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16 September 2018updated 09 Sep 2021 5:50pm

A no-deal Brexit spells disaster for the UK’s car industry

The former deputy general secretary of Unite the Union claims the automotive industry is facing a triple threat.  

By Jack Dromey MP

Britain’s car industry has gone from strength to strength, having been on its knees four decades ago. However, the future of the industry is at a crossroads where it needs continuation of the strong strategy established by the last Labour government and tariff-free access to its biggest market: Europe.

A generation ago, Britain’s automotive industry was in turmoil. It had become a byword for poor management, low productivity and tumultuous industrial relations. While the car industry in Germany and France was forging ahead, it was in crisis in Britain.

The second half of the 20th century was a turbulent time for the British car industry, characterised by poor industrial relations, low productivity and the eventual bankruptcy of British Leyland, leading to its nationalisation. A key trade union player was Derek “Red Robbo” Robinson. Derek, who I knew well, famously said: “Pay, our problem. Productivity, their problem.” 

Derek was eventually sacked unfairly by British Leyland and the trade union movement was hammered. To the enormous credit of the unions, they rebuilt, with a style I have often called the “car industry model of trade unionism”. Strong, no-nonsense, hard-nosed, standing up for its members but acting as an agent of change, combining higher productivity and higher pay. 

The industry needed long-term security and sustained investment. Under the last Labour government, a remarkable rebuilding process took place which sought to make the British automotive sector a world-class success story. Overseas investment flowed into the industry. This included foreign manufacturers investing in operations based in the UK, not least because of frictionless integration of products and people across the European Union, and no tariffs or regulatory barriers. 

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Then the 2008 global economic crash threatened catastrophe and wholesale closure of car plants. I remember what happened next well, not least because I, as deputy general secretary of Unite the Union, supported my good friend and colleague Tony Woodley, then general secretary, in the discussions to save the industry from collapse. Two things were key: the Scrappage Scheme and the establishment of the Automotive Council. 

The Vehicle Scrappage Scheme was a stroke of genius. Trade your old banger in and get a brand new car at a £2,000 discount. The scheme not only benefitted the environment, taking many of the most polluting cars off the road, but it also led to a boom in new car sales. It was enacted in the 2009 budget and by February 2010, new car sales were up 26 per cent on the previous year. The manufacture of 400,000 new cars saved the industry from collapse.

Next, the creation of the Automotive Council in 2009 led to a more co-ordinated, strategic approach to industrial strategy for the automotive sector. This meant that leading figures from the industry were able to develop a better dialogue with government, shaping a strategy for growth in the sector and leading to more inward investment. With this pioneering industrial strategy, the Automotive Council helped create a state of stability in an industry which had been the complete opposite for a long time. 

The automotive sector accounts for more than £77.5bn in turnover and £21.5bn in value added to the UK economy. The sector employs over 169,000 people directly in manufacturing and over 814,000 across the wider economy. We now make more cars in Britain than we did in the 1970s. 

However, the industry is now facing serious uncertainty. The triple threat of a no-deal Brexit, which could lead to job losses and factory closures, a botched transition away from diesel, which has left the public confused as to which cars to buy, and the most significant technological change in the industry in 100 years as electric and autonomous vehicles become the norm. 

A no-deal Brexit would harm exports to the EU and mean that the “just in time” manufacturing system would become impossible. In “just in time” supply chains, components and parts are delivered at very high frequencies from suppliers located in nearby regions or countries. But for “just in time” to work, the whole delivery system has to be seamless or frictionless, which is why the Society of Motor Manufacturers and Traders has consistently called for customs union membership to continue post-Brexit. 

While it is vital that we move to an automotive industry which consists of primarily ultra low-emission vehicles, the government’s rhetoric around the transition from diesel has left the car industry in limbo. The public has become convinced that all diesel cars are polluting the planet and will be taxed higher, leading to lower sales. However, the sales of electric cars have yet to pick up the slack; this has led to falling sales overall. 

The automotive industry is facing a fundamental technological shift, the likes of which we haven’t seen for over a century. It is vital that the growth of electric and autonomous vehicles is welcomed and embraced. If managed and invested in, this growth can lead to a further boost for British manufacturing. As Unite the Union stated in its impressive document – Electric Vehicles, Autonomous Technology and Future Mobility: A Manufacturing Strategy from the Unite Automotive Sector – investment in sustainable technology can lead to growth in high-skilled jobs for workers, that will help to create the high-pay, high-quality, high-productivity economy which is vital for Britain to succeed. However, if not managed well, our country could pay a heavy price. 

For me, it is about the Jaguar Land Rover workers in the Erdington Jaguar plant. We worked hard to save the factory from closure in 2010. It doubled in size, transforming the lives of thousands of workers in one of the poorest parts of Birmingham. It is unthinkable that those workers’ future now be put at risk. 

During this period of uncertainty, the government must put measures in place to ensure the stability and continued growth of one of Britain’s working class and world-class success stories. A detailed, long-term industrial strategy is vital for future investment and protecting almost a million jobs; something the Tories’ chaotic approach to Brexit simply cannot deliver, leaving one of the jewels in the crown of British manufacturing at risk.

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