Home » British Industrial Policy » A Vision of Manufacturing in Post-Brexit Britain

A Vision of Manufacturing in Post-Brexit Britain

Archives

by John Brian Shannon

post-Brexit British manufacturing model

McLaren celebrates their 5000th supercar on February 2, 2015. File photo courtesy of compositestoday.com

Yes folks, it really does take that many people to build a McLaren supercar!

In fact, it takes many thousands of people combining forces to build any car, aircraft, or other modern and/or technologically advanced vehicle.

And the point of this blog post is to show that the UK can add one million manufacturing jobs in the automotive sector alone, just by adopting the right policies — policies that help foreign automakers become ‘part of the solution instead of part of the problem.’

So, please bear with me while I show you how the UK could emerge a winner in the post-Brexit timeframe, create millions of homegrown jobs, boost the economy like never before, and supercharge UK manufacturing exports.

If you like the sound of that, then you’re a British patriot and you want the best for your country. I salute you!

(If you’re a foreign car manufacturer, don’t panic, it’ll work out for you too in the post-Brexit era. Just keep reading ’til the end)


UK Slaps a £25,000 Tariff on any Car or Truck (New or Used) That’s Imported After Brexit

WOW! That got your attention, didn’t it?

It’s not as bad as it sounds, because every auto manufacturer would be invited to establish their headquarters for all Commonwealth of Nations countries (and this blogger suggests) that the UK government should provide brand-new, free-of-charge, turnkey factories to every auto manufacturer that wants to build cars and trucks in the UK and sell them to every Commonwealth of Nations country including the UK, sans tariffs, simply by manufacturing those vehicles in the UK.

Remember, The Commonwealth comprises 53 countries with a combined population of 2.5 billion people by 2020 and a combined GDP that nearly matches the U.S.A.

The UK alone, is the 5th-largest economy in the world by GDP (6th by PPP) and India is the 6th-largest economy in the world by GDP (5th by PPP) and other countries in the Commonwealth include Canada (10th) Australia (13th) Nigeria (30th) South Africa (33rd) and Pakistan (40th) and many others whose economies are rocketing upwards in this young century.

Nigeria alone will have more citizens than the United States by 2060. Maybe sooner.

How many auto manufacturers want enhanced access to 2.5 billion consumers, most of whom live in rapidly growing economies with upward disposable income?

The Commonwealth consumers not living in those burgeoning economies live in developed nations with high per capita incomes like the UK, Canada, Australia, New Zealand and Singapore.

Brand-new, ‘build to suit’ factories, paid for and owned by the UK government, leased to each manufacturer for £1 per year — with the benefit of zero UK or Commonwealth tariffs for those auto manufacturers, and streamlined access to 2.5 billion Commonwealth of Nations consumers.

If you’re a global auto manufacturer, you can’t lose!


Why Would Commonwealth Nations Agree to This Plan?

The UK unemployment rate is low at present, and falling each year.

In 2019, the UK unemployment rate sits at 3.8% and you’ll remember from your economics class that 2.5% unemployment is functionally a 0% unemployment rate — as exactly that many people are in some kind of transitory employment state without being actually unemployed.

Which means the UK is 1.3% away from zero functional unemployment even with all the Brexit uncertainty due to the overly-long negotiating period. (3.8% – 2.5% = 1.3%)

Q: In the immediate Post-Brexit era and assuming a (functional) 0% unemployment rate in the UK, who will the UK call-on to fill perhaps a million new manufacturing jobs?

A: The Commonwealth of Nations countries, that’s who.

And that’s the benefit of being a member of a large and diverse bloc such as the Commonwealth. For the UK, membership in that group means a huge pool of highly motivated workers ready to jump on a plane and begin working in the UK immediately.

For Commonwealth countries, it means hundreds of thousands of their young people will have good paying jobs waiting for them in the UK at the end of their schooling, and good kids will send some money home to Mom and Dad — who after all, probably paid for their child’s entire education and the airfare to the UK.

Workers who show up on-time and do a good job will of course be invited to stay on where the manufacturing continues year ’round, or find themselves invited to return to the UK by their company at the beginning of the next production cycle.

For the UK, this plan would reduce UK unemployment to zero, then allow any additional labour to be sourced from Commonwealth of Nations countries.

For foreign auto manufacturers, this plan would provide a specially-built for them factory at a cost of £1 per year, and guarantee them no automotive tariffs in the UK and other Commonwealth of Nations countries.


Saving Money, Streamlining Production, Centralizing Administration

Let’s pretend at present that Ford Motor Company builds the F-150 pickup truck in different Commonwealth nations and earns low profit per vehicle because the sales numbers in each country don’t quite support one factory per country. And all of its vehicles are subject to a plethora of different tariffs and fees in the various Commonwealth countries, depending upon where those F-150’s are built and where Ford is shipping them. Very inefficient!

But if Ford decides to build all of its UK and Commonwealth-destined F-150’s in the UK, it means that one humongous factory in Britain could build all of them. There are economies of scale in that approach! And to have the land and building built and paid for by the UK government guarantees the economics work for Ford.

All Ford must decide is where in the UK it wants the factory, which car lines or trucks to build in the factory, and pay an annual £1 rent payment to the UK government.

And no automotive tariffs for Ford in any Commonwealth nation, including the UK. Ever!


But This is An Expensive Plan!

No, not really. Especially when you factor-in some of the possible alternatives.

Such as the entire auto manufacturing sector in the UK dying completely. Which is happening in slow-motion anyway. (Rolls-Royce, Bentley, JLR, Mini, Lotus, Triumph, MG, Rover cars, BSA motorcycles, etc. are almost gone, or already gone)

There go a million existing UK jobs! (For just one example of it going wrong) And there go the additional one million UK jobs I’ve proposed.

But if UK unemployment hits 0% in the UK as I expect AND if one million new auto manufacturing jobs are created via this proposal, that means (on average) each of those additional one million auto workers will pay an average £20,000. income tax annually, and thousands of pounds in other taxes on their discretionary spending because almost every time you buy something in the UK you pay some kind of tax on it. New house, new car, new baby pram, you get the idea.

What is one million times £20,000. anyway? That’s £20 billion annually in income tax revenue HM government isn’t presently earning.

It’s even better if those one million additional workers spend every pound sterling they earn on taxable items in the UK. Maybe twice as good as the calculation above shows.

  • Check the math: 1,000,000 x £20,000. = £20,000,000,000. annual income tax revenue alone.
  • Over 10-years, that equals ‭£200 billion in tax revenue alone for HMG.
  • Yes, some of the £200 billion would be spent to build turnkey factories over that decade, but nowhere near all of it.

Remember: This is Just One Example of Why Britons Shouldn’t be Shrinking Back from Brexit!

Whether we’re talking Volkswagen Golf, BMW 5 Series, Audi A8, or whatever car you want to buy in the UK — if they don’t build them in the UK after Brexit — each vehicle imported into the UK would be subject to a £25,000 tariff.

Because at present, those cars are built in the EU, by EU companies, by EU workers who pay EU income taxes, in EU-subsidized factories — and the UK is getting no benefit whatsoever — other than UK drivers are encouraged by slick advertising to hand over their hard earned money to EU car manufacturers.

However, if they build them in the UK — a no automobile tariff regime for those auto manufacturers would apply anywhere in the Commonwealth of Nations, under this proposal.

I posit that vehicles destined for the UK and Commonwealth market could and should be built in Britain, and by adopting better policies, UK manufacturing will succeed as never before!


1 Comment

  1. […] Reposted at ArabianGazette.com […]

Leave a Reply to Arabian Gazette Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.