Toyota Manufacturing UK
Toyota Manufacturing UK - Burnaston, Derbyshire, United Kingdom. Photo: Toyota UK

Letter From The UK: No Plan B

Letter from the UK

A long time ago, back in the distant days of the 20th century, a blimpish, patriarchal politician called Sir Edward Heath conned the British public. The British nation was told the European Community was all about free trade.

We all thought that was a neat idea and signed up. Little did we know the plan all along was for wholesale political union – a sort of United States of Europe only without safeguards enshrined in a constitution. On June 23rd, this nation will vote whether or not to leave or remain in the European Union.

It’s going to be a close call.

If we stay then we can be sure of an ever more integrated Europe. If we leave then . . . oh; hold on. It turns out nobody knows what will happen and what the effects will be. This is a particular worry for the automobile industry.

BMW has always worked to Plan A. That is, build the Mini and the Rolls Royce in the United Kingdom so we can pretend they are still British products. If we leave the EU, what happens if trade barriers go up? What happens to currency exchange as Great Britain is not part of the Euro zone? What happens to the parts supply network?

Even President Obama has gotten in on the act. He visited our royal palace to meet a two-year old future king called George wearing blue gingham pyjamas and a dressing gown. That’s the future king by the way, not the President. The Prince gurgled tentatively, possibly about marrying Taylor Swift, and then wandered off muttering something about Legos.

Obama wants us to stay within the European family and spoke kindly to the Prince.

President Barack Obama and Prince George at Kensington Palace. Photo: Pete Souza / The White House
President Barack Obama and Prince George at Kensington Palace. Photo: Pete Souza / The White House

The fact is, BMW has no idea what to do if we Brits go our own way. BMW head honcho, Harald Krueger, has said even at this late stage, it is too early to plan for changes if the irritating and irrational Britons vote in the national referendum to leave the EU. Sales of the i3 and i8 electric vehicles are crucial to the company’s future and the loss of trade, thanks to new tariff barriers, could be considerable.

“There is no point in speculating about a Plan B,” Krueger said during the company’s annual meeting in Munich, Germany.

If the UK quits the EU, BMW will use the ensuing two-year transition period to decide what to do next. The trouble is not a single politician has said in public what form that transition will take. In general, the motor industry would prefer if the UK remained in the EU but as there is no Plan B, they are doing their best to support the ‘stay’ campaign. Clearly and obviously they want to maintain the status quo for financial reasons.

None of this ‘people before profits’ nonsense. Don’t rock the gravy train, Brits.

A departure from the Union could cause problems for all foreign motor manufacturers because of the long-term uncertainty about work permits for European Union citizens working in the UK. The same goes for Britons working in continental Europe.

President Obama has been unequivocal on the subject of Britain’s membership of the EU. Although he did not cite the motor industry directly, his emphasis was clear. Stay in or the UK will lose the trade deals America has with Europe. He is also reported as saying it could take ten years for the UK to negotiate a new set of trade deals. How would that affect sales of Mini and Rolls Royce in the USA or American-built vehicle exports to Britain?

BWM i3 and i8. Photo: BMW

Way back in 1989, Toyota chose the UK for its first major manufacturing operation in Europe because of the open and free access to the European market. We had a huge skilled workforce with very little to do thanks to the demise of our home-grown motor manufacturing, plus a strong network of suppliers. The Japanese company is now concerned that Britain leaving the EU would cause operational problems and a lack of competitiveness.

Seventy-seven percent of motor manufacturers would prefer us to stay in. Of course they would. The business uncertainty otherwise is almost more than they can stand.

Nissan is the same. Last year they built 475,000 vehicles in state-of-the-art car plants in the UK. What happens if selling these cars in Europe becomes harder?

The motor trade has a lot on its plate right now.

If we vote to leave the Union then the industry is hoping the two-year transitional period will sort all the individual issues out. Well, they shouldn’t hold their breath. These are European politicians we’re taking about here. These guys can talk for hours and not say anything meaningful. That’s their job.

There are variables beyond counting. By the time this lot gets back from their tax-payer funded lunches and have a little sleep, two years will seem not nearly enough. If the UK does decide to leave the Union it may be that the politicians will not throw their toys out of the pram in a fit of pique but instead, work out a compromise on trade that keeps everyone happy?

There’s no reason why this isn’t possible but we will have to wait and see. In the meantime, the best thing we can do is to stay tuned to John Oliver for updates.

*Geoff Maxted is a motoring writer, photographer, and author of our Letter From The UK series. Follow his work on Twitter: @DriveWrite

First Toyota production in Europe by Salvador Caetano in 1971. Photo: Toyota UK
First Toyota production in Europe by Salvador Caetano in 1971. Photo: Toyota UK

Cover Photo: Toyota Manufacturing UK – Burnaston, Derbyshire, United Kingdom / Toyota UK