UK Auto Makers Plead For Single-Market Access After Brexit Vote – Wall Street Journal

Posted: Wednesday, June 29, 2016

Jaguar Land Rover Group Strategy Director Adrian Hallmark said the Brexit vote would trigger no near-term job losses, Above a Range Rover sport-utility vehicle on an elevated production line at Jaguar Land Rover’s manufacturing plant in Solihull, England.
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LONDON—Manufacturers and consumer-products companies in Britain are sticking to their business plans despite the country’s referendum last week to exit the European Union, though they spoke with one voice in pleading for the U.K. to keep its access to the European single market.

“Clearly we want to retain tariff-free access to the single market,” said Mike Hawes, the head of the Society of Motor Manufacturers and Traders, which represents the U.K. auto industry. Mr. Hawes wouldn’t speculate on the industry impact if the U.K. loses access to the single market.

Access to the single market is a high priority for almost every U.K. manufacturing and services business, but how exactly Britain would keep that access is unclear. Norway, for example, is part of the European Economic Area but has to accept free movement of EU citizens and contribute to the EU budget—two things many pro-Brexit voters in the U.K. firmly oppose.

The British automotive industry is one of the sectors potentially most vulnerable to the uncertainty caused by last week’s Brexit vote. The U.K. is the biggest producer of cars in Europe after Germany, Spain and France, and represents the second-largest EU market for new cars after Germany.

The U.K. automotive manufacturing sector generated £71.6 billion ($95.8 billion) in sales last year, with production rising 5.2% to 1.7 million vehicles, Mr. Hawes said.

Erik Jonnaert, secretary-general of European Automobile Manufacturers’ Association, said: “I do not really expect for the time being any impact from Brexit on sales.”


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Individual auto makers also remain sanguine for now about the outlook for their industry.

“The short-term issue that Brexit presents doesn’t change our overall strategy,” said Jaguar Land Rover Group Strategy Director Adrian Hallmark. The luxury auto maker, a unit of India’s Tata Motors Co., exports about 80% of its vehicles.

Mr. Hallmark said the vote would trigger no near-term job losses, though long-term prospects were contingent on what sort of new U.K.-EU trade deal is negotiated. Plans to set up a new production facility in Slovakia announced late last year wouldn’t be affected, he said.

Toyota Motor Corp.
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sees “no immediate change to our business in the U.K.,” said Johan van Zyl, president of the Japanese auto maker’s European business.

With talks on future trade deals not likely to begin until October or later and a two-year process for the U.K. to exit the EU, “we will just have to be patient during this time,” Mr. van Zyl said.

Candy maker Mars Inc. wants post-Brexit U.K. regulation to converge as much as possible with EU rules on packaging, storage and labeling, since differences would raise complexity and cost, said Matthias Berninger, vice president for public affairs. He worries about “death by a thousand razor cuts of new regulation” that could move the U.K. “to a place that looks different to the rest of the EU.”

Access to skilled labor is another concern.

The car industry needs to tap foreign workers, the SMMT’s Mr. Hawes said, with 5,000 vacancies in the industry. “We have to secure talent from abroad,” he said.

Similarly, the U.K. food industry has almost 100,000 workers from the rest of the EU, according to the Food and Drink Federation, a British trade body. The federation estimates the food industry will have a shortage of 130,000 workers by 2024 as Britain ages and more technical skills are needed.

FDF Director-General Ian Wright said he would push for clarity on labor issues. “The U.K. government must now develop a new migration policy that ensures food and drink manufacturers have continued access to the workers; we will need to address a looming skills gap and the drive for future innovation,” he said.

The Scotch Whisky Association, a trade body, has for months remained staunchly against the idea of Britain leaving the EU despite the slumping pound’s beneficial effect on profits.

“What matters to us are the fundamentals of competitiveness, tariffs and market access,” said the SWA’s head, David Frost. Scotch is Britain’s largest export by value, while France is the Scotch industry’s largest market by volume and its second-largest by value behind the U.S.

The Scotch industry has benefited from EU trade deals with countries like South Africa, Korea and Vietnam. “The big question now is how the U.K. government is going to gear up to do the same, and we need to talk to them about that,” Mr. Frost said.

Write to Robert Wall at robert.wall@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com

Corrections & Amplifications

The U.K. automotive manufacturing sector generated about $95.8 billion in sales last year. An earlier version of this article incorrectly gave the figure as $95.8 million. (June 29, 2016)

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