Britain’s vote to leave the European Union has caused great uncertainty in the automotive industry, with many fearing that it would result in “car-mageddon”.
With so much still up in the air investment in the industry has dropped dramatically, however it is likely that new recruitment opportunities will arise. Steele-Dixon is following developments closely in order to be best prepared to mitigate the negative effects of a “no-deal Brexit” and to continue to provide tailored recruitment solutions for your business.
So what should automotive industry professionals be thinking about? The UK Society of Motor Manufacturers and Traders (SMMT) maintains that there are four main issues to consider.
1. Access to the Single Market
Firstly, access to the single market is an important factor in the success of the UK automotive industry to date. According to their report, the retention of a tariff-free agreement is vital to the future success of the industry.
SMMT analysis suggests that EU tariffs could add an annual cost of £2.7 billion to the importing industry and £1.8 billion to the export industry. The introduction of a tariff would, therefore, drive up production costs which would ultimately be passed onto the consumer. The SMMT estimates that this cost could be as much as £1,500 on every car, if brands are unable to absorb this cost. This would most likely lead to a decrease in demand. It is therefore imperative that the UK retains the same advantages it currently benefits from.
Source: Nissan Plant in Sunderland
2. Customs and Border Control
The second factor to consider is customs and border controls. The current ability for goods to flow freely through borders helps the automotive industry to function efficiently. Extra border checks would compromise competitiveness and would undermine the efficiency of the manufacturing process.
3. A Global Workforce
Access to a talented, global workforce is also an important factor which contributes to the success of the industry. In order for the UK to remain competitive, new immigration controls must not hinder companies’ ability to recruit from the continent. If jobs are left vacant, productivity will surely drop and other European countries that are not subject to the same constraints will seek to monopolise.
4. The impact of GDPR
The final consideration is the new regulations that will doubtlessly come into play as a result of Brexit. A PwC study suggests that General Data Protection Regulation (GDPR) is forcing all companies,including those within the automotive industry that have dealings with EU citizens, to consider how they use and store personal data. The UK’s relationship to regulations such as this will have to be closely monitored.
In order to ensure a smooth transition once the UK leaves the EU, it’s important to have a transparent regulations. Companies are also advised to employ legal experts – to ensure they remain compliant.
It is important to understand that the UK’s automotive sector is diverse and currently thriving. SMMT estimates suggest that 814,000 people are employed in the UK industry, which turns over approximately £70 billion annually. Alongside this, exported vehicles accounted for£34 billion in 2015.
Investors also remain confident in the UK’s ability not only to manufacture efficiently but also to be at the forefront of new vehicle technology – with over £2.5 billion invested in UK-based R&D programmes.
The success of the automotive industry is based on a highly productive workforce, world-class production quality, cutting-edge technology, products with global appeal and favourable trading conditions with the EU.
So it’s not all doom and gloom in the wake of Brexit. Whilst the industry will experience drastic changes as a result of the vote to leave the EU, it is also true that growth opportunities will continue to present themselves. The SMMT estimates that by 2020, there will be as many as 50,000 new jobs created within the industry in order to meet new demand.
Additionally, many companies will be creating new positions to ensure that their strategy is best tailored to the constantly changing market conditions. SMMT chief executive Mike Hawes said that Brexit has cost the industry millions of pounds already and this includes money for “consultants advising on Brexit position.” Whilst this may be financially painful at first, the presence of such consultants could ultimately lead to more opportunities developing for them in markets outside of the EU.
EU citizens make up an average of 10% of the workforce in the UK automotive industry. In some companies, this figure can be anywhere up to 50%. With this in mind, it is clear that any unfavourable Brexit deal could very much jeopardise the state of the industry. What can be done to mitigate the negative effects of this?
The UK government is taking some steps to ensure that there is a wealth of homegrown talent to feed into the industry. Science, Technology, Engineering and Maths (STEM) initiatives are taking place, aiming to encourage young people to pursue scientific and technical career paths. Aerospace company Thales is working with The Prince’s Trust to get people into engineering by offering experience programmes where young people will rotate through four areas of their business – and ultimately get the chance to join them as a permanent employee. Similar schemes are running across the country and Steele-Dixon is optimistic that this will benefit the automotive industry greatly, ensuring there is a wealth of young talent for recruiters to choose from.
Source: Robot Wars at The Prince’s Trust
Brexit will doubtlessly prove challenging for the automotive industry but it will also create opportunities. The industry will be forced to adapt to changing conditions with a possible focus on a more domestically sourced workforce. Steele-Dixon is following developments closely to ensure that we can remain ahead of the curve and provide the best and brightest candidates for your business.
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