Industry is demanding more clarity from government on its Brexit plans after new figures revealed a sharp year-on-year decline in the automotive sector.
A report published today by the Society of Motor Manufacturers and Traders (SMMT) showed a 13.7 per cent drop-off in the number of cars produced in June 2017, compared to 12 months previous. Figures for the year-to-date are only down 2.9 per cent on 2016, and the total is still the second highest in 12 years. However, the June numbers mark the third successive month of decline and concerns abound over the health of the industry in a post-Brexit UK.
“World-class engineering, productivity, strong government collaboration and massive investment in the past few years have helped UK automotive become a global success story,” said Mike Hawes, SMMT chief executive.
“At the heart of this has been the free and frictionless trade we’ve enjoyed with the EU – by far our biggest customer and supplier. But Brexit uncertainty is not helping investment and growth is stalling. The government has been in “listening” mode but now it must put on the table the concrete plans that will assure the future competitiveness of the sector.”
Commenting on the figures, Unite assistant general secretary for manufacturing Tony Burke echoed the calls of the SMMT, and urged the government to provide more clarity.
“The Brexit effect is now real and is biting into an important UK manufacturing sector, our world-class car industry,” he said. “Government must hear the alarm bells ringing and take action.”
“Not only are consumers shying away from buying cars because of the massive economic uncertainty we are in, the industry is also putting a brake on investment until they hear from government that our existing friction-free trading arrangements will be secure once we are out of the European Union.
“The auto sector, in common with our other superb high-tech industries, is built on a complex supply chain. Any interruption to that and jobs and skills are at threat.”
Home Office announcement
Meanwhile, the Home Office has declared that EU-UK freedom of movement will end in March 2019, with a new immigration system set to replace it. Speaking on BBC Radio 4’s Today programme, immigration minister Brandon Lewis declined to give details on the new system, saying plans would be revealed in a white paper later in the year.
Lewis was speaking in the wake of a Home Office announcement that a ‘detailed assessment’ on the impact of EU migration is to be carried out by the Migration Advisory Committee (MAC). Coming almost exactly 13 months after the Brexit referendum, the assessment will look at the costs and benefits of EU citizens living and working in the UK, how migration is distributed regionally, how it affects competitiveness and how it impacts different sectors. The MAC is due to report on its findings in September 2018, just six months before a new immigration system will need to be implemented.
(Credit: jeffdjevdet via flickr)
Commenting on the announcement, Tim Thomas, director of Employment & Skills Policy at manufacturers’ organisation EEF, said: “Manufacturers rely heavily on EU workers as well as non-EU nationals to fill crucial roles within their businesses and any immediate restriction in this supply would only exacerbate the current skills crisis in the sector.”
“Many manufacturers will see today’s announcement as a first step, with the government for the first time acknowledging that future migration changes will be implemented in a measured way over a period of years. Whilst this announcement was much needed, the fate of EU nationals already in the UK before Brexit now needs settled quickly, positively and conclusively.”
Is some of the decline in UK sales caused by people taking out some of these seemingly attractive finance schemes in the last year and then realizing how expensive they are and thus not replacing their car after a year or two? This effect would produce a blip which would be finishing about now.
I was just going to comment on this myself – good point Clive. Despite all the talk about the success of the UK car industry over the past 10 or so years it has always been built on a fragile base. In general volume car production is built on low margins, has been boosted by the financialisation of the industry making them credit businesses as much as producers – save up problems for the future, plus the fact that most UK operations are not only foreign owned, but more importantly foreign managed. JLR might be an exception in so far as it was split away from Ford. If the UK had real entrepreneurs or better managers, it would be working out how to take advantage of uncertainly – not hiding behind it.
Industry is demanding…. how very true. Does nobody ask politely any more? Maybe if industry did its own job, ie recruiting & training more skilled staff through apprenticeships, student sponsorships etc, rather than telling everybody else what they should be doing, we might progress a bit faster and not continually need imported staff.
I think industry has been asking for quite a long time Steve, and is now at the point where it needs some answers from government. And clarity is exactly what’s needed in order to make decisions regarding recruiting & training more skilled staff.
Andrew
Decisions regarding recruiting & training are not for the government. Too easy to take a very short-term view and sit on our hands, buying in resource that other countries are happy to train, sometimes with our money. That is why the NHS is short of nurses, because however predictable this is (and it is clear as the proverbial) it is cheaper to let someone else pay the bill. Accountants rule. Engineers should know better.
Industry can only recruit people who go through the education system knowing that there are well-paid careers in engineering at the end of it. Yes, industry can do its bit to make that case, but when the government cuts budgets for careers advice it is hard to counter negative messages from teachers who don’t know what engineering is all about.
