Here at Borough, we have been working with automotive
manufacturers across the world for years, but Europe has always
been an important market for us.
The vote to leave caught us all by surprise and our
Germany-based sales agent Henning was indeed shocked at the
decision, despite Article 50 not having been triggered yet.
There appear to be plenty of businesses worried about what the
UK leaving the EU will mean for them, with some companies already
putting the wheels in motion for significant changes. The
automotive industry is one that could see some of the biggest
shifts in the UK; from component manufacturers through to the car
Just recently week, German car-maker Opel has warned it will
have to cut hours for its factory workers, citing slowing sales
after the UK's Brexit vote.
A Huge Industry
In a report by the Society of Motor Manufacturers and Traders,
£69.5 billion of turnover and £15.5 billion in value is added to
the UK economy by the automotive industry - every single year!
Around 799,000 people are employed in the industry - including
those who work across the wider sector, not just manufacturing. In
2015, over 1.5 million cars were produced in the UK. These figures
alone go to show that this is one of the biggest and most important
industries in the country.
With 11.8% of the UK's total exports being in this industry, the
decision to leave the EU could well prove a tumultuous one.
Impact on the supply chain
The entire supply chain is already feeling the effects of the
Brexit vote, but mostly it's rumour and supposition - we are
continuing to take enquires for both injection moulding and
Of course, the recent drop in the value of Sterling has ensured
our exports to the continent are currently very competitively
priced. The situation is worse for importers and if suggestions
that the pound might drop further when Article 50 is finally
triggered, are true, importers could really struggle.
Those companies like Borough, exporting components across the
globe may find that the exchange rate works in their favour in the
short term, but much will depend on free trade agreements with the
European Union. New markets might open up for high quality
components with many new trade agreements already at the early
stages of discussion.
Impact on UK-based car manufacturers
The same is true for the manufacturers in the UK, with many
importing components from around the world, which has led to them
seeing a decrease in profit margin as the pound dropped.
There may also soon be an impact on employment in car
manufacturing if the laws on migration are tightened. Car factories
are filled with skilled workers from around the world, many of whom
face an uncertain future as we wait to see what deal the UK strikes
with the EU.
The issue of migration is a tricky one, but must be handled
carefully if we're not to throw the baby out with the bath water.
Borough has certainly benefitted from highly-skilled migrants
making the UK their home and place of employment.
Taking a Stand
It was interesting to see in the run-up to the vote that many
car manufacturers, including BMW, backed the remain campaign, for
the sake of the British car-making future. For Borough, both
Rolls-Royce and Mini here in the UK feature components moulded and
plated in our Southend facility, so we are inextricably linked to
the issue and echo the automotive sector's call for sensible heads
While much of the 'news' may be speculation and bluster, with
politicians on both sides vying for an advantage, the vote to leave
could have a very real impact on jobs in the UK and we really need
to get on with the next steps.
I suspect that the world's largest car manufacturers will plot
their way successfully through these troubled waters and we see
this is an opportunity for Borough to become an even more important
member of the global automotive supply chain.