Car manufacturer Vauxhall announced last week that it will be cutting 400 jobs at Ellesmere Port in Cheshire. Falling car sales figures are to blame. At the same time, the Society of Motor Manufacturers and Traders (SMMT) has announced that investment in the UK car industry is on track to halve this year. Is this the future of the post-Brexit car industry?
Cutting jobs
Vauxhall is part of the PSA Group, which also makes Peugeot and Citroen vehicles. It has cited the ‘challenging European market condition’ as the reason for the 400 job cuts at Ellesmere Port.
According to PSA, the costs at the Ellesmere Port plant were higher than other ‘benchmark plants’ within the company. Thus Ellesmere Port was first in line when it came to cutting costs in the wake of Vauxhall’s falling sales figures. Vauxhall currently employs some 1,800 people at the plant as part of a total UK workforce of 4,500 people, including the factory in Luton where it makes its vans.
PSA Group became the second largest car manufacturer (after Volkswagen) in August when it bought both Vauxhall and Opel from US car giant General Motors. At the time, Prime Minister Theresa May sought assurances from chief executive Carlos Tavares that there would be no job losses. However, it seems that the situation has changed.
Vauxhall has denied that the move is connected with the current Brexit process, insisting it is about maintaining competitiveness within an industry facing a great deal of change. While SUV sales have grown across Europe, the number of five door estates and saloon vehicles sold has fallen. These are the models manufactured at Ellesmere Port.
The Brexit factor
While Vauxhall may not overtly be blaming Brexit, one cannot help but assume that it is a factor in the recent job loss announcements. According to the SMMT, the UK motor industry enjoyed £1.66 billion of investment last year. So far this year, it has received just £647 million. As such, the overall investment figure for the year looks set to crash by as much as half.
In the case of Vauxhall, PSA Group has said that it is not in “a position to consider future investments.” Part of the reason is that it does not have “enough visibility on the future trading relationship with the EU.” So while Vauxhall may deny that the job cuts relate to Brexit, its new owner is citing that as a direct cause of reduced investment commitments.
The plummeting pound
PSA went on to say that the Ellesmere Port plant currently makes around 140,000 Vauxhall Astras per year. A new model is planned for the early 2020s and its aim is to make the plant more productive in preparation for that model.
However, Professor David Bailey from Aston Business School said that the changing emphasis on SUV models was only a part of the problem. He believes the depreciation of sterling since the Brexit vote is causing big issues for many companies – as are the stalled and somewhat farcical Brexit negotiations.
According to the professor, PSA acquired some 33,500 staff across Germany, Hungary, Poland, Austria, Spain and Italy as part of the recent deal. Cutting costs will be one way of making the company profitable. With the decline in sterling, it seems that the UK arm of the business is the one to suffer first.
Brexit Chaos
The sterling issue, the concerns about future trade deals and the myriad other issues surrounding Brexit have clearly played some part in PSA’s decision. They highlight the negative impact that the apparent chaos of the negotiations is already having.
In fact, the negotiations are so bad that EU diplomats are convincing themselves that it is really some cunning plan to make things appear chaotic, while underneath they are calm and organised. However, closer to home there is no such conviction.
Politicians fighting, a complete inability to agree on anything and the looming threat of ‘no deal’ – there’s little surprise among business experts that companies with a European presence are already looking at their options. Even the President of the EU Commission, Jean-Claude Juncker, has said that he thinks the process will take longer than anyone thought – five rounds in and nothing at all seems to have been agreed (apart from the fact that everyone needs to agree). In the meantime, UK businesses and jobs could start to see the negative effects snowball, with the car industry leading the way.
Are the Vauxhall job cuts a sign of what’s to come for the UK car industry? Will the halving of investment in the industry mean more job losses before the end of the year? Leave a comment to let us know your views.
Nothing to do with the rush to buy cars early this year in order to avoid new road fund licencing fees for so called cleaner cars then? This left a glut of stock which attracts fees.
