Brexit discussion thread XII (Please read OP before posting)

Leroy42

Deleted User wrote: »

It's the manufacturing version of taking a short position on an industry. It would be remarkable to see it play out and succeed.

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

My reading of it is that they close the EU factories, and produce directly from Japan to service the EU market and move all UK required vehicle production to the UK.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

johnnyskeleton

Deleted User wrote: »

Interesting development. Nissan considering focusing on the UK market and closing its EU factories.

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

They reckon they could increase market share from 4% to 20% if other manufacturers face tariffs.

But it also says in that article that:

A spokesman for Nissan Europe said: "We deny such a contingency plan exists.

"We've modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs.

"We continue to urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade."

I suppose the Breixteers with their suspicious minds will assume that the fact that Nissan are denying it, it must be true. But I'm not sure that the article really makes sense. There are so many unknown issues such as how the UK and Japan could conclude a free trade deal if the UK doesn't have one with the EU, or whether in such a deal, if there was tarrif and quota free trade, why Nissan wouldn't simply close the Sunderland plant or reduce it to a finshing plant while keeping most manufacturing in Japan. Then we have the UK dying for a US deal, where there is government subsidies of the struggling automotive industry and the upshot of all this is that post Brexit Britain may well be targetted as an ideal export location for foreign manufactured cars.

Leroy42

Leroy42 wrote: »

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

My reading of it is that they close the EU factories, and produce directly from Japan to service the EU market and move all UK required vehicle production to the UK.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

Peregrinus has a good write-up in the CA thread. Since he posts here too, I don't think he'd mind me copying it here.

Peregrinus wrote: »

Brexit poses a challenge to challenge for everyone in the auto industry, but a slightly different challenge for all of them, depending on how they are situated. One of the factors particular to Nissan is that, of non-indigenous manufacturers in the UK market, they are far and away the biggest - much bigger than Toyota and Honda combined, who are number 2 and 3 respectively. That level of investment represents a huge sunk cost in the UK. They wouldn't like having to write it off.

The other preliminary point to bear in mind is that, although Brexit poses a big challenge to the motor industry, they don't yet know what that challenge is. Until the UK negotiates a trading arrnagement with the EU, or abandons the aspiration to do so, they have no idea what trading environment they are going to face, and the contradictory and rapidly-changing pronouncements of the last Tory government and the present one don't help. This makes planning for the challenge very difficult. The bigger players (including Nissan) respond to this by planning for a variety of different scenarios, from the close trading arrnagement with frictionless trade targetted (initially) by May to the no-trade-deal WTO-terms-only scenario that some still threaten and a few still desire.

Right. So this particular story is based on Nissan's planning for the no-deal WTO scenario. And Brexiters crowing about it are missing one of the main points: Nissan themselves are quoted in the article as saying "We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs". That's not good news, people, for Nissan or for the UK.

It seems that Nissan's damage limitation strategy will be to retain its investment in the UK. They calculate that other manufacturers with smaller investments in the UK and larger investments in the EU will take the opposite course, running down or closing outright their UK operations, and their offerings in the UK market will become more expensive, as they will be imported and will be subject to tariffs.

Nissan's cars, although manufactured in the UK, will also become more expensive because of tariffs on imported components, extra costs due to loss of just-in-time techniques, etc. Nissan can try to limit this by closing its own facilities in the EU and centralising production in the UK, so as to reduce the number of imported components/elements but, still, there'll be an impact.

None of this is good news for Nissan but, within the UK market, it presents them with a competitive opportunity; their cars, although more expensive, will be relatively cheaper than imported cars, so they should be able to increase market share in the UK, which may help to offset the loss of export sales to the EU. (Currently 70% of Nissan UK production is exported to the EU.)

They'll have to increase it a lot, since the total UK car market is likely to shrink (because cars will be more expensive overall). So, in a shrinking market, they have to fight for a larger share to offset increased costs and declining exports. Thereport says that this "would potentially allow them to increase their UK market share from 4% at the moment to 20%". But, actually, I suspect someone is putting a favourable spin on a rather more stark finding in the report; for this strategy to succeed, and Nissan UK to remain viable, they will need to increase their share of the UK market from the current 4% to 20%. That's a hell of an ask, but only if they think they can do that does the strategy of doubling down in Sunderland make sense.

If I were a Brexiter, I would not be calling attention to Nissan's dilemma.

