Automakers tell Britain auto jobs could be lost if the UK leaves the EU

By Sara Lewis, in Brussels   With a June 23 date set for Britain to hold an in-out referendum on UK membership of the European Union (EU), the European car industry has made it clear it wants British voters to keep their country within the 28-member state bloc.Four top automaker executives have rejected Brexit (British exit from the EU) by adding their names to a letter from business leaders to the London-based The Times newspaper, flagging up the EU’s benefits. 

Ralf Speth, CEO of the UK’s biggest automaker, Jaguar Land Rover, owned by Indian conglomerate Tata; James Farley, Ford executive vice president and president, Europe, Middle East & Africa; Warren East, Rolls-Royce CEO; and BMW board member Ian Robertson all signed the February 23 letter, which argued: “Business needs unrestricted access to the European market of 500 million people in order to continue to grow, invest and create jobs. We believe that leaving the EU would deter investment and threaten jobs. It would put the [British] economy at risk.”

The 197 business leaders from all sectors added: “Britain will be stronger, safer and better off remaining a member of the European Union.”

The letter came just days after British Prime Minister David Cameron returned from a Brussels summit after getting the other 27 EU leaders to agree unanimously to a revamp of British membership arrangements with the bloc, notably to limit UK welfare rights for other EU nationals. Following the renegotiation deal, Cameron set the June 23 referendum date. 

The outcome will hinge on whether voters consider that the deal Cameron clinched February 19 will give the UK more independence, whilst keeping EU economic and other benefits. The 197 business leaders argued the deal does deliver. The letter claimed the PM had “secured a commitment from the EU to reduce the burden of regulation, deepen the [border-free EU] single market and to sign off crucial international trade deals,” such as the planned Transatlantic Trade & Investment Partnership (TTIP) with the USA.

Japanese car makers Nissan and Toyota, both with major plants in the UK, each issued statements February 23, saying they would not campaign on Brexit, but nonetheless backed continued EU membership.

Carlos Ghosn, chairman and CEO of Nissan, which employs 8,000 people in its UK manufacturing, engineering and design facilities, and a further 32,000 indirectly through dealerships and the supply chain, said that the company preferred that the UK stays within Europe as “it makes the most sense for jobs, trade and costs. For us, a position of stability is more positive than a collection of unknowns.”

Ghosn explained: “Last year we produced more than 475,000 vehicles in the UK – 80% of which were exported.” He added that while Nissan remained committed to existing investment decisions, “we will not speculate on the outcome nor what would happen in either scenario.”

A Toyota statement cited “the open and free access to the European market” as a key reason behind its 1992 decision to locate its first major manufacturing operation in Europe in the UK. It noted that nearly 90% of Toyota’s UK-built vehicles are exported and that UK operations “are wholly integrated into our European business.”

Johan van Zyl, president and CEO of Toyota Motor Europe said that the company had “carefully considered the implications for our manufacturing operations,” if the UK quits the EU and “we are concerned that leaving would create additional business challenges.”  He continued: “As a result we believe continued British membership of the EU is best for our operations and their long term competitiveness.”

A key concern of the European auto sector is that by leaving the EU, Britain could lose out on TTIP, which could lead to the mutual recognition of EU and US automotive technical rules – if Britain was outside TTIP, its auto manufacturers would not benefit from this key trading advantage. The pro-Brexit campaign group ‘Leave Alliance’ has argued counters that a non-EU Britain could still negotiate its own specific trade deals for the auto-sector.

Leave argues that the EU creates additional trading barriers by gold plating global standards, “often weakening new measures or mangling them altogether,” despite the fact that EU technical auto standards are based, usually word-for-word on international vehicle regulations, agreed by the World Forum for the Harmonisation of Vehicle Regulations, which is run by the UN Economic Commission for Europe (UNECE). Despite this, the Leave Alliance has argued in a campaign note: “The net result is yet more protectionist barriers. That makes it all the more expensive for suppliers round the world to export components to EU assembly lines.” Automakers disagree. A spokesperson for the European Automobile Manufacturers’ Association (ACEA) told wardsauto: “The UK is a major part of the EU automobile manufacturing supply chain, home to 33 OEM [original equipment manufacturer] production facilities, producing both engines and whole vehicles. This is in addition to many more suppliers to the automotive industry, who are also global competitors in the automotive supply chain.”

The spokesperson pointed to a 2014 KPMG study commissioned by the association’s UK affiliate the Society of Motor Manufacturers and Traders (SMMT) which “highlights the clear mutual benefits of continued UK membership in the EU.”

ACEA holds that continued UK EU membership “is clearly of economic benefit” for both sides, the spokesperson told us, adding: “In a period of increasing global competition, the UK’s place in the EU ensures that it has direct access to one of the world’s largest vehicle markets. It also ensures that the UK has a large degree of influence on the EU trade policies, EU vehicle standards and EU laws that affect its economy and its people.”

This article was originally published by Wards Auto (http://wardsauto.com/).