Currently reading: Ford: Free-trade agreement critical for UK car industry’s survival
Investment in electrification and autonomy relies on business being financially viable post-Brexit
Rachel Burgess
News
3 mins read
23 June 2020

A free-trade agreement in the face of Brexit is crucial to ensure the future of the UK automotive industry, according to Ford UK chairman Graham Hoare.

“A free-trade agreement is necessary for the viability of our businesses. We’re putting huge amounts of investment into an electric future. We’re embracing digital activities, which is another burden,” he said at today’s SMMT summit.

“We need to do everything we can to avoid that exposure and reinforce the message in every conversation we have for the survival of the auto industry. We need to steadfastly hold that view and support our government partners in delivering that aspiration.”

SMMT chief executive Mike Hawes, who has consistently lobbied for a free-trade agreement with the European Union, said: “Brexit is still the biggest threat to the long-term future of the industry. There would still be industry here [without deal], but it will look very different. The challenges to this industry - Covid, Brexit, electrification, autonomy - these are all happening at once and the scale of change is unprecedented.

"It’s a very agile industry. That’s why we need to work with government and other stakeholders to try and make a bright future.”

Bentley CEO Adrian Hallmark, also talking at the SMMT summit, said: “The bottom line is that any that slows down components and costs us more cash and time, and anything that puts more cost to the customer, is going to reduce either profitability or demand.

“We see a significant hit from a hard Brexit, but we have put measures in place and would have to take price adjustment accordingly. A deal for our industry would be decisive in enabling us to grow and develop at the rate we have over the past ten years.”

Bentley has doubled its warehousing capacity in preparation for Brexit, an implementation which has been able to be stress-tested over the last few months due to Covid-19. “We now have between five and 10 days’ provision [compared to two before]," said Hallmark. "It costs us millions per year - millions we didn’t want to spend. We’ve used that to stockpile components."

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Nadhim Zahawi, minister for business and industry, said while addressing the summit: “The UK is a significant importer of vehicles [to Europe]. Avoiding tariffs should be crucial for both sides. Alongside that, we’ve already agreed deals with Switzerland, South Korea and South Africa, and we’re continuing discussions with others such as Japan and Turkey. We’re committed to removing tariffs with partners and negotiating free-trade agreement with the EU.”

Zahawi also announced £78 million of grant funding for the UK automotive industry, intended to help businesses develop expertise in green automotive technologies. The funding will benefit companies including Ford, Jaguar Land Rover and McLaren.

The SMMT’s second annual trade report for 2020, published today, said that car and light commercial vehicle production volumes are expected to fall by a third to 920,000 units this year as a result of the pandemic. It claims that if a tariff-free deal is in place, full recovery is predicted to take up to five years, with output reaching pre-crisis levels of 1.35 million units by 2025.

However, it said a no-deal scenario could result in volumes falling below 850,000 by 2025 – the lowest level since 1953. This would mean a £40 billion cut in revenues, on top of the £33.5bn cost of pandemic-caused production losses over the period.

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Comments
21

23 June 2020

Perhaps if Ford had not stop building cars in the UK 8 or so years ago I'd take their opinion more seriously.

Ford, as they put it - They might give mainland europe more but not the UK

23 June 2020

Cheeky bastards, closing the Brigend engine plant also, Transits are now built in Turkey (not in the EU last time I looked). Free trade agreement will benefit all the mainland European car plants selling into one of the biggest auto markets in "Europe".  UK manufacturers will suffer? Really? Nissan Sunderland is to start building Renaults soon, now that must be the Brexit effect LOL

23 June 2020

Anyone bother to ask the Ford chairman why his company made thousands of UK workers redundant and pulled both car and van manufacturing out of the UK whilst we had the trade agreement he seeks?

 

 

 

23 June 2020
Exactly this, ford have pulled pretty much all manufacturing from the UK whilst we had a free trade agreement. Hypocritical comments as far as I am concerned.

23 June 2020
Scotty5
I think Ford's changes were on the table before Brexit started.

23 June 2020
Just Saying wrote:

Scotty5 I think Ford's changes were on the table before Brexit started.

 

Everyone else seems to have worked out what I said, whilst others have said exactly the same thing so, err, I'm confused why you single me out.

Just Saying like

23 June 2020
Just Saying wrote:

Scotty5
I think Ford's changes were on the table before Brexit started.

Exactly, just as Scotty said, if ford have pretty much pulled out of the UK before Brexit was even thought of and whilst we had a free trade agreement, what benefit to them in the UK is it if we have a free trade agreement after brexit.
All seems very hypocritical of them to even comment on it.

23 June 2020

Brexit only works if we embrace protectionism. The means ramping up prices of goods we import where the same type of goods we export to the same countries sell poorly. Case in point if we put a 20% import tax on all EU cars then BMW, Mercedes and Audi's sales would suffer at the hands of JLR disproportionatly to how many cars JLR exports to the EU. It's possible to argue that's a good thing.

But lets be clear then Brexit means less free trade internationally and more protectionism. That's a significant change in policy from the Thatcher era. It's very left wing Labour in many respects.

Brexit doesn't work if you want free trade. We are at a negotiating disadvantage with almost every country we trade with, even New Zealand. New Zealand believes exports of lamb will soar to the UK but exports from the UK will barely change.

23 June 2020
TStag wrote:

....

But lets be clear then Brexit means less free trade internationally and more protectionism. That's a significant change in policy from the Thatcher era. It's very left wing Labour in many respects.

Brexit doesn't work if you want free trade. We are at a negotiating disadvantage with almost every country we trade with, even New Zealand. New Zealand believes exports of lamb will soar to the UK but exports from the UK will barely change.

All you need now is some evidence.

Try asking the tens of thousands ex-Ford car employees what the EU did for them.

23 June 2020
xxxx wrote:

TStag wrote:

....

But lets be clear then Brexit means less free trade internationally and more protectionism. That's a significant change in policy from the Thatcher era. It's very left wing Labour in many respects.

Brexit doesn't work if you want free trade. We are at a negotiating disadvantage with almost every country we trade with, even New Zealand. New Zealand believes exports of lamb will soar to the UK but exports from the UK will barely change.

All you need now is some evidence.

Try asking the tens of thousands ex-Ford car employees what the EU did for them.

 

Its not about making a case for or against the EU at this point. I'm simply making the point that for Britain to make Brexit work we have to embrace protectionism. Ramp up those tariffs on imports and aim to wipe BMW and co out in favour of JLR, Nissan, Toyota, etc. The alternative is free trade but we will struggle to make a go of that because the US and others are in a much better negotiating position than us.

 

Happy to listen to other idea about how free trade can be made to work in our favour under Brexit but so far I've not heard 1 convincing argument.

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