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Why urgent action is needed to protect the Midlands Motor Industry

October 2, 2017 1:45 PM
By John Shoesmith
Originally published by East Midlands Liberal Democrats

Brexit isn't either all good or all bad. It's a very complicated mixture - with some good and bad consequences. During the Brexit negotiations it is important that our politicians understand those areas where there is potential for bad things to happen, so that they take care to avoid them.

One of the most threatened areas is the 'British' motor manufacturing industry. This industry employs 169,000 people in this country, but it is not British owned, nor does it produce cars using only British components. Its owners are from Japan, France, Germany, India, America etc.. It assembles cars using many imported components - 79% of them from the EU.

Its production lines operate on the 'just in time' principle. Parts from across the UK and Europe arrive on the line just when they are needed. Component delivery delays are costly - cars cannot be produced unless 100% of the parts are available.

The motor manufacturers have warned repeatedly that they need a smooth and frictionless border with the EU. Without that their costs will increase as they deal with extra paperwork, costs and delays in their component delivery and in their exports of finished cars.

If our border with the EU is not frictionless the long term consequences will be severe. They will not be immediate, the manufacturers have built costly plants in the UK and they do not want to write off that investment. They are still investing where they have little choice - for example to keep the UK plants in line with global manufacturing methods.

However there will come a time when each manufacturer will face major investments - a new model, perhaps, or a major new technology. Will they invest here or inside the EU? They will invest where costs and risks are lowest.

Right now those investment decisions are going against the UK. Investment in the UK motor industry has fallen disastrously since the Brexit vote - from £2550M in 2015 to £1660M in 2016 and then to only £322M in the first half of 2017. If that trend continues then in 10 years the UK motor plants will be obsolete and uncompetitive. That will lose many thousands of well paid jobs, and motor exports of £750M a week (which should perhaps be written on a bus!).

But - I hear you say - as the EU market closes we can address the much bigger world market. There is a problem with that. Our plants are not British owned. Their owners have already set up plants to serve other continents.

To avoid the wasting away of this huge and valuable industry our action is clear - we must have assured frictionless access to the Single Market. We need that assurance quickly so that investment can begin again - every year it is delayed means that our motor plants become more outdated. The centre of gravity of the motor industry is here in the Midlands, and our London-centric government is quite likely to forget about its importance.

Sources - Sky News - http://news.sky.com/story/brexit-forensics-why-car-industry-is-getting-worried-a11041671 nd Society of Motor Manufacturers and Traders https://www.smmt.co.uk/wp-c