4th August 2016

Could leaving the EU affect the automotive sector’s HR skillset?

According to figures from the Society of Motor Manufacturers and Traders (SMMT), the automotive sector is unarguably substantial, with a turnover of nearly £72 billion leading to a contribution to the economy of almost £16 billion, and 1,587,677 cars rolling off UK production lines in 2015.

Over 800,000 people are employed by car, LGV and HGV companies, with just short of 170,000 of these working directly in vehicle manufacturing, this number signalling a 1% rise from 2014. With domestic albeit foreign-owned brands like Bentley, MINI and Jaguar Land Rover (employs 40,000) thriving, along with global titans such as Toyota (employs 3,400 here) and Honda having poured billions of pounds of investment into their UK plants, it’s not the kind of sector that should bow to Brexit ramifications with a whimper.

KPMG published a report in the spring of 2014 that highlighted how Vauxhall, another iconic British brand, actively supplements its Luton workforce with Opel employees from Poland, whilst BMW seconded 150 workers from Europe during the production of a new model, and around 10% of British managers working for BMW Group are deployed internationally at any given time.

After the Brexit leave vote’s narrow win in the EU referendum became apparent, the SMMT’s chief executive Mike Hawes was quick to state that the government’s efforts must include “ensuring that we can recruit talent from the EU”, his further comments partly attributing the booming UK automotive sector’s recent success to “unrestricted access to the single market…and the ability to recruit talent from abroad”.

Anyone who feels threatened by EU workers’ presence in the UK car industry should think again, be more open-minded and see the bigger picture, which is hit home by Mr Hawes’ frank snapshot: “Carmakers can’t get enough people. It’s not about replacing British jobs – it’s about supplementing those we can’t fill. We have around 5,000 vacancies in our industry at the moment. We look to the UK, Europe and beyond to fill those vacancies. Clearly, we want to retain the single market’s talent pool”. It is abundantly clear that free movement of employees across the UK and Europe is vital in maintain the automotive sector’s momentum.

It’s interesting to see PA Consulting Group labelling Honda and Toyota as the car firms most likely to up sticks and leave the UK once Article 50 is triggered and Brexit’s likely impact becomes clearer, with MINI and Vauxhall marked as possible leavers and JLR tagged as a definite stayer. One can’t blame Nissan if they also pull their revered Sunderland plant in due course, partly due to the way in which Renault-Nissan factories compete against each other to win production rights. But at least we know that the refreshed Qashqai with semi-autonomous driving technology will still be produced on home soil during 2017, even if the third-generation model of Nissan’s ubiquitous SUV ends up being built elsewhere.

Staggeringly, almost 80% of UK-manufactured cars are exported with nearly 60% headed to Europe, which is the UK automotive industry’s largest market. Put under a microscope, Honda exports 40% of its UK vehicle output to the EU, Nissan and Toyota level-peg on 75% and four-fifths of Vauxhalls produced here end up in Europe. It’d be a travesty if the Japanese trio decide to call it a day in a few years’ time, leaving a jobs hole in the sector as a result, but if they’ve been struggling to make their UK operations profitable even in recent years of supposed single-market bliss, it would be understandable.

Car plants in France, Germany and other major European countries benefit from the skills provided by talented automotive workers from Eastern Europe, just like those in the UK do, who also call on French, German, Spanish, Scandinavian, Italian and other expertise such as in IT, design and engineering. Basically, we’re currently all in it together and this will remain the case for at least a couple of years, during which time jobs in the sector will hopefully be largely unaffected.

As our name indicates, Trak is a global company, headquartered in Crewe, England, but with business operations in Canada, Dubai and Spain, where our leading telematics solutions are marketed to the Spanish and southern European markets through successful alliances including Drive and Win.

Let’s keep our fingers crossed that Mrs May will be able to negotiate a Brexit deal that retains free movement of people so that whichever car factories remain in the UK will still be able to utilise EU workers’ skills going forward and vice versa.

 

 

 

 

Sources:

Diesel use to fall over next five years, predict UK fleets

https://www.theguardian.com/environment/2016/jul/18/ban-diesel-cars-in-london-thinktank-urges

http://www.ft.com/cms/s/0/99656818-42b0-11e6-b22f-79eb4891c97d.html

https://www.gov.uk/plug-in-car-van-grants/eligibility

https://www.theguardian.com/business/2016/jun/29/access-eu-single-market-record-uk-car-production-report

http://www.paconsulting.com/introducing-pas-media-site/releases/uk-car-factories-face-uncertain-future-post-brexit-research-on-the-carmakers-most-likely-to-leave-the-uk-14-july-2016/

http://internationalfleetworld.co.uk/news/2016/Jul/Post-Brexit-research-identifies-carmakers-most-likely-to-leave-UK/0444025782

http://www.bbc.co.uk/news/business-37024707