The UK Auto Industry and Europe

Jaguar Land Rover's Castle Bromwich production line

Jaguar Land Rover’s Castle Bromwich production line

Professor David Bailey reflects on the impact of EU membership on the UK’s auto industry.

The UK government likes to boast that the UK’s auto industry is undergoing something of a revival, in assembly terms at least. Indeed the UK’s auto sector has experienced investment on an unprecedented scale of late. This has come on the back of a major upturn in auto assembly in the UK – up by over 50% from a low point of around a million cars in 2009 – combined with changes in economic fundamentals which are encouraging firms to build more cars here and to source more components locally.

Remarkably, over £8bn has been invested by major auto assemblers over the last 3 years. It’s hoped that the industry will – by 2020 – overtake its historical peak level of output of 1.92 million cars (a record set back in 1972).

At the same time, the UK government will hold an ‘In-Out’ EU referendum at some point over the next few years.

The impact of EU membership on the UK’s auto industry was explored in a recent UK in a Changing Europe event organised by the Aston Centre for Europe (ACE) and the Aston Business School. Participants heard a mix of views, with arguments in favour of continued EU membership, and also of exit.

Those in favour of continued membership of a reformed EU, including Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT), John Leech of KPMG and Tony Burke of UNITE the union pointed to what they see as significant benefits for the UK’s auto industry from staying in the EU, particularly in relation to investment, growth and job creation (all the things that the UK’s auto industry has been enjoying of late).

Other voices, notably Alex Storey from Business for Britain, and automotive journalist Neil Winton, argued that the UK auto industry would do continue to do well outside the EU.

The pro-EU membership argument stresses that EU membership boosts both the attractiveness of the UK as a place to invest, and the competitiveness of the domestic automotive industry. Not surprisingly, it notes that access to the Single Market is fundamental to UK auto manufacturing, thereby supporting sales and facilitating supply chain growth.

Those pro Brexit, like Neil Winton, argue that if Britain left the EU “it would quickly (within hours?) negotiate a free trade deal with little difference to the current arrangements”.

That’s probably correct; a trade deal with Europe would probably indeed be done. But a second, more powerful argument centres on regulations and standards. Those in favour of continued membership highlight that the UK needs a powerful voice at the EU level to make sure that the specific needs of the UK’s auto industry are considered.

Over 50% of UK auto exports go to the EU, so even if the UK were to leave and maintain access to the Single Market, producers in the UK would still have to meet European regulations so as to sell into Europe.

That would mean having to anyway follow European regulations rather than helping to shape them, which might mean German of French firms shaping them for their own benefit.

At the moment, it’s argued that UK-based niche firms like Bentley, Aston Martin and Jaguar Land Rover can benefit from the British government having a seat at the table when regulations are thrashed out that impact on the industry. They would lose that voice if the UK was no longer a member.

On that, the UK’s auto industry has actually benefited from the government managing to soften tough EU carbon emission regulations for its smaller niche manufacturers.

Again, the pro-Brexiters like Neil Winton are sceptical of this argument, pointing to how the likes of BMW and Mercedes are “hugely successful in the US and China, with no say in the politics at all” (although it should be noted that China has tended to follow the EU’s own ‘euro’ standards on engines over time).

Those supportive of the EU membership point to EU bargaining power in trade negotiations being critical to improving access to international growth markets, thus helping major exporters such as Jaguar Land Rover, and in ensuring mutual recognition of standards.

Pro-Brexiteers argue that the UK acting alone could anyway more quickly cut its own trade deals with other countries than an EU that has to please 28 countries. That’s probably the case but some critical issues would remain on ensuring mutual recognition and greater regulatory convergence across technical standards and approvals procedures (the SMMT cites CEPR work suggesting that transatlantic auto regulatory divergences are equivalent to a tariff of 26%).

It was interesting that at the Aston event new technological opportunities and challenges around autonomous cars and data protection were highlighted in the European context by discussants, both in terms of standard setting for new technologies and in maintaining access to research networks developing such technologies.

The latter point relates to some other arguments for remaining in the EU, such as on ensuring access to EU funding and research networks that has supported R&D and innovation at businesses and universities in the UK, and the free movement of labour which enables UK-based firms to combine domestic and international talent (which was seen as especially important by some at the event given skills shortages in the UK industry).

Of course, that doesn’t mean that the EU can’t be improved, such as through the simplification of regulations and reducing complexities for firms operating in the EU, something that those in favour of continued membership were keen to stress.

