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06/12/2016

Pro-EU carmakers say plants not at risk from ‘Brexit’

Transport

Pro-EU carmakers say plants not at risk from ‘Brexit’

Bentley's factory in Crewe, UK.

[Automative Rhythms/Flickr]

Britain’s foreign-owned carmakers, strong supporters of the open markets created by its membership of the European Union, would not shut their plants were the country to leave the bloc, though future investment could be at risk, executives have said.

Prime Minister David Cameron has promised a referendum on membership of the 28-member European Union (EU) by the end of 2017 with many expecting the vote to come as soon as next year.

Cameron has vowed to campaign to stay in the EU if he can renegotiate Britain’s ties with the bloc but the election of a leftist opposition leader, who has given mixed signals on membership, has added to uncertainty over whether the country might vote for a ‘Brexit’ – to leave the EU.

Britain’s car industry has been vocal on the benefits of EU membership, and pro-EU campaigners have warned an exit could lead to job losses in an industry employing almost 800,000 people.

However, executives at the Frankfurt auto show said their British plants were not at risk were the country to leave.

“We made our plans, we’ve announced the investments […] and they were in full knowledge that there was a referendum so we believe in the UK,” said Kevin Rose, board member for sales at Volkswagen-owned Bentley.

“Regardless (of the outcome), we think that the UK is a good place for investment.”

Fellow luxury carmaker Rolls-Royce, which makes all its 200,000-pound-plus models in England, said Britain was central to the brand’s popularity among the super-rich around the world.

“I’ve had lots of questions in my time in a way of why aren’t you opening up a plant somewhere else,” Torsten Mueller-Oetvoes, CEO of the BMW-owned brand told Reuters.

“This is so truly British, that it belongs to Britain and it is also part of our success story that we are from Britain,” he added, stating that maintaining access to markets was crucial.

Even at mass-market carmaker Opel, which shut a plant in Germany last year, there was no sign that Britain leaving the bloc would put its English facilities, which build Vauxhall-badged models, at immediate risk.

>>Read: Brexit would hit UK economy hardest, German think tank warns

“We have plants in Luton and Ellesmere port. We will not turn our back on England,” Chief Executive Karl-Thomas Neumann told journalists.

If Britons voted to leave the EU, “life would carry on,” he said. “We would continue to find ways to invest.”

Two opinion polls in recent days have shown the debate finely balance, with one giving a small lead to those in favour of leaving the EU and the second a slender advantage to those wanting to stay.

Wait and see

Britain’s car industry has undergone a renaissance over the last few years with production expected to reach an all-time high of 1.95 million cars in 2017, beating the previous record set in 1972.

Several executives said that if Britain left the EU, future investments would depend on the kind of deal it struck with other European nations on issues such as trade.

The chief executive of Jaguar Land Rover (JLR), which built almost one in three of Britain’s 1.5 million cars last year, said it was impossible to plan now for ‘Brexit’.

“We don’t know what kind of regulations we have to expect afterwards, so in principle at the moment we only can guess and that’s not a good basis for a decision-making process,” said Ralf Speth, while affirming his commitment to Britain.

Neither JLR nor Japan’s Nissan appear to have stopped investing as the vote approaches, with Nissan saying this month that it would build its next generation Juke sport-utility vehicle (SUV) in Britain and JLR spending a further £120 million pounds at an English plant.

But last year, before a referendum was certain, the chief executive of US carmaker Ford in Europe, Steve Odell, warned the firm would reassess its British operations were the country to leave the EU.

And although Bentley said it had made a commitment to its British plant for at least 15 to 20 years with a recent decision to build its first SUV there, its chief executive said the country faced continual competition.

“Volkswagen Group has 110 locations around the world where they produce cars,” Wolfgang Duerheimer said.

“That means they are not in any case reliant on the UK so if the situation changes dramatically, future decisions need to be considered among the circumstances you face.”

A survey published today (17 September) found that almost half (47%) of British small business owners would vote to stay in the European Union if the referendum on the UK’s membership of the bloc was held today.

>>Read: Half of British small businesses would vote to stay in EU