Ford reportedly telling British politicians it would take “whatever action is needed” to protect its business over Brexit was the most-read story on just-auto this week, as the UK government, six months from the off, finally decided to issue some position papers to various industries outlining what is most likely to happen following an increasingly-likely ‘no deal’ departure from the EU.
According to the UK’s Independent newspaper, which did not cite a source, the automaker blamed uncertainty over Brexit for a GBP760m drop in its European earnings in 2017 (it attributed GBP470m of the GBP760m loss to the drop in the value of the pound since the referendum), citing plummeting confidence in the UK since the vote and raising fears of long-term damage from European Union withdrawal. This far in, with no firm outcome to plan for, the frustration of top executives across all sectors is understandable. How is trade going to function? Will there be longer delays at the borders? And so it goes. Some of the earlier ‘doom ‘n’ gloom predictions which have not come to pass remind me of the Y2K hype at the end of the last century when the world was meant to come to a grinding halt at the stroke of midnight on 1/1/(20)00. By about 12:10am in my native New Zealand (first major chunk of land to see the new day), with the lights still burning and New Year parties still in full swing, we knew how that had turned out but, boy, had some money been made playing on people’s worst fears over two digits.
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Yes, there will be difficulties, yes there will be much to sort out, post Brexit, but the auto industry is resilient, has faced crises before, and will ride this one out, I am sure. I also wonder what else Ford has left to cut in UK, if that is the veiled threat? Its European operations have been largely awash in red ink for many years, long before Brexit was invented, and it has already axed or sold all of its UK vehicle manufacturing operations, with the loss of thousands of jobs, ‘exported’, as President Trump might say, to Germany and Turkey. And, when that didn’t work, a few thousand Belgians were dumped out on the street, after the Genk plant there closed, with the work (but not the jobs) moving to Spain. And manufacturing also ended in Australia in 2016. Ford retains R&D and engine making in the UK, a huge dealer network – and, it’s worth noting, market leadership. If Europe isn’t working for Ford (and there are struggles in China, and issues with tariffs on steel and aluminium in the US), maybe it’s time to reconsider the global footprint, as GM has done in Europe, India and Australia, and concentrate on areas where it can make money.
Brighter news from Down Under (where Ford started the local Big Three’s exodus by axing the local Falcon manufacturing programme), General Motors’ Holden, which also axed local manufacturing (as did Toyota) and shrank its dealer network, is adding 150 engineers – taking the workforce to 500 – to work on developing future technology for autonomous vehicles and electric powertrains. Local media noted this was really only ‘putting back’ some of the hundreds of jobs lost when the unit was downsized after The End to car making was announced around 2013 and local product development wound down. But it’s still new opportunity and it’s been suggested some Australians since posted elsewhere with GM might be hitting the ‘apply’ button in hopes of returning to the sun. GM’s annual budget there is now A$120m and it’s worth noting Ford also retained R&D, with an A$500m annual spend.
More consolidation in Tier 1 suppliers is looking likely with news this week private equity firm KKR was in talks to acquire FCA’s Magneti Marelli business through Japan’s Calsonic Kansei which it bought last year from Nissan and other shareholders. “FCA is pursuing a plan to separate the Magneti Marelli business… it will evaluate bona fide proposals for alternative transactions that may be in the best interest of the company,” a spokesman told Reuters, without mentioning KKR. The plant is to create a giant supplier which could cut costs by eliminating overlapping operations which, sadly, nearly always means jobs go, too. This will be one to watch.
We have new future model articles this week, including one on BMW’s i EVs (another from our new analyst and author Mike Vousden), plus a look at MG’s updated 3 and upcoming models. We mention the lack of six-speed manual or any sort of automatic transmission option in Europe but I noted this week it is now an automatic-only offer in Australia with a rather old fashioned conventional four-speed torque converter ‘box.
Show lists continue to be added or updated and this week we have Chengdu (new Great Wall EV brand) and Monterey/Pebble Beach (for the non-millionaires, a new BMW Z4 might be accessible).
Have a nice weekend.
Graeme Roberts, Deputy Editor, just-auto.com