Nody

Leroy42 wrote: »

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

Boris plans to cut import tax to zero on pretty much everything; which is why Canada for example walked out from the talks of a trade deal until they know were UK stands because why offer preferable access to your market if your counterpart offers free market access to everyone.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

Nope; they clearly stated WTO tariffs would kill the export market. Hence all they got left is a UK plant to produce cars for the UK market because they will most likely not meet the requirements for domestic share in the cars to make export viable if UK struck a FTA on the topic (55% parts produced in the UK) to steal markets from other brands basically.

BarryD2

correct horse battery staple wrote: »

4 years, dozen mega threads, constant UK backpedaling with EU running circles around them.

And still despite all the EU has done for its members and especially Ireland, we still have this constant "EU will shaft Ireland" nonsense

So I am going to repeat it again.

WE ARE EU

uk is now an outsider in same league as Russia trying to piss into the tent but ending up pissing all over themselves

You'll stand by that theory in a years time??? We'll see

The squeeze will come on us, nothing personal in it - it's just business.

Just like it was 'just business' that continental financial institutions had to be protected from the full implications of their lending losses a few short years ago.

Historically, economically and geographically , we are 'un isle derrière un isle'.

The EU are of course not going to 'shaft Ireland' but nonetheless we're headed for that spot between a rock and a hard place.

Leroy42

BarryD2 wrote: »

You'll stand by that theory in a years time??? We'll see

The squeeze will come on us, nothing personal in it - it's just business.

Just like it was 'just business' that continental financial institutions had to be protected from the full implications of their lending losses a few short years ago.

Historically, economically and geographically , we are 'un isle derrière un isle'.

The EU are of course not going to 'shaft Ireland' but nonetheless we're headed for that spot between a rock and a hard place.

I have no doubt that Ireland is going to do very badly because of the impacts of Brexit. But it will be because of Brexit, the UK, not because of the EU.

When looking at the overall effects, one needs to look at the relative outcomes. Where we end up compared to where we would have ended up without the support of the EU.

The EU can only do so much for us, they are not going to sink the entire EU economy just for Ireland. But they have shown already that they will go a good distance to try to limit the damage.

The WA, do you think we would have got those commitments if the agreement was just between UK and Ireland? It is not about shafting us, no more than the bailout was.

It is about Ireland having to deal with the realities of having our closest neighbour tell us they no longer care out working closely with us as equals and instead wanting to revert back to the old system where thye are in charge.

For Forks Sake

Strazdas wrote: »

That seems to be a lot of ifs and buts and highly speculative. Trying to grow their sales five or sixfold would be a big gamble and could easily fail.

Also, they don't seriously think that 1 in 5 brits actually want to buy a Nissan do they.....

Igotadose

Leroy42 wrote: »

But how do they get around the tariffs on imports of all the materials needed? I assume they believe that they can control costs in the UK plant to offset those.

My reading of it is that they close the EU factories, and produce directly from Japan to service the EU market and move all UK required vehicle production to the UK.

But since the UK plant currently exports a large portion of their production to the EU, this would actually end up with much advantage to the UK itself.

Lest we not forget, the weakening of worker's rights, and the assumed crash in salaries, or at best stagnation at current levels for some time, is good for business owners. So, Nissan might very well be considering reduced labor costs in their calculations. So, cheaper, shoddier cars produced for the UK market in the UK, sounds great to Brexiteers at the top, and shafts the ones that voted for it. And Nissan earns more money as a result. What's not to like?

ancapailldorcha

Igotadose wrote: »

Lest we not forget, the weakening of worker's rights, and the assumed crash in salaries, or at best stagnation at current levels for some time, is good for business owners. So, Nissan might very well be considering reduced labor costs in their calculations. So, cheaper, shoddier cars produced for the UK market in the UK, sounds great to Brexiteers at the top, and shafts the ones that voted for it. And Nissan earns more money as a result. What's not to like?

It's not quite that simply. As Peregrinus has noted, much depends on what, if indeed any trade deal with Brussels is struck. Very close alignment could be good for Nissan but if the UK diverges significantly then it will have to build based on at least two regulatory frameworks, the UK and the EU before we get to the US and so on. That won't be cheap.

I'm not too worried about workers' rights. This is something the EU has prioritised and it would look appalling if such a big employer started watering down wages and protections. The British establishment no longer have the Brussels bogeyman to protect them.

Zubeneschamali

For Forks Sake wrote: »

Also, they don't seriously think that 1 in 5 brits actually want to buy a Nissan do they.....

Not today, no - but in a few years time when they are the only car manufacturer left in England and everything else is a lot more expensive, maybe.

Sam Russell

For Forks Sake wrote: »

Also, they don't seriously think that 1 in 5 brits actually want to buy a Nissan do they.....

Those who buy Mercs and Beemers would not be in the market for a Nissan. 10% extra would be no bother, besides, Mercedes dropped their prices the other year by 10% across the board.

