Toyota boss’s concerns over ‘hard Brexit’

A “hard Brexit” could hit Deeside manufacturing industries hard.

That’s the view of Plaid Cymru’s North Wales AM Llyr Gruffydd after news emerged that Toyota bosses were considering “how to survive” in a UK outside the single market after Theresa May announced her Brexit plan (1).

Speaking to the Financial Times, Takeshi Uchiyamada, chairman of Toyota, said May’s plans would damage UK operations and that they were speaking to the UK Government to minimise the problem.

Toyota UK exports three-quarters of its cars to the EU.

Mr Gruffydd said: “Deeside and Wrexham are the manufacturing powerhouse of the North and the concerns expressed by major employers such as Toyota in the wake of the ‘hard Brexit’ decision by Theresa May are a huge concern. The decision to leave the EU has been made but it’s vital to get the manner of that departure right – for the sake of Welsh jobs and the wider economy.

“There’s a real risk that the confrontational stance adopted by the UK Government will result in the EU not allowing unfettered access to the single market and that could be a real disaster for some of our big manufacturers here in Wales. Banks are already re-locating jobs, according to the Financial Times, and I really hope we’re not going to see big manufacturers go down the same line.

“Let’s not forget that the UK Government was very keen to make a secret deal with Nissan in Sunderland to reassure them immediately after the Brexit vote. Whatever that deal entailed should be offered to Toyota too.

“Toyota’s boss has made it clear that the company will review its options depending on whether access to the single market is retained. That’s in the best interests of Welsh workers and that’s why Plaid Cymru will continue to campaign for the best possible deal to safeguard the Welsh economy. Welsh exports to the EU make up 68% of all exports, the largest percentage of all nations and regions in the UK. So this is a particular issue for Wales and we should not be sidelined in any debate on our future.”

(1)Here’s the article in full in case you can’t get past the paywall:

Toyota warned that it is considering “how to survive” in a UK outside the EU single market as businesses began to absorb the implications of Theresa May’s Brexit plan.

Job losses and relocations seem certain. HSBC confirmed plans to move 1,000 London roles to Paris, accounting for a fifth of the revenues from its global markets division.

Andrea Orcel, the president of UBS’ investment bank, said the Swiss bank “would have to move bankers” from London. “The question is how many,” he said to Bloomberg television, adding they could shift to Frankfurt or Spain.

“In our plans [ . . .] the only thing we can do is anticipate the worst, we cannot be optimistic. We anticipate a de minimis agreement between the UK and the EU. We anticipate there will not be a transitory period [ . . .] You are almost saying that the moment the UK invokes Article 50, we need to be in execution to move whatever we need to move to another jurisdiction,” he said.

Takeshi Uchiyamada, chairman of Toyota, also in Davos, told the Financial Times that the company’s UK plants needed to become more competitive if they were to survive the damage from Mrs May’s plans.

We have seen the direction of the prime minister of the UK, [so] we are now going to consider, together with the suppliers, how our company can survive,” he said.

Mrs May laid out a vision of life outside the single market and customs union and further spooked businesses by warning that Britain would walk away from a trade deal with the EU altogether and revert to World Trade Organisation rules if it is not offered sufficiently compelling terms.

Mike Hawes, chief executive of UK car industry body SMMT said access to the single market is “critical” for the sector. “We must, at all costs, avoid a cliff-edge and reversion to WTO tariffs, which would threaten the viability of the industry,” he said.

Britain’s car industry is not only heavily reliant on exports to the EU, but also on Europe, and especially Germany, for many of the components that go into its vehicles.

Several carmakers including Nissan and Toyota have based their operations in the UK in order to export to the rest of the continent. Three quarters of the cars made by Toyota in Britain are exported to the EU.

A person close to Nissan, which obtained a guarantee from the government that its terms of trade would not be hurt by the Brexit negotiations, said the company’s position is unaffected by the content of Mrs May’s speech.

But Mr Uchiyamada had a stark message for the more than 3,000 workers in Toyota’s Burnaston and Deeside plants. Responding to Mrs May’s commitment to take Britain out of the EU single market and customs union, he said: “I won’t say that there is no impact to the company.”

Mr Uchiyamada made it clear that Toyota is speaking to the government in an effort to minimise disruption for the Japanese carmaker.

“We are considering and discussing with the government how to maintain the competitiveness and therefore through these kinds of communications we have with the government, our hope is that we will be able to draw a bright future for the continuing existence of the plant,” he said.

But he stressed that the local operations would have to play their part in improving productivity if the plants are to survive, when most of the models and engines they manufacture are exported to the EU.

Agreeing that Mrs May’s plans will damage the UK operations, he said: “The company will have to make efforts to ensure that it doesn’t turn out that way and of course what the company needs to do in any country is to understand the overall policy of that country and do what they have to do.”

Mr Uchiyamada stressed that no decisions had yet been taken and Toyota would wait to see how the rest of the EU responded to the UK government’s Brexit plans.

He also stressed that Toyota, which has operated in the UK since 1989, liked to make long-term investment decisions and recognised its responsibilities to local workforces and suppliers. He said that in recent years, while the company has increased production in the Czech Republic to meet rising demand, it had maintained its operations in the UK and France.

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