Weekly News Review | 17 October 2016 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Level playing field

Jaguar Land Rover has announced that it will “realign its thinking” on investments in the UK, following Brexit and the news of Nissan’s possible compensation. CEO Carlos Ghosn said he could stop further investment into the UK, unless the region compensated Nissan for the incoming tariffs on British-built cars, which has - understandably - unsettled JRL and its Halewood and Castle Bromwich plants. The country's largest automaker believes there has to be a level playing field for manufacturers operating in the UK, otherwise they will leave. This, in addition to the European market losing interest in British-built vehicles post-Brexit, could have a detrimental effect on the country’s manufacturing industry, which relies so much on foreign investment from manufacturers.

Although Britain is not set to leave the European Union until 2017, foreign businesses are already concerned with the possibility of export tariffs into the EU market and are strongly advising the region to elucidate the outcome as quickly as possible. JLR’s Halewood facility built one third of Britain's 1.6 million cars last year and has provided many jobs across its divisions, strengthening the Northern Powerhouse. Now, the company which provided such support to our country is to face tariffs on exported cars and imported parts. With Britain considering Nissan’s plea, you can understand the anxiety of rival automakers, who feel they are being treated unfairly. By facing higher costs in Britain, automakers will have to reduce their competitiveness in Europe, unless they move to a cheaper region within the EU. JLR already operates in Slovakia, so it could easily expand and increase production at its £1 billion manufacturing facility in the city of Nitra, and leave the UK behind. Homegrown automakers like JLR and external businesses such as Nissan have done so much for our country, staying loyal and revitalising the UK as a manufacturing hub. However, if we put strains on these automakers, we will force them to leave. If the capital is not there, what is the point of staying?

The British motor industry has seen phenomenal growth in the last decade, so it will be disappointing to see all of this development go to waste if no action is taken. Production reached record levels in August this year, achieving a 14-year high, which was primarily fueled by exports that drove demand. This is great news for Britain, though I cannot see any further investment from automakers unless we start focusing on technology or start manufacturing batteries for the EV sector. Ultimately, future success depends on continued investment in facilities and products across the countries, and that all boils down to how we maintain competitiveness and keep trading costs to a minimum.

Alex Kreetzer

Alex Kreetzer - News Editor

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