Also, Nissan has a close relationship with Renault who could produce Nissans, if required, within the EU.

Currently, Opel, Nissan, and Renault vans are produced in Luton. Are these vans Nissans, Renaults or Opels?

Perhaps this puff article is making much out of nothing.

Bit cynical

Leroy42 wrote: »

I have no doubt that Ireland is going to do very badly because of the impacts of Brexit. But it will be because of Brexit, the UK, not because of the EU.

Well it could also be because of failure to promote Irish interests within the EU in their upcoming trade negotiations with the UK. We could end up with a very German-centric deal with automotive exports favoured over agriculture for example.

roosterman71

Bit cynical wrote: »

Well it could also be because of failure to promote Irish interests within the EU in their upcoming trade negotiations with the UK.

Luckily the current trade commissioner is an Irishman then. Let's hope he earns his money and works for a good deal for all of the EU, including Ireland

ancapailldorcha

Bit cynical wrote: »

Well it could also be because of failure to promote Irish interests within the EU in their upcoming trade negotiations with the UK. We could end up with a very German-centric deal with automotive exports favoured over agriculture for example.

I think this is unfair. The EU has backed the Irish since the initial negotiations began and, according to Tony Connelly's book (which is well worth a read), the only stumbling blocks the Irish faced in getting their agenda to be adopted at the top level were purely technical.

The UK has been Ireland's biggest market for centuries. It was always going to be impossible to alter that paradigm significantly in a mere few years.

Don't forget, the deal requires unanimous approval across the EU. That's a lot of room for things to go wrong and an excellent opportunity for the Taoiseach to assert Ireland's will.

Leroy42

Bit cynical wrote: »

Well it could also be because of failure to promote Irish interests within the EU in their upcoming trade negotiations with the UK. We could end up with a very German-centric deal with automotive exports favoured over agriculture for example.

You absolutely could, but all the evidence points to the opposite.

Agriculture is not just an Irish thing. It effects all countries, although to more or lessor extent.

But if you believe that argument, then why not that the UK would do the same in terms of their fisheries or similar in order to get services? We have already seen them cut out NI in order to get a step closer.

So all the dumping on parties has come from the UK

First Up

roosterman71 wrote:

Luckily the current trade commissioner is an Irishman then. Let's hope he earns his money and works for a good deal for all of the EU, including Ireland

Hogan getting that job was not a coincidence.

Bit cynical

Leroy42 wrote: »

Agriculture is not just an Irish thing. It effects all countries, although to more or lessor extent.

But if you believe that argument, then why not that the UK would do the same in terms of their fisheries or similar in order to get services? We have already seen them cut out NI in order to get a step closer.

So all the dumping on parties has come from the UK

To a certain extent, however, holding the UK to the border issue suited the EU. It sent a message to other prospective leavers that they would not have an easy time of it. It suited the EU further in that they were able to do this in the guise of helping Ireland. And when the time came to back down on it with the allowance of the NI Assembly members vote, the announcement came from Germany.

Now I am not saying this was a bad thing; the alternative would have been worse, but German economic interests did predominate in the end.

Zubeneschamali

Bit cynical wrote: »

Now I am not saying this was a bad thing; the alternative would have been worse, but German economic interests did predominate in the end.

Eh, what??

Ireland from the outset wanted no border on the island, and that is what we got.

Germany would be quite happy with a Dundalk to Derry canal full of piranhas.

gooch2k9

Bit cynical wrote: »

To a certain extent, however, holding the UK to the border issue suited the EU. It sent a message to other prospective leavers that they would not have an easy time of it. It suited the EU further in that they were able to do this in the guise of helping Ireland. And when the time came to back down on it with the allowance of the NI Assembly members vote, the announcement came from Germany.

Now I am not saying this was a bad thing; the alternative would have been worse, but German economic interests did predominate in the end.

Or maybe it suited them because it reinforced the message that this is a union of equals, and smaller countries won't just be dumped/sacrificed to suit larger ones.

Bit cynical

Bit cynical wrote: »

Now I am not saying this was a bad thing; the alternative would have been worse, but German economic interests did predominate in the end.

In what way?

Leroy42

Bit cynical wrote: »

To a certain extent, however, holding the UK to the border issue suited the EU. It sent a message to other prospective leavers that they would not have an easy time of it. It suited the EU further in that they were able to do this in the guise of helping Ireland. And when the time came to back down on it with the allowance of the NI Assembly members vote, the announcement came from Germany.

Now I am not saying this was a bad thing; the alternative would have been worse, but German economic interests did predominate in the end.

