‘engines’ or do you consider that electric motors are not ‘engines’. For the record Germany makes some of the best electric motors in the world e.g. Siemens, with the rest of the world only just catching-up with Siemens 1944/45 technology.

  6. Iain Lennox says:

    George..George…

    “But electric cars don’t have engines.”

    Get a grip for goodness sake !
    Kindly explain how exactly cars convert electric energy into kinetic energy then !

  7. Willie says:

    Despite the hype about the imminent demise of petrol and diesel cars it just isn’t going to happen any time soon.

    Yes electric car production could be ramped up but the infrastructure for charging huge numbers of electric vehicles is a long long way off.

    Electric car charging isn’t like boiling a 2kw kettle. It’s more like boiling anything from a 7.2kw kettle ( basic 3 to 5 hour home charger ) to 120kw Tesla supercharger with everything in between. Think of a three car family with three basic chargers, or maybe something a bit faster at 20kw or 32kw a charger, and then multiply by the number of houses in the street and the infrastructure and power challenge becomes clear.

    In fact the viewing public, when it rises to put the kettle on at the Coronation Street advert break, already causes power demand surges and now we want to add tens of millions of cars all sitting in the drive charging for the next days travel.

    Or what of electricity charging stations for cars on the move. On a busy motorway how many football sized stations do you need to have a couple of hundred cars sitting whilst they are charged by the fastest most powerful charging points. A hundred cars times 100kw, or 50kw and do you need a power station nearby.

    No, I think diesel and petrol will be with us a bit longer unless we decide to ban personal transport such as cars. And as long as we have cars someone will build them – with petrol, diesel, gas or electric engines.

    Might just be however that very few cars will be built in the UK. Brexit will help see to that.

  8. Willie says:

    Mind you maybe the UK could move to bicycles. That’s good and green. No fumes there. What not to like if you are young, fit and don’t mind hills, distance and the weather. Four bicycles together and you could have an ambulance, or twenty harnessed together a truck. A future growth industry then, our logistics needs satisfied by hordes of cyclists – and no fumes.

    Or what about the old art of sled pulling prior to the invention of the wheel. Another fume free way to service our caves. And could we restore our bicycle and sled manufacturing long departed to offshore climes.is clearly not dead.

    And with parking charges and fines for everyone who doesn’t use a bike or a sled, can we really see an imminent car, lorry, truck free environment free of fumes.

    But I make light. We do want to reduce pollution and that’s why introducing parking charges for employer provided parking to working people is such a sensible step. In fact, maybe if they didn’t work that would be better again. No work, no fumes, easy the peasy.

    1. Alasdair Macdonald says:

      Willie,

      As a septuagenarian, who has never (by choice) owned a car, and who cycles daily, in Glasgow, which is fairly hilly, there are very good cases for increasing bicycle use and there are, indeed, ways for which bicycles can be used to transfer goods in an urban environment.

      Parking needs to be dealt with – irrespective of your jibe about fines for non-bike owners – because it obstructs around half of our roads and creates a fence to corral pedestrians. Car owners are being provided free, or fairly cheaply (where there are CPZs) for storing their property and for providing via the police service, security for their property. Motorised vehicles have provided benefits and I certainly do not want them to be eliminated, but, I do wish to reduce private car ownership and the way it is destroying our urban ethos as well as the environment.

  9. Willie says:

    Alistair, as a cyclist with both the health and enthusiasm for cycling you are fortunate that in electing to never own a car you have been able to excercise the choice of cycling. However for others, and not just because of health or age, the option of cycling cannot be for them. Time, distance, weather, all play apart in how people travel.

    But it is not just the issue of hydro carbon fuelled vehicles that are the issue. Space too is an issue and all too many people confuse mobility with accessibility. If folks recognised that then their mobility, being our traffic congestion, and their immobility, might be better understood, with that then arguing for better, more integrated transport systems. Indeed, and although I have quite a large truck type vehicle, I prefer to use public transport when I can. Unlike you however I could not live and work without the use of vehicular transport.

    Unfortunately the agenda of transport has been hijacked by the anti car anti hydrocarbon lobby with no real appreciation of what is required to achieve an integrated transport system that delivers accessibility at the lowest environmental cost. Such a thinking also appertains to the movement of goods where all transport is bad and no transport good. But more correctly, and aside of minimising food miles, and not eating foreign foods such as bananas et al, who has not entertained the question of why so much heavy traffic, such as containers, have to to go by road as opposed to rail, or rail as opposed to maybe coastal shipping.

    Indeed I read somewhere that one individual in a medium sized car uses more energy per kilometre than one individual on a full aeroplane. And that energy calculation will in a similar way apply to heavy road trucking as opposed rail or sea borne trucking. But I’m not arguing going everywhere by plane or that you should sail from Glasgow to London. Fast trains may ultimately where practicable displace planes, and trams may replace cars. But until then, cars, buses and truck today, will continue to be a mode of transport.

    Ultimately though , reducing congestion, reducing pollution, reducing energy use, probing enhanced accessibility is only something that national and supra national governments can truly change. The road haulage industry will haul as the day is long, and folks will continue to elect to sit in traffic unless and until more attractive modes of travel are made available. Market forces will not do it.

