• Calls for a strategic approach to support manufacturing industry at the European level
  • Highly critical of the EU-South Korea Free Trade Agreement
  • Advocates a more pro-industry policy to aid European manufacturing competitiveness
  • "...opening of EU-Japan FTA discussions should not go ahead until the issue of non-tariff barriers to trade is fully addressed by the Japanese"
  • European market is tough
  • Ford is continuing to invest in Britain
Odell railed against non-tariff trade barriers

Odell railed against non-tariff trade barriers

Ford of Europe chairman and CEO Stephen Odell tells just-auto that he would like to see a more coherent European industrial and manufacturing policy as well as free trade that is fair.

Speaking at a London reception to mark the centenary of Ford's presence in Britain, Ford's European chief begins his address in upbeat mood. Ford has been around in the UK for a hundred years. The Blue Oval may not be making cars here any longer, but leadership of the car market has lasted 34 years; leadership of the commercial vehicle market is 45 years. Ford directly employs some 15,000 people in the UK and the R&D facility at Dunton employs over 3,500 designers, engineers and support staff. If suppliers and dealers are rolled in, Ford estimates that 100,000 British jobs are reliant on Ford.

Ford is committed to invest an additional US$1.5bn in low-carbon, high-tech R&D and manufacturing in Britain over a five year period. The combined annual export value for Transit and engines built in the UK exceeds US$2bn and Ford builds 2m engines a year in the UK at Dagenham and Bridgend.

It's a positive picture but Odell also sounds a serious warning note or two.

Free trade must be fair

“The industry in Europe is at a point of inflection,” he says. Odell's concerns stem from what he sees as unfair international trade arrangements combined with out of touch attitudes towards industry in Brussels.

“Free trade is fine,” he told just-auto. “But it needs to be balanced and it needs to be fair. If we eliminate auto tariffs into the EU for aggressive exporting nations, with little or no export potential for the EU in return, then we will seriously undermine auto manufacturing in the EU. This is not just an auto industry issue, but one that affects many other areas of the European economy as well."
 
He cites the EU free trade agreement with Korea and what he sees as unfair practices present in Korea, a country that exports a lot more vehicles than it imports from Europe.

“Non-tariff barriers are a big issue that need to be tackled,” Odell maintains. “You just have to be an import distributor in Korea to discover that the tax authorities take a greater interest in your affairs.”

Odell is highly critical of the EU-South Korea Free Trade Agreement.

"The EU-South Korea FTA is damaging for the EU automotive industry. It gives improved market access for Korean manufacturers in Europe, while export opportunities for European-based manufacturers are likely to remain strictly limited in South Korea. In fact, we're already hearing some disconcerting rumours from Korea concerning the strengthening rather than the weakening on non-tariff trade barriers. This at a time when one of Korea's manufacturers is stating it expects its sales to increase by 40% in Europe over the next few years.

"Against that background, I believe the opening of EU-Japan FTA discussions should not go ahead until the issue of non-tariff barriers to trade is fully addressed by the Japanese."

Brussels needs to take account of industrial needs 

Odell also called for the creation of a comprehensive industrial policy across the European Union.

"We need an effective EU-wide industrial policy: not just for the auto industry, but for manufacturing industry as a whole,” he says. “Across the EU, the auto industry accounts for 10 per cent of all manufacturing by output, and 35 per cent by employment. It provides direct employment for 2.3m people, and a further 10.4m indirect jobs."

Odell is worried about the way transport policy more generally is discussed in the corridors of the EU. “It worries me that unelected bureaucrats are putting together White Papers that appear to ignore economic realities like the fact that the auto industry is responsible for keeping 13m people employed in Europe,” he says. “The choices have to be put more honestly to the voters: you can vote for an option heavily geared away from the car and all the unemployment that comes with it, or you can have the option that develops personal transportation choices in a socially responsible way and that creates new opportunities and investment.”

Odell cites the European Commission's recently published the EU White Paper on the Future Transport Policy. “I have to say I found it to be a hugely disappointing document. The proposals outlined in the White Paper – which call for a 50% reduction in internal combustion-engined cars in urban areas by 2030, and a complete ban by 2050 – do not effectively address the issues of congestion and environmental improvement in urban areas. It also effectively proposes to ban cars from out-of-city traffic altogether, by suggesting that such travel should mainly be made by train. Such radical proposals require further discussion and reflection, and they need to respect the principles of technical neutrality and freedom of consumer choice."

"The Transport White Paper is a prime example of policy proposal developed with little regard to the collateral damage it can cause. It could discourage essential R&D in Europe, and significantly reduce employment. We have to consider transport policy not only as part of a wider industrial policy, but also in its effects on energy policy."

Tough European market and a brighter future

Turning to the European marketplace, Odell acknowledges that conditions are tough. “Sovereign foreign debt is a big issue. We can see that northern Europe is in a generally stronger position than countries in southern Europe. Perhaps the UK is somewhere in between and austerity measures here will start to bite – that's not to say that they are not needed – but the car market will be impacted.” The UK car market is set to stall he says, with pressures already visible in the retail sector set to remain. The fleet sector will also see some weakening of demand.

Odell is however optimistic that Europe and indeed Britain have a vital role to play in the global auto industry's expansive future.

"The auto industry is one of the world's great growth industries. By 2020, it's estimated the annual global vehicle market will be around 90 million vehicles. That's 90m vehicles that have to be designed, engineered and built somewhere in the world. Why not here in Britain and Europe as whole?"

He detects a change in the attitude to manufacturing in Britain.

"It was a mistake in the 1980s to believe the West was entering a post-industrial age, and it was a mistake to believe this country could focus its economy on financial services. The important thing now is to learn from those mistakes."

"Happily, British policy makers are once again also beginning to see it. I believe they increasingly understand the importance of a strong manufacturing base, and I detect a renewed sense of urgency to re-establish a stronger manufacturing base in this country.

"We fully support the UK government’s goal of rebalancing its economy – putting a greater focus on low-carbon technologies, manufacturing and exports – and we recognise that we have a big role to play in helping to achieve that objective."