Things to come, or a beacon of hope? The GM takeover...

It’s rare that political events directly influence business; that’s more the province of budgets, investment, and spending. However, there can be no doubt that an impending hard Brexit has already had a marked effect on industry and manufacturing, even before Article 50 is triggered. Sterling’s lemming-like plunge off a cliff as soon as Sunderland returned a firm Leave result in the early hours of 24th June 2016 was indicative of a what a rocky ride the markets might expect for months to come whatever the eventual result would be – and if the markets are rocky, big names are rocky too.

There are 24 Vauxhall/Opel factories across Europe – thought to be too many – and there is a sense of ‘every plant for itself’

The news that General Motors was to sell its loss-making Opel brand is widely thought to be one of the more significant Brexit-related deals thus far; a €2.2 billion deal for the Vauxhall/Opel name (which has been making losses for the past decade in the European market). However, despite Carlos Tavares’ – the Chief Executive of purchasing company PSA – assertion that the Vauxhall/Opel brand would become part of a European car super-manufacturer second only to Volkswagen, has done nothing to calm the fears of workers at the Vauxhall plants in Luton and Ellsmere Port. There are 24 Vauxhall/Opel factories across Europe – thought to be too many – and there is a sense of ‘every plant for itself’. PSA were famously ruthless in shedding thousands from the Peugeot and Citro?n workforces to streamline the company and save it from disaster three years ago.

Source from the UK from inside the UK

 Back to Sunderland, however – the government’s swift deal to ensure Nissan’s presence and investment in the area has been hailed as an early success of Brexit before the paperwork is even signed, let alone the ink dry, and there is little doubt that it’s good news for jobs locally. The hope that the former GM factories must have is that Tavares’ comments that a hard Brexit would allow PSA to “source from the UK from inside the UK” will mean a similarly secure future for them too, at least in the short-term.

 General Motors Chief Executive Mary Barra is happier to lay the blame for Vauxhall/Opel failing to at least break even in 2016 directly at Brexit’s door, although UK Business Secretary Greg Clark – who incidentally voted for the UK to remain a part of the EU – thinks that there’s no blame to cast, and that it’s part of a wider need to restructure, and that “our automotive plants are the strongest in the world”.

 However, to get a true picture of which way the wind is blowing, it’s worth listening to how the unions are speaking about the possibility of redundancies, and Unite’s Len McCluskey has already fired the warning shot. In his view, GM has a moral obligation to support its now former workers, who are, in effect, those that “have helped make this company what it is today”. He also believes that the government must offer the same deal and backing as Nissan has received, and to the wider UK car industry as a whole.

One thing is certain – Brexit will change the face of industry and manufacturing in the UK. Whether the motor industry sets the standard for new regional investment and job security, or whether the big names eventually move to mainland Europe remains to be seen.