Overall, the debate on the importance of EU membership for the UK auto industry boils down to two views. On the one hand is a view that Brexit is compatible with retaining a strong auto industry, as trade deals would anyway be cut with Europe and other countries.

In contrast is the view of the SMMT that “being part of a strong Europe is critical for future success” in particular by being able to shape regulations in Europe and ensuring mutual recognition of standards in wider trade deals.

While the Aston event focused on the UK car industry, the issues it raised – in terms of the single market, influencing regulation, trade, access to funding and networks for innovation, and the free movement of labour – will no doubt be relevant for other sectors in the UK economy as the in/out debate gathers pace.

* Professor David Bailey works at the Aston Business School in Birmingham.

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Workers Uniting Opposes Market Economy Status For China

unite_logo2Workers Uniting, the global union between the United Steelworkers (USW) and Unite the Union of Great Britain and Ireland, has announced its strong opposition to any move by the European Union (EU) to grant Market Economy Status (MES) to China.

China has recently stepped up its campaign to end its non-MES treatment, a status that affects the amount of antidumping duties that the EU may impose on Chinese imports sold at below market value.

“Such a change in China’s status as a trading partner could have a devastating effect on the manufacturing sector in Europe as well as in North America,” said USW International President Leo W. Gerard. “The focus of government leaders on both continents should be on leveling the playing field for workers, not on relaxing standards for countries that already refuse to play by the rules.”

While the EU has yet to make a decision on China’s trade status, EU officials have signaled that the coalition is considering making the move in December of 2016.

“A decision to grant market economy status to China would also be disastrous for European workers,” the Workers Uniting statement said. “We ask all concerned organizations to communicate this opposition urgently to their respective governments.”

For a copy of the full statement from Workers Uniting click here 


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USW: New Edition Of Chemical Solutions

Issue 3 Chemical Solutions lower res_Page_1The United Steelworkers in the USA & Canada have issued the latest issue of their excellent newsletter for their members working in the Chemicals sector.

Click on the link here to download Issue 3 Chemical Solutions

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U.S.A. : No Guarantee Of Trade If UK Leaves EU

imagesThe United States trade negotiator Michael Froman, who is leading the talks for the USA on TTIP and lead the talks on TPP says the USA would not be positive towards negotiating a separate free trade deal with UK if the country votes to leave European Union.

These are the the first public comments from a senior U.S. official on the referendum.

Froman’s comments undermine Tory and UKIP Eurosceptics who have long argued that the UK could ‘go it alone’ and negotiate trade deals with the USA and the rest of the world on the strength of UK brands.

Coming fast on the heels of David Cameron’s rubbishing of the idea that the UK could operate outside of the EU as Norway does and benefit from EU membership (Norway has to pay almost the same monies to the EU as it would if it were a member – and has no seat at the table when agreeing trade deals or legislation); and the laughable idea that we could operate like Switzerland does with the EU (an endless number of trade deals all dependent on the rule that if Switzerland brakes deal one they could lose the lot!) or become some form of low tax enclave such as Singapore, operating offshore from the EU – Foreman’s warnings should not go unheaded.

The USA is the UKs biggest export market after the EU, buying more than $54 billion in goods in 2014.

“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” Froman said – adding that EU membership gives Britain more leverage in negotiations.

“We’re not particularly in the market for FTAs with individual countries. We’re building platforms … that other countries can join over time.”

If Britain left the EU, Froman said, it would face the same tariffs and trade barriers as other countries outside the U.S. free trade network.

“We have no FTA with the U.K. so they would be subject to the same tariffs – and other trade-related measures – as China, or Brazil or India,” he said.

The US has warned that the booming UK automotive export market would be hit with trade tariffs. British built premium cars exported to the United States, such as those made by Jaguar Land Rover, and the iconic BMW Mini would face a 2.5% tariff and could be at a disadvantage to German and Italian-made competitors.

These are facts that need to pointed out to the Brexit Brigade who delude themsleves that plucky little Britain can go it alone – and that other countries could not turn their backs on the UK (or would not dare to).

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World’s Biggest Union Elects New Leadership

New IG Metall President Joerg Hofmann

New IG Metall President Joerg Hofmann

The world’s biggest trade union, Germany’s IG Metall elected a new leadership at its Congress last week in Frankfurt.

The 2.5 million member union has elected Joerg Hofmann, aged 59, dubbed ‘a tough wage negotiator and trained economist’ by the German media as its new leader (First President) and a woman Christiane Benner as his deputy (Second President).