“When the votes cast on 23 June were counted 37 per cent of those registered voted to leave, 36 per cent voted to remain and the rest (27 per cent) did not vote. The majority of the Scots who voted wanted to remain with a similar picture in Northern Ireland and Gibraltar (where the vote was overwhelmingly in support of Remain). London likewise – by a healthy majority – voted to remain, as did other big cities. Leave pipped Remain to the post, but was it a mandate to leave? Conversely had the vote gone the other way with the same margins, could that be seen as a mandate to remain? “
If you wanted to question the legitimacy of the vote, you might as well question the legitimacy of parliamentary election votes, where turnout is usually lower than it was in the Referendum AND no single party ever gets 50%-plus of the votes cast. Those who don’t vote get the government they deserve, so I once read. At least the Referendum delivered a majority for one way or the other – the winning side will cheer and the losing side will cry and that is life. As for London and Scotland voting to remain, far be it from me to suggest that the Scots instinctively vote contrary to England – a mindset that reached its zenith with the SNP whitewash of 2015 – and that London has never more truly demonstrated its difference from the rest of the nation than in that Referendum. Outside of London, England (and Wales incidentally) voted overwhelmingly for Brexit.
Sad to see the British succes story unravel on the back of misplaced nationalism. The global image of Britishness has for ever been changed…
I put it all down to the diesel fiasco which is the government’s own making.I for one would have possibly bought a new car but with all the uncertainties of trade back prices I’m not sure if buying and losing such a lot of money is in anyone’s interest,viable.
I know a few who are keeping their diesel car longer for the same reason also the change in excise duty encourages some to keep a car that has very low excise duty as a new one now could be over £100 more, makes sense. As for Vauxhall we should have known not to trust PSA about not cutting jobs, I expect they would allway but Peugeot first so could Vauxall die eventually.
So the value of the pound has dropped, our exports become cheaper, or imports more expensive, so components would be dearer? I seem to recall pre EEC days goods could be imported duty free if they were to be ‘worded on’ and re exported as would any car parts produced in Europe and then exported in a car. Is there any reason to suppose this arrangement will not be reinstated by Customs? This next bit is a feeling that may or may not be right. The UK has slowly but surely sold of vast amounts of it industrial base rather than invest in it to make it competitive. Steel, oil refining, some confectionery manufacture and so on. Plants here are then closed as production is moved to the new home country of the owner or somewhere thatchy wish to curry favour. Once this Brexit circus has ended and we are able to make our own deals one of which might be “if you want to sell here then manufacture here”. Let’s do a bit of holding too ransom ourselves. As a matter of interest I’m sure I heard we were going to expand our territorial waters once free of Europe, presumably to get our fishing industry going, but I have seen no reports of Shipyards revebicing orders for lots more fishing boats. Why is that I wonder, maybe we’re going to sell licences to fish to foreign fleets, how is that going to help UK employment?
Opel/Vauxhall’s stale model line-up, lack of serious competitor in the key growth sectors and inflexibility of its production facilities may be contributing factors. GM didn’t seem to have any worries about losing control of branding and IP this time, while such sophistry crippled their sale of Saab – they appear happy to have dumped the rest of the European operation.
The car industry is always the first to feel it in any economy downturn. The fact that there is a downturn of the economy is nothing new this time of year as most of the population are saving and gearing for Christmas spending. However, there is no denying that Brexit has a significant effect. If we were to exit tomorrow with no deal, the economy would take another dip. But! When Europe sees the way that Britain will begin to thrive, trading with the rest of the world, they will be clamouring at our door. Britain buys more from Europe than Europe buys from Britain. Look at the number of European cars on our roads, European domestic appliances in our homes and the number of European holidays we take. London is the European centre of finance. Not Rome, or Berlin, nor Paris and not Brussels for all of it’s posturing as the centre of the EU. European countries are beginning to question the wisdom of staying tied to the EU. A few of their economies are in turmoil and have been for a few years. Even Ireland is still feeling the effects from their being tied to the Euro economy. Britain has always had an unsettled economy with Europe, it’s nothing new. It’s being exacerbated by all the hype about infighting within the government, but important decisions are like that. Look at the heated discussions people have in their own work places and their own homes when it comes to important decisions that have to be made. It’s just the way that important decisions are arrived at.
