UK automotive industry urges rethink on Brexit ‘red lines’ following latest industry numbers

The UK government has come under further pressure on its post-Brexit plans, this time from the automotive industry.

Last week the aerospace sector spoke up as Airbus warned on the disruption it would face if the UK left both the single market and customs union immediately without a withdrawal agreement.

Now, the Society of Motor Manufacturers and Traders (SMMT) has called for swifter progress on Brexit and for a deal that, as a minimum, maintains customs union membership and delivers single market benefits.

The society said investments are slowing and the deadline is approaching, so negotiators “must get on with the job” of agreeing a deal that will put an end to uncertainty and prioritise the needs of the automotive sector.

AUTOMOTIVE RECORD TURNOVER

The SMMT made the call following the latest record turnover figures for the UK automotive industry, which were the result of long planned investments.

UK Automotive’s 19th annual Sustainability Report reveals the manufacturing sector turned over a record £82 billion in 2017, marking an eighth consecutive year of growth. The sector’s economic contribution now stands at £20.2 billion, although a recent SMMT study showed its impact on adjacent sectors as significantly larger, at around £202 billion – some 10% of UK GDP. Jobs in the UK automotive manufacturing sector rose 2.8% to 186,000, with employment across the wider industry reaching 856,000. At the same time, the industry improved its environmental impact, with waste to landfill falling to a new low of 0.7% and impressive reductions in water and energy use. This positive growth is largely due to significant investment in the sector over the last decade, said the SMMT.

“OUTPUT DOWN, INVESTMENT STALLED”

Despite this positive performance last year, the first six months of 2018 have been less encouraging. Production output has fallen alongside slowing demand in the new vehicle markets; job cuts have been announced and investment has stalled, with just £347.3 million earmarked for new models, equipment and facilities in the UK – almost half the sum announced in the same period last year.

With decisions on new vehicle models in the UK due soon, government must take steps to boost investor confidence and safeguard the thousands of jobs that depend on the sector, the SMMT urged. Government must end the current uncertainty about the UK’s future trading relationship with the EU, and commit to continued membership of the customs union and maintenance of the benefits the single market delivers, it said, adding that leaving the single market and customs union will bring an end to the seamless movement of goods that UK Automotive relies upon, with more than 1,100 trucks from the EU bringing components to car and engine plants every day. Without the customs union and the regulatory alignment of the single market, there would be disruption at the border undermining the competitiveness of the sector.

Mike Hawes, SMMT Chief Executive, said: “Today’s figures show the critical importance of the automotive industry to the UK economy. There is growing frustration in global boardrooms at the slow pace of negotiations. The current position, with conflicting messages and red lines goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership. There is no credible ‘plan B’ for frictionless customs arrangements, nor is it realistic to expect that new trade deals can be agreed with the rest of the world that will replicate the immense value of trade with the EU. Government must rethink its position on the customs union.

“There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment. Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it.”

Key to the UK automotive sector’s recent success has been its highly skilled and productive workforce, in which manufacturers continue to invest. In 2017, the number of training days per employees rose by almost a quarter (23.3%) to 3.7 days. In addition, Sustainability Report signatories alone reported an intake of 700 new apprentices last year, on top of the 950 apprentices that were retained – 150 more than in 2016.

The sector’s improved social and economic performance was achieved while simultaneously reducing the environmental impact of its manufacturing processes. In 2017, CO2 emissions per vehicle produced fell by -9.4%, energy use per vehicle was reduced by -0.7% and water use by -7.9%. Meanwhile, waste to landfill was cut by -12.6% to a new record low of 0.7% of all waste produced, with almost 87.4% recycled. Manufacturers also continued to invest in onsite renewable energy production, with signatories to the report producing 60.5 GHh of renewable energy locally in 2017 – enough to power 15,600 homes.

There’s more on the automotive market and the implications of electrification on the fastener sector in Torque’s June 2018 print mag. 

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