But again, even if that where true, where does that leave the UK union. The UK went against the wishes of NI, and ignored the vote in Scotland. Now one can argue about Scotland, given the nature of the vote etc, but the DUP clearly expressed, and the Tories were adamant, that no part of the union would be sacrificied. In the end they were more than happy to throw NI away to get what they want.

In any review of the two unions, it is clear which is stronger and more attuned to the members wishes.

BarryD2

Leroy42 wrote: »

I have no doubt that Ireland is going to do very badly because of the impacts of Brexit. But it will be because of Brexit, the UK, not because of the EU.

When looking at the overall effects, one needs to look at the relative outcomes. Where we end up compared to where we would have ended up without the support of the EU.

The EU can only do so much for us, they are not going to sink the entire EU economy just for Ireland. But they have shown already that they will go a good distance to try to limit the damage.

Agreed but does it really matter at the end of the day whether it's the UK or the EU position that damages us. This UK/EU blame game is pointless, we have to realise we are a player on the chess board but only a pawn compared to the knights, bishops and rooks, the heavy hitters.

Has all the potential of not working out very well and as pointed out above, maybe this is not a great general election to win here as a result. The blame game here if/ when things go a bit pear shaped won't be pretty.

Sam Russell

Leroy42 wrote: »

But again, even if that where true, where does that leave the UK union. The UK went against the wishes of NI, and ignored the vote in Scotland. Now one can argue about Scotland, given the nature of the vote etc, but the DUP clearly expressed, and the Tories were adamant, that no part of the union would be sacrificied. In the end they were more than happy to throw NI away to get what they want.

In any review of the two unions, it is clear which is stronger and more attuned to the members wishes.

History tells us that majority rules.

In NI, the Unionists ran a Protestant Government for a Protestant people. Majority rule.

In the UK, the Tories are an English Nationalist party that are determined that English Rule will prevail - over Scotland, and they could not ccare less about Ireland or Wales.

The old West Lothian Question is being answered with this Tory government. F*** Scotland.

Shelga

"We want a comprehensive free trade agreement similar to Canada's but in the unlikely event that we do not succeed then our trade will have to be based on our existing withdrawal agreement with the EU," Mr Johnson said.

What on earth does he mean by this?- he seems to think that if the EU don't offer them the trade terms they want, they can just stay in the transition period forever?

Shelga

Shelga wrote: »

"We want a comprehensive free trade agreement similar to Canada's but in the unlikely event that we do not succeed then our trade will have to be based on our existing withdrawal agreement with the EU," Mr Johnson said.

What on earth does he mean by this?- he seems to think that if the EU don't offer them the trade terms they want, they can just stay in the transition period forever?

Yeah, I thought that part was weird as well. Maybe he just means that the WA stuff about NI will be respected, because that's about all it could mean.

Sam Russell

Shelga wrote: »

"We want a comprehensive free trade agreement similar to Canada's but in the unlikely event that we do not succeed then our trade will have to be based on our existing withdrawal agreement with the EU," Mr Johnson said.

What on earth does he mean by this?- he seems to think that if the EU don't offer them the trade terms they want, they can just stay in the transition period forever?

Does he mean a transition period extension by another name?

Leroy42

It just another version of TM Lancaster House speech. 'We don't really know what we want, well we do its everything, but even we accept that is unlikely, so instead we are going to threaten to walk away. Like we have for 3 years, without ever doing it. But this time we really, really mean it. Except everyone knows we are not ready. But we are still going to go.'

And it will be breathlessly reported as Johnson sticking it to the EU, finally putting manners on the EU. Remember when TM held that speech on No 10 where she said she had had enough? The night the UK finally turned the tables? What changed? Nothing.

Because despite all the noise, the UK know they cannot go without a deal. Its madness. It won't be the end of the UK but it will create huge problems. A government is meant to make peoples lives better not worse

Bit cynical

Deleted User wrote: »

In what way?

It was no border permanently before and now, subject to a vote among NI Assembly members, the UK can be freed from its obligation. I'm not saying this is a likely outcome but it represents a backing down on the EU/Ireland side.

Bit cynical

Sam Russell wrote: »

Does he mean a transition period extension by another name?

He means WTO terms since WA does not specify the trading relationship.

ancapailldorcha

Bit cynical wrote: »

It was no border permanently before and now, subject to a vote among NI Assembly members, the UK can be freed from its obligation. I'm not saying this is a likely outcome but it represents a backing down on the EU/Ireland side.

It's a far cry from the claim about it being done for the Germans' economic interest though. The frontstop was the EU's preferred option and it also hands autonomy to Northern Ireland so it can decide for itself.