Failure of transition agreement will result in financial losses and increased car prices, says Akio Toyoda
The chairman of Toyota, Akio Toyoda, has warned that the automotive industry will inevitably suffer if talks break down on the terms of the UK’s withdrawal from the European Union. “Spiralling logistics and production costs” will hit company profits and force up car prices, Toyoda warned in a statement.
While expressing his “respect and appreciation” for the efforts of the UK government and European Union representatives in trying to reach an agreement, Toyoda stressed how high the stakes were for his company and others in the automotive sector.
“If no withdrawal agreement is reached and the transition period through December 2020 is consequently not implemented, corporate activities and consumers will be adversely affected by the impacts of suspended production activities resulting from failed just-in-time logistics operations, declines in revenue, and revised vehicle sales prices caused by spiralling logistics and production costs,” he commented. “We hope that both the UK and EU governments will continue to make maximum efforts to reach a satisfactory settlement and that a “withdrawal without agreement” is avoided at all costs. We also ask that flexible responses be implemented to ensure a smooth transition for all relevant systems following the UK’s withdrawal, enabling minimal impacts on business activities.”
Toyota operates a production plant in Burnaston, Derbyshire, and in February of this year unveiled a plan to invest £240m in the facility, aided by a £23.1m government grant, to build the next generation of its Auris hatchback. At the time, Toyota Europe president Johan van Zyl said the investment would ensure that “in the worst case scenario” the company would still be able to continue its business in the UK, but warned that future investment will depend on the establishment of frictionless trade with the EU.
In his comments today, Toyoda pointed out “Japanese automakers’ contributions to the economy and employment in the UK and the EU position us as stakeholders in the automobile industry in both the UK and Europe. For those contributions to continue, it is necessary that an unimpaired trade environment between the United Kingdom and the European Union be maintained and that the automobile industry’s activities remain predicated on shared standards, including those regulating vehicle certification.”
I understand that we don’t want British built cars to have tariffs when sold into the EU.
I drive a Toyota. It was manufactured in Japan, not the EU. I had to pay a 10% duty on its purchase price, imposed by the EU on all Japanese cars. I still bought the car. Just saying…
I have always believed that Value Engineering and ‘just-in-time’ supply chains are the most obvious aspects of Engineering and Technology which would and should to ‘cross-fertilized ‘ from our noble profession to those operated by other groups. It is rewarding to note the CEO of Toyota suggests in his comments that it is these factors which are dominant influences on the future of manufacture in both the UK and Europe. But, the problem in the UK is simple. far too many of ‘our’ so called professionals depend on exactly the reverse of Value and Time management: spinning out any matter to benefit more from its continuation, not its outcome. I believe it is that which almost all other countries ‘thinking’ persons find so laughable. Adversarial politics, far too lengthy resolution of disputes, management and labour relations are the very reverse of an inquisitorial approach: and sadly we all pay for such! Dragging out negotiations, changing track, claiming some new or different scenario half-way through: all aimed at encouraging procedural trickery as a route to success?
Although not necessarily disagreeing with Mr.Toyoda’s concerns, I was under the impression that one of the attractions of foreign manufacturers of using the UK as the entry point to the EU was the enhanced flexibility (aka dispose-ability) of the UK workforce and I don’t see that changing anytime soon, so as long as they can still make money out of it , particularly if they have a large domestic local market, they will continue. I also get the impression that all agents are so keen on cost efficiency that they are becoming less resilient to any shock. JIT is all ok until its JTL (just too late). If Hyundai can import cars from S.Korea and still make a profit, I am sure others can find a way also whilst maintaining the industrial base. I am sure that any UK government could adjust the rules to facilitate export if they needed to.
I know that Brexit and SCM is a different kettle of fish – but here’s what Toyota had to say about the UK not joining the Euro (around 2000) . I’m sure there will be impacts both negative and positive. The point is no one can really predict and I don’t take these warnings serously – they’ve cried wolf took many times. Airbus, BMW etc all want to continue of their nice status quo operations set up, nudging and lobbying the EU in Brussels where they can. Well I for one am happy to call their bluff.
‘Toyota threat to quit UK over euro ‘
https://www.theguardian.com/business/2000/jan/18/emu.theeuro
Like all commercial negotiations, Brexit should have been done in private, without any of the public statements that have been made in the process of talks. |t the end of it all, the proposed agrement should then have been made public. Cuts out all the posturing!!
But it was not a commercial negotiation, it was a social and political one. There’s a strong argument for them to be open and televised!
Good point Frank on the fragility of supply lines. JIT and ‘The Toyota Way’ have degenerated into a mantra since at least the early 2000’s in the UK. It’s time for a critical look at it.
Lean etc can sort out some disorganised organisations and let’s face it many in the Uk were very poor. It has it’s place as does many of it’s techniques. But by simply squeezing out more from less aka efficiency, it is possible that incremental innovation thinking becomes ‘baked in’ as well as supply lines being fragile. Scope for genuine, even radical innovation in manufacturing processes (and organisation) becomes limited (especially as it is unlikely to definitely deliver ROI in the short term).
Ultimately JIT etc may contribute to companies being risk adverse, becoming part of the status quo and, across industries, producing products that differ little between companies.
Some ‘textile’ related history. what a difference now: we are being warned of the consequences of ‘our’ weaknesses, by the CEO of Toyota. In about 1885 the Crown Prince of Japan and a ‘delegation’ (presumably of Shogun’s there were no industrialists in Japan then) came on a State Visit to Victorian England. One of the cities visited was Manchester -still 2018 ‘twinned’ with Osaka. and amongst the technology which was ‘hoovered’ up was a complete textile Mill and links with the manufacturer UK of the Machinery :both looms and spinning machines. The link was between Platts and Toyota (no cars of course then) What happened to alter the real power base?
You couldn’t have a delegation of Shoguns. There was only one Shogun at a timer. Unless you meant Samurai?
Apologies! sure you are right. Interestingly, the house built in Osaka for the fitters and mechanics who went to Japan and installed the textile mill is called the White House! and its still there. The rooms are massive, the beds and doors are substantially larger than ‘normal’ in Japan because the purchasers had noted that the average English fitter was 50cm taller that the average Japanese. I take little comfort (nor should the USA (Pearl Harbour) and Russia (Tushana)) from knowing that the syllabus for trainee Japanese Naval officers and Engineers was based upon and initiated from that developed by Professor Ewing in the 1880 et seq for those being trained at Britannia Naval College. Ewing was one of the first ‘technical’ persons recruited by the Royal Navy to enhance technical education . The building where I studied Electrical Engineering at St Andrews was called the Ewing Building!
For the first time in my life, I bought a new car last month. I try to buy stuff that’s actually made in Britain (rare as hen’s teeth). The Toyota Auris Touring Sports Hybrid is the only car on the market that fits my bill – carrying capacity, economy, range – on promotion (end of model) with 0% finance. But a scrappage allowance of £3,000 on my 16-year old Audi A2 (collapsed suspension) clinched the deal.
I can’t see myself replacing it with anything other than a small, zero-emissions car. Will a second hand BEV be a good buy (charging infrastructure) in the mid 2020s? What choices will I have, if firms see no profitable future – made in Britain?
https://qz.com/india/1133216/suzuki-toyota-partnership-why-marutis-entry-into-indias-electric-vehicle-segment-is-such-a-big-deal/