Hofmann, aged 59, takes over from Detlef Wetzel, who has retired aged 62. Benner aged 47, becomes the most powerful woman in the German trade union movement.

Hofmann was elected by 88 percent of delegates, with 8 percent voting against and 6 percent abstaining. Benner won 89 percent of votes, with 8 percent against and 3 percent abstaining

Under Detlef Wetzel the union restored its standing in Germany and reversed membership decline, helped by a strategic organising campaign to recruit workers in new industries, women and young people.

In addition the international outlook of the union has been extended with the union now opening offices in Brussels to influence the EU, and in Hungary and in the southern USA – the latter two to help unions organise in non union car plants owned by German companies, using the German style ‘works council’ system.

Unlike other IG Metall leaders, Hofmann did not come up through the ranks of engineering workers but came through research and then became a full-time union official.

He has set out a series of policies designed to fight attempts by employers using out-sourcing, temporary and agency work to evade collective bargaining agreements and to undermine co-determination, the cornerstone of the successful German manufacturing economy.

The other key issue debated is the digitization of industry which will be a major issue for all manufacturing unions. IG Metall has set out a strategy (backed by a significant resources) to focus on the prospects for traditional manufacturing workers whose work is being taken over by robots and more automation notably in semi and unskilled areas.

IG Metall is campaigning for workers to be trained in higher IT functions to help save them from becoming redundant.


Christiane Benner Second President of IG Metall

Benner’s, election was helped by the fact that she is currently responsible for IT and electronics workers in the union and she came through the ranks as a union youth leader.

She has focussed on ‘click-workers’, including contractors who work remotely, often from home, doing project work such as processing data, paid on a piece-rate basis. “IG Metall needs to reach out to such workers”, she says and warned delegates that “IG Metall will transform itself. We know exactly what’s going on. There will be upheaval.”

Other key issues at the Congress included the VW scandal and its effects on the German automotive sector with speakers making in clear that the union will not accept VW workers paying the price for what was described as ‘criminality’ by managers.

The refugee crisis also dominated debates with delegates and the leadership supporting the need to help refugees find decent work and education to ensure they are not used as cheap labour to undermine German workers standards. Delegates, in a show of solidaritry wore T shirts with “Refugees Welcome” emblazoned on the front.

Chancellor Angela Merkel in her address to the union said the influx of asylum seekers into Germany was part of the fallout from globalisation, which, she noted, had served Germany well in terms of exports and jobs.

Merkel said: “Your experience of globalisation has, until now, has basically been – our economy goes into other countries, builds factories, sells products and the results are positive for German employment and business. And now we’re witnessing an inverse movement: globalisation is coming to us.”

Merkel said that the refugee tide had made “that which we thought was very far away, – the war in Syria or the bloody conflict between rival factions in Libya, is concrete for us in the form of refugees.”

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The Government Can Save Redcar : Judith Kirton Darling MEP

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Middlesbrough MP Andy McDonald: My Plea To Save SSI Redcar

mcdonaldAs As the Member of Parliament for Middlesbrough with many, many thousands of constituents devastated by the SSI collapse, I plead with the Government to consider my analysis.

Now that the liquidation order has been made, I am of the view that this presents some major opportunities for a positive outcome and future at Redcar.

Government is in pole position to turn this situation around.

My understanding is that the Secretary of State for Business Innovation and Skills has the power to give direction to the official receiver as to how the liquidation is to proceed.

If that is so, then I propose the direction that the BIS Secretary should give is the preservation of the assets in this way:

Firstly, the coke ovens and power plant represent a viable business in their own right. There is coal sitting out in the bay in ships waiting to be unloaded. That power plant feeds into the national grid and can make money. That money could be utilised to pay the creditors – many of them in the local supply chain – at least in part for some of the debts they are owed.

Secondly, the blast furnace itself is a nationally and strategically important asset and it is imperative that it is made safe and preserved.

That at the very least should be the direction from the BIS Secretary through to the Official Receiver and that same direction onto the administrator Price Waterhouse Coopers.

If there are insufficiently available funds generated from the coke oven and power plant operation to fund a full mothballing, then Government should provide those funds directly.

My understanding is that a full mothballing is not as costly as some had previously suggested. I’m not an expert but I’m relying on the information the Government has when it says that it would cost a mere £2m to mothball and something similar on an annual maintenance basis.

These are small sums in the grand scheme of things.

The mothballing would avoid an environmental disaster and provide a breathing space to find a buyer as well as the opportunity for a full strategic review of, not only the steel industry, but of all our core industries that underpin our manufacturing base and capability to enable us to put together a coherent and integrated industrial strategy.