Unfortunately the Government can’t provide clarity as they have no more clue than anyone else. What happens after Brexit is not up to us, it’s up to EU27 and what crumbs they will allow us from their table.
The clock is ticking very quickly and launching studies into the benefits of immigration now is a bit late; no-one would expect any Government to come up with any answers within 2 years, never mind 12 months, leaving us time to act upon them. There can be no ‘transitional period’ for any element of Brexit as it has been pointed out many times by the EU that you can’t be ‘half in’ the club without paying the subscription.
It’s a great pity that all of this information now coming to light was not revealed before we got voted out.
What a bogus article. It is undermined by it’s own data.
For a start the year on year decline in volumes is .09% overall which still way above a Pre-Brexit referendum levels. Secondly the decline is in domestic demand, indeed the data shows a growth in export trade in the year to date figure.
Many other commentators would argue that domestic demand for cars is softening due to an over expansion in the use of credit schemes for new car purchases.
I can understand why the SMMT might be worried given this trend of falling UK sales for their members, but this has nothing to do with Brexit whatsoever.
I agree
Totally agree Des. Anyone that works in Automotive knows there’s still massive investment both in OEM’s and the Supply chain. After a boom there’s always going to be some adjustment . A year on from Brexit , the initial spike in inflation due to the pound devaluation has worked it’s way through the system , and this should benefit consumers
No real apprenticships/tech colleges and 1.28 million people available for work anyone? Same point to the entertainment industry by the way.
You reap what you sow……..
There is no car industry in the UK: all the mass-production models are in foreign ownership; the manufacture of small-scale cars that really are in British hands is minimal.
Surely, a golden opportunity for those keen on environmental-friendlier transport to build electric vehicles, thereby creating anew a British car-industry. Pushing the technological glass-ceiling a la Musk is what is needed – with more positive support from central UK government.
–> An ideal time to introduce advanced transport technologies into apprenticeship schemes and technical colleges – NO MORE FOSSIL-FUEL!
There are 30,000 people employed in automotive factories in the Northeast alone who would take exception to your characterisation of their industry’s non-existence, not to mention around 140,000 jobs in the supply chain.
By 2040 we will see the demise of all new petrol and diesel vehicles and the incentive will be to keep existing vehicles going to posterity. Incidentally there was no mention of electric motorbikes or anything about polluting diesel lorries or new electric trains which are having diesel engines retrofitted; is this progress? Will we see an electric Morgan?
My immediate reaction to the article was that Brexit is being used as a fear factor where the real issue is austerity. However, a number of people have already made this point very clearly. The effect of the announcement about electric cars will be interesting: I would not now invest in current models if I owned a car factory, but take the money and slowly grow battery powered cars if the market develops (i.e. if anyone can afford them).
If you want a good laugh, look at the you tube Mercedes AA class battery powered car: brilliant and possibly subversive!
The year on year graph actually doesn’t look too bad. The output is still well above the pre 2015 levels. I hope us engineers (unlike those in the financial business) don’t expect output graphs to be on a never ending climb.
One dip and the press are blaming Brexit…. again!
Year to date decline is 2.9% overall Desmond, which has been clearly stated in the article. Exports are down 0.9%, with domestic sales down 9.5%. I’m not sure where you’re getting the 0.09% figure but it is, in your own words, bogus.
And the figures do not show a growth in export volume, they show a growth in the percentage of exports that make up overall sales, as domestic demand weakens. As stated above, exports are down 0.9% for the year-to-date, and down 13.1% in June 2017 compared to June 2016.
To claim that the fall in sales has “nothing to do with Brexit whatsoever” is a very bold statement and one which the figures do not support.
It is worth looking at the SMMT figures as they show that while we made 243 k cars in June, we imported about 84k, mainly VW and Mercedes AA class. So , although our car exports are very commendable at 123 k / month, we are still greatly in deficit to the EU.
Another interesting fact from their stats is that diesel is falling most rapidly, but petrol engines are increasing rapidly: pollution scares possibly? Also, Electric-petrol hybrid cars are increasing most rapidly of the electrics, the government grants for pure electric are proving ineffectual, wonder why??.
I have to agree with the writers who say that Brexit has no demonstrable relevance to these stats.
Getting very interested in SMMT figures, not an area in which I have been very interested before.
The UK is doing well in Commercial vehicles and engines, both growing significantly and export balance looking good.
Sadly, given the current demonization of NO2, bus sales are declining everywhere except London and N.I. Demonstration of our governmental commitment to public transport I guess.