It’s a bit rich of PSA to cite employment cost as a reason for axing UK jobs. I am sure that France (home of PSA) has much higher employment costs than the UK, for instance – my understanding is that employers face non-wage costs of around 57% in France, compared to the UK situation of 12.2% employer’s NIC and upto 4% obligatory pension payments (wow…). The difference in France is that it is virtually impossible (even illegal) to make people redundant. PSA will be reaping the benefits of inheriting the (relatively low-cost) Eastern European Opel workers while the UK once again gets the short straw. We are the first target for ‘cost reduction’ exercises by international businesses, not because we are the most expensive but because we are the most-easily disposed workers. The Brexit angle is just a smokescreen, an excuse that companies can make whilst wielding their axe.
Read any government or council document and it is all about “Cycling & Walking” and getting us ‘out of our cars’
Everything they do to make driving more costly or unpleasant is to achieve that goal!
The latest gimmick is ‘Toxicity Taxes’ mostly all based on ‘fake news’ scare stories and opening the door for whole new council revenue streams.
Your APATHY is the governments best weapon, do not leave it to somebody else to do.
Write to your MEP, MP, councillor, local paper, Twitter, Facebook etc, get off your backsides and do something!
We are not going to be a very prosperous nation, by getting rid of the car industry and manufacturing a few bicycles!
That is what is happening now, as cars become every more costly to buy and especially to maintain and drivers demonised by all political party’s..
The world car industry is near saturation point where the weakest will disappear. I think PSA planned to close factories in Britain and move machinery abroad to produce Peugeot, Citroen, Vauxhall and GM cloned cars to get a bigger slice of the market with reduced costs. Euro bought and sold and no tariffs. These companies are smarter than our career politicians.
Nothing to do with the rush to buy cars early this year in order to avoid new road fund licencing fees for so called cleaner cars then? This left a glut of stock which attracts fees.
“When the votes cast on 23 June were counted 37 per cent of those registered voted to leave, 36 per cent voted to remain and the rest (27 per cent) did not vote. The majority of the Scots who voted wanted to remain with a similar picture in Northern Ireland and Gibraltar (where the vote was overwhelmingly in support of Remain). London likewise – by a healthy majority – voted to remain, as did other big cities. Leave pipped Remain to the post, but was it a mandate to leave? Conversely had the vote gone the other way with the same margins, could that be seen as a mandate to remain? “
If you wanted to question the legitimacy of the vote, you might as well question the legitimacy of parliamentary election votes, where turnout is usually lower than it was in the Referendum AND no single party ever gets 50%-plus of the votes cast. Those who don’t vote get the government they deserve, so I once read. At least the Referendum delivered a majority for one way or the other – the winning side will cheer and the losing side will cry and that is life. As for London and Scotland voting to remain, far be it from me to suggest that the Scots instinctively vote contrary to England – a mindset that reached its zenith with the SNP whitewash of 2015 – and that London has never more truly demonstrated its difference from the rest of the nation than in that Referendum. Outside of London, England (and Wales incidentally) voted overwhelmingly for Brexit.
Sad to see the British succes story unravel on the back of misplaced nationalism. The global image of Britishness has for ever been changed…
I put it all down to the diesel fiasco which is the government’s own making.I for one would have possibly bought a new car but with all the uncertainties of trade back prices I’m not sure if buying and losing such a lot of money is in anyone’s interest,viable.
I know a few who are keeping their diesel car longer for the same reason also the change in excise duty encourages some to keep a car that has very low excise duty as a new one now could be over £100 more, makes sense. As for Vauxhall we should have known not to trust PSA about not cutting jobs, I expect they would allway but Peugeot first so could Vauxall die eventually.