Industry is crying out for a national strategy. There are considerable gaps in the UK steel operation. For example, the slab from Redcar is all exported. We don’t have an internal UK market for the very steel we produce. Government should be looking to not only identify the gaps, but to settle a strategy that would facilitate the filling of those gaps in the UK steel chain.

If I am wrong about this, let the Secretary of State tell me why I’m wrong.

On the other hand, if there is merit in what I am saying, he should crack on with implementation as a matter of urgency or otherwise provide an explanation as to why he chooses not to.

Ultimately, we cannot let the Redcar plant disappear. I could set out vast tracts as to the damage it will cause to the Teesside economy but we’ll learn the full horror of the impact in very early course.

I have to say, in the final analysis, Government should undoubtedly intervene in any event.

Let me make it clear, I am not proposing the full scale nationalisation of the entire UK steel industry. I am concentrating solely on the Redcar operation. But what I am saying is that Government stepping in to take this operation off the hands of the liquidators, lock stock and barrel, should not be ruled out.

Let’s face it, when the East Coast mainline fell over some years ago, Government did the right thing and stepped in and took over, albeit temporarily, despite the arguments for it to remain in state hands given the success of the operation. Government stepped in there because the East Coast mainline was far too strategically important for Government to sit on its hands and do nothing.

The same is true of Teesside Steel. And please let’s not have the “state aid” argument. If the state was to step in and take on the ownership, it could so economically. The money needed to get it away from the administrator has to be small fry.

What are we talking about? As a non-operational plant with no one wanting to buy it currently, the coke ovens and power plant apart, we must looking at scrap value. There can be no state aid complications in terms of the blast furnace itself whilst the purpose is to secure and preserve the plant. There is no steel production or trading involved. No one can plead “state aid” in those circumstances. And if they do, then so be it. Let’s resolve that through the necessary channels in the years ahead. In the meantime the country’s biggest blast furnace can be saved.

And as for the coke ovens and blast furnace, I can’t accept that any intervention there could contravene state aid provisions. For goodness sake, it’s EDF the French state owned energy company which has supplied Redcar with electricity and has been hovering about to literally pull the plug on the plant for the last many weeks because of the unpaid bill.

State owned companies provide energy throughout Europe and we simply could not be penalised for our Government owning and operating the Redcar power plant.

Ultimately this is all a matter of political will. I urge the Government to intervene before it is simply too late.

Originally posted on Andy’s Blog. October 3rd, 15:21

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Unite Cab Driver Mike Hedges on Uber “We want a level playing field”

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Workers Uniting statement on breakthrough in Colombian peace talks

Santos-Timochenko2Workers Uniting, the 2 million member global union formed by UNITE the union and the United Steelworkers (USW), congratulates all parties in the Colombia peace process for the efforts that led to the historic handshake between Colombia President Juan Manuel Santos and FARC Commander Timoleon Jimenez ‘Timochenko’ on Wednesday 23 September 2015.

The commitment to sign a final deal by March 2016 and to bring to an end the tragic conflict that has lasted five decades offers hope for a better future for millions of ordinary Colombians.

During the conflict hundreds of thousands of innocent people have been displaced, threatened, imprisoned and killed, including human rights workers, Afro-Colombian and indigenous leaders, and of course our fellow trade unionists.

There is no doubt that years of international campaigning have played a key role in helping to create the conditions for peace, and in this respect Workers Uniting  pays tribute to the trade union campaign Justice for Colombia for all the path breaking initiatives it undertook to help the process reach this point.

Workers Uniting also salutes  all the MPs and trade unionists involved in the Northern Irish peace process who also repeatedly travelled to Colombia and Havana to share their experiences and aid the process,  there is no doubt their assistance was invaluable.

Workers Uniting calls on the international community to remain fully involved and ensure that the agreements are respected and adhered to. There must be no repeat of the 1980s when those who laid down their arms and entered the political process were systematically murdered alongside thousands of other opposition members. We call on the government to confront the existing paramilitary groups and encourage the parties to agree a bilateral ceasefire as soon as possible.

Workers Uniting recognises there is still a huge amount of work to do in building a civil society which can operate free from persecution.  We will continue to remain fully involved in supporting and developing the Colombian trade union movement.

In the meantime Workers Uniting calls on the Colombian government to immediately release political prisoners such as Huber Ballesteros – the falsely accused leading member of our sister union Fensuagro.

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Tribune Article On Productivity


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