Vehicle manufacturers were well on the road to recovery after the slump of 2009 and many were now heading towards record production while efficiency levels are the best in Europe.
Some car makers might have to rethink their production plans to maximise the benefits of building in Britain and include more UK sourced parts, but the overall situation is that even Europe depended on UK plants for a lot of export work and this income to the foreign suppliers would be jeopardized if tough tariffs were imposed on British models.
“As the Common External Tariff on parts, components and systems is only 3.8%, no efficient UK-based supplier should be alarmed by eventual BREXIT.
“GM Vauxhall car plant at Ellesmere Port has moved from low to medium grade anchorage since 2013. So, whilst anchorage by a supply chain is low, this is more than offset by the excellent market success of the new Astra.
“This has led to the improved status of the plant within GM because of its trailblazing work practices leading to excellent productivity and profitability. In 2015 output rose 9.3% and to August this year by circa 30%.
“Similarly, Toyota’s growth over the last two years could see record output in 2016 at Derby. However, the short-term uncertainty surrounding BREXIT may cause a hiccup for about six- twelve months. Even so, Toyota is now firmly established in the High category after being medium in 2013.
“All the UK auto sectors display good anchorage with none below medium. This is also true of that for trucks and buses as well as cars. After all, the DAF Truck plant is measured as the most efficient truck assembly plant in Europe and it is the only source for rigid, non-articulated, trucks. The degree of UK sourcing should be higher, however.”
There is room for Honda to raise output and concentrate on making Swindon plant a global centre of manufacturing for one model in particular, possibly the Civic.
What is significant is that many of the car makers who have struggled a bit since 2008 are now closing in on their record UK outputs. In 2015, Toyota made 190,000 cars which is not far from their record of 216,000 in 2006. Its annulised output so far this year would exceed this but as said above, continued growth of this magnitude may be interrupted by a short-term hiccup as a result of BREXIT.
Jaguar Land Rover continues to post record output figures and the annualized rate for 2016 would produce another, while Jaguar alone would at last exceed its relatively modest 126,000 made in 2003.
Nissan could about equal its 2012 performance of 511,000 while McLaren will shatter its previous record given the worldwide march of its sales. Total car output from the UK in 2016 may reach the highest ever of about 1.8 Million, the second highest ever.
It must be remembered that in every decade since 1900, a car plant has closed in the UK, even in the late 1940s when the market cried out for new cars after WW2.
So any post-BREXIT closures could be a continuation of a long-term trend, irrespective of BREXIT circumstances. The Chinese owned Longbridge plant doing final assembly of MG models hangs on by its fingertips and its future must be considered in the light of this.
Workers, unions, suppliers and politicians must be alert to the temptation for failing businesses blaming everything on BREXIT.
Leading international economist Prof Garel Rhys is chairman of the Welsh Automotive Forum and President of the Centre for Automotive Industry Research Cardiff University.