So the value of the pound has dropped, our exports become cheaper, or imports more expensive, so components would be dearer? I seem to recall pre EEC days goods could be imported duty free if they were to be ‘worded on’ and re exported as would any car parts produced in Europe and then exported in a car. Is there any reason to suppose this arrangement will not be reinstated by Customs? This next bit is a feeling that may or may not be right. The UK has slowly but surely sold of vast amounts of it industrial base rather than invest in it to make it competitive. Steel, oil refining, some confectionery manufacture and so on. Plants here are then closed as production is moved to the new home country of the owner or somewhere thatchy wish to curry favour. Once this Brexit circus has ended and we are able to make our own deals one of which might be “if you want to sell here then manufacture here”. Let’s do a bit of holding too ransom ourselves. As a matter of interest I’m sure I heard we were going to expand our territorial waters once free of Europe, presumably to get our fishing industry going, but I have seen no reports of Shipyards revebicing orders for lots more fishing boats. Why is that I wonder, maybe we’re going to sell licences to fish to foreign fleets, how is that going to help UK employment?
Opel/Vauxhall’s stale model line-up, lack of serious competitor in the key growth sectors and inflexibility of its production facilities may be contributing factors. GM didn’t seem to have any worries about losing control of branding and IP this time, while such sophistry crippled their sale of Saab – they appear happy to have dumped the rest of the European operation.
The car industry is always the first to feel it in any economy downturn. The fact that there is a downturn of the economy is nothing new this time of year as most of the population are saving and gearing for Christmas spending. However, there is no denying that Brexit has a significant effect. If we were to exit tomorrow with no deal, the economy would take another dip. But! When Europe sees the way that Britain will begin to thrive, trading with the rest of the world, they will be clamouring at our door. Britain buys more from Europe than Europe buys from Britain. Look at the number of European cars on our roads, European domestic appliances in our homes and the number of European holidays we take. London is the European centre of finance. Not Rome, or Berlin, nor Paris and not Brussels for all of it’s posturing as the centre of the EU. European countries are beginning to question the wisdom of staying tied to the EU. A few of their economies are in turmoil and have been for a few years. Even Ireland is still feeling the effects from their being tied to the Euro economy. Britain has always had an unsettled economy with Europe, it’s nothing new. It’s being exacerbated by all the hype about infighting within the government, but important decisions are like that. Look at the heated discussions people have in their own work places and their own homes when it comes to important decisions that have to be made. It’s just the way that important decisions are arrived at.
It’s a bit rich of PSA to cite employment cost as a reason for axing UK jobs. I am sure that France (home of PSA) has much higher employment costs than the UK, for instance – my understanding is that employers face non-wage costs of around 57% in France, compared to the UK situation of 12.2% employer’s NIC and upto 4% obligatory pension payments (wow…). The difference in France is that it is virtually impossible (even illegal) to make people redundant. PSA will be reaping the benefits of inheriting the (relatively low-cost) Eastern European Opel workers while the UK once again gets the short straw. We are the first target for ‘cost reduction’ exercises by international businesses, not because we are the most expensive but because we are the most-easily disposed workers. The Brexit angle is just a smokescreen, an excuse that companies can make whilst wielding their axe.
Read any government or council document and it is all about “Cycling & Walking” and getting us ‘out of our cars’
Everything they do to make driving more costly or unpleasant is to achieve that goal!
The latest gimmick is ‘Toxicity Taxes’ mostly all based on ‘fake news’ scare stories and opening the door for whole new council revenue streams.
Your APATHY is the governments best weapon, do not leave it to somebody else to do.
Write to your MEP, MP, councillor, local paper, Twitter, Facebook etc, get off your backsides and do something!
We are not going to be a very prosperous nation, by getting rid of the car industry and manufacturing a few bicycles!
That is what is happening now, as cars become every more costly to buy and especially to maintain and drivers demonised by all political party’s..
The world car industry is near saturation point where the weakest will disappear. I think PSA planned to close factories in Britain and move machinery abroad to produce Peugeot, Citroen, Vauxhall and GM cloned cars to get a bigger slice of the market with reduced costs. Euro bought and sold and no tariffs. These companies are smarter than our career politicians.