Northeast Automobile Industry in Danger

Brexit hasn’t officially commenced, yet the UK is already feeling its impact — and not in a good way. The automobile industry in the northeast has felt the crunch. The Chronicle Live reports that an industry body believes that Brexit will be “[a] death by a thousand cuts”. This slump, which has affected car manufacturers all around the UK, has been greatly impacted by a sharp decrease in investment (from £647.4 million to £347 million) in new car models and facilities during the first six months of 2018.

This decrease in investments according to the Society of Motor Manufacturers and Traders (SMMT) is largely due to the uncertainty being caused by the slow progress of Brexit negotiations, and it has prompted major stakeholders to seek government safeguards. Anything less may very well be a death knell to the automobile industry, particularly in the northeast, even as SMMT chief executive Mike Hawes clarified that an overnight closure won’t happen anytime soon. With over 6,000 people working at the Nissan factory in Sunderland alone, the danger of a no-deal or bad-deal Brexit is very real.

Already, the “death by a thousand cuts” assessment is turning prophetic, as Jaguar Land Rover cut 1,000 jobs from its West Midlands plant earlier this year. Then just days later, Nissan laid off hundreds of workers in its Sunderland car plant. These layoffs, though, are purportedly due to “a collapse in diesel sales” and are not related to Brexit. The Nissan car plant in Sunderland mostly makes diesel cars, which are now being shunned by many consumers because of rising diesel taxes and the possibility of the fuel being banned by the government in the near future.

Whether Brexit factored into these layoffs is immaterial. The bigger picture is that the car industry is slowing down, and the impending divorce from the European Union (EU) is exacerbating matters. Newcastle Central MP Chi Onwurah is rightfully worried that Brexit will negatively impact more than just the automobile industry. Omwurah, who won her seat by a landslide in Newcastle upon Tyne Central, expressed her concerns about Brexit through a powerful op-ed piece for The Guardian, which she wrote in February. Omwurah rued that a divorce without a deal will hit every region hard, with the northeast being “worst off.” She pointed to how 160,000 jobs in the northeast that are directly connected to membership of the Single Market would be affected.

The numbers seem to bear out her concern, as a post from FXCM states that a hard Brexit could cause an economic fallout of at least £190 billion. At the moment there will be a 21-month window for the national government to smoothen out the transition. If that doesn’t work out, then the northeast could face more unemployment. The automobile industry in the region would struggle, especially since EU members are the main importers of cars made in the region.

LEAVE A REPLY

Please enter your comment!
Please enter your name here