    Moreover, the switch also needs to involve workers. This week’s announcement of the loss of something like 20% of the UKs car production at Swindon will be a bitter blow for the 3,500 direct car assembly workers and maybe another 7,000 in the supply chain

    Ken Livingston once argued for free, or more correctly, general taxation funded free public transport and you know what, in cities that makes a lot of sense. That would certainly drive good public transport forward.

    Anyway Alistair keep up the cycling. Dinnae cause any road rage from some of the intolerant, and keep up the good work. We’re all on the same side.

    1. Alasdair Macdonald says:

      Willie,

      Thanks for your good wishes and for your well considered nuanced response.

      I am a volunteer for the charity Sustrans, which was started, initially to promote cycling but has extended more widely to active travel, public transport and a general reconsideration of how our public space, particularly roads, are distributed. A couple of years back, the Liberal Democrats (they were in Government at the time) held their conference at the SECC in Glasgow and one of the fringe events which Sustrans promoted was with the Road Transport Federation (or similar!)

      I was impressed by the insightful attitude shown by the representatives and the willingness to adapt to changing circumstances. They saw the growth in private car us and the demise of public transport as serious inhibitors to the growth of trade. I think you have echoed these in your reply.

      About 18 months ago, the new Glasgow City Council hosted a travel forum at the City Chambers, which was attended by a wide range of individuals from public transport advocates, climate change campaigners to bus companies, rail companies, hauliers as well as academics. At one point the discussion got round the the Glasgow Region City Deal and the development of Glasgow Airport. The spokesperson for Glasgow Chamber of Commerce was very eloquent in his support for the development of the Airport, but what I found most interesting was that he devoted a substantial section to the roads issue. He was unambiguous: he wanted no more new road building, but wanted the roads we already have substantially improved, mainly in terms of surfacing and lighting but also to be used principally for haulage and public transport and wanted positive measures to incentivise more people to forsake private cars. Of course, there are people who need to use cars, but it is only a fraction of those who claim that they are special cases.

      One of the academics who made a keynote speech provided a lot of rigorous data regarding the unsustainability of the growth of private car usage, but also of its adverse effect on day to day business, on simple matters like trying to make deliveries to shops, or congestion bringing delays in systems which require just-in-time supples.

  10. mince'n'tatties says:

    George does seem to have a bee in his bonnet re. Germany, and going by their shocking support of Volkswagen over the diesel emissions scandal, I don’t blame him.
    Nothing shows more clearly who runs the EU and how little they care for their fellow Europeans, although chances are the Greeks up to speed on that.
    They committed criminal fraud. Guilty, plain and simple. Full on polluters. It took an American court to elicit the truth.
    They have paid out compensation billions in North America yet hide cowering behind arcane EU law here. Not a single comment, far less a scintilla of criticism from any Scottish MEP. Surely no one is surprised.
    And for any readers of a cynical bent….I truthfully do not own one.

  11. w.b. robertson says:

    UK car sales are declining. but vehicles now last longer and folks hang on to them longer. Simples.

    1. Willie says:

      The Waste Makers, by Vance Packard 1960 , gives an insight into consumption for consumptions sake.

      And yes, over half a century later folks change their car, or whatever, not because it is worn out, but because there is a newer, more flashy model.

      And yes, the pricing structure of replacement parts is structured towards encouraging scrap.and new buy.

  12. MBC says:

    I bet Howells is paid by the Brexshits in the ERG and their dark money to come out with this drivel.

  13. Mark Bevis says:

    I don’t agree that Brexit is killing the UK car industry, it is the lack of discretionary spending of the many that is reducing car sales (as well as the collapse of high street shopping). Fossil fuel powered car sales are falling something like 20%. Ten years of austerity, (whether inflicted by a Tory government on it’s submissive populace, imposed on Greece by the EU, or drilled into Haiti by the World Bank) has reduced the surplus spending power of the bulk of the population. Brexit is merely the symptom of the predicament, not the cause.

    With reduced spending power, sales of consumer goods (which includes cars) can only fall. It has only been the availability of cheap credit that has allowed the facade of continued growth to be retained. Whilst an increase in EV sales is initially encouraging, there simply are not the resources to replace privately owned cars one for one with EVs. Lithium for batteries for instance, will only last 10 years at current usage rates, based on known reserves across the planet.

    As with many resource/pollution/climate related predicaments, this is an opportunity to redesign our transport systems radically, starting with the premise that we will have to use much less energy in a future civilisation, that doesn’t pollute, and perhaps starting with the question why do we travel so much anyway?

    See for example:
    http://consciousnessofsheep.co.uk/2018/10/05/car-sales-down-economy-to-follow/
    http://consciousnessofsheep.co.uk/2019/01/10/a-brief-moment-of-clarity/

  14. Wul says:

    How I wish it were just the “United Kingdom of England, Wales & Northern Ireland” that is busy turning itself into a nasty, wee, racist island off the coast of Europe.

    Sadly we in Scotland are getting dragged along for the ride back to the 50’s.

    SPAM fritter anyone?

  15. Rab.Alexander says:

    The thing that convinced me of Salmonds genius was his analysis of the conspiracy to close Bathgate and move BL to England.
    It was printed in the magazine Radical Scotland about 84 well worth the read.

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