Auto parts suppliers warn hard Brexit may set UK back 25 years

BMW said only 10 percent of British automotive suppliers and 41 percent of EU suppliers considered they were well prepared for Brexit. (Supplied)
Updated 17 October 2018
0

Auto parts suppliers warn hard Brexit may set UK back 25 years

  • Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW and brakes maker Brembo, jointly warned that a no-deal exit would be catastrophic for the industry
  • Roberto Vavassori: The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world

BRUSSELS: Failure to secure a trade deal for Britain when it exits the EU next year could set the UK auto sector back two decades, leading parts suppliers said on Wednesday as they urged leaders to reach agreement at a summit in Brussels.
Europe’s carmakers’ lobby ACEA and suppliers’ association CLEPA, along with BMW and brakes maker Brembo, jointly warned that a no-deal exit would be catastrophic for the industry.
The “just-in-time” industry model relied on frictionless trade between Britain and mainland Europe, they said.
“If we are continuing to be taken hostage by this situation, the flourishing UK auto industry could come back to the situation it was at 20-25 years ago,” said Roberto Vavassori, a management board member at Brembo and president of CLEPA.

 

The recovery of Britain’s auto sector in the 20 years since the decline of British Leyland and its successor Rover Group was based on investment from around the world, he said.
Vavassori said he felt “betrayed” that Brembo’s manufacturing in Coventry, UK, would be a different prospect post-Brexit from the time of its investment 15 years ago.
ACEA said contingency planning by its members included temporary production shutdowns and scouting for warehouse space to stockpile parts.
“No amount of contingency planning can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms,” ACEA said, referring to a no-deal scenario in which Britain would have no preferential access to EU markets.
Some 1,100 trucks arrive in Britain every day from elsewhere in the country with parts for the UK auto sector, and storage space to cover more than a day or two of production was not feasible.
The EU leaders’ meeting from Wednesday had hoped to reach a provisional Brexit deal before signing off on a withdrawal agreement at a special Brexit summit
in November.
The talks, stalled since Sunday, are stuck over the issue of how to avoid a hard border between the British province of Northern Ireland and the Irish Republic.
BMW said that its survey of
Brexit preparedness showed only 10 percent of British automotive suppliers and 41 percent of EU suppliers considered they were well prepared for Brexit, with many having little or no experience of customs clearing.
Stephan Freismuth, customs manager at BMW, said that at the Channel tunnel and ports such as Dover there was no customs
infrastructure and, in some cases, no space for trucks awaiting checks to park.

FASTFACTS

Some 1,100 trucks arrive in Britain every day from elsewhere in the country with parts for the UK auto sector.


Davos organizer WEF warns of growing risk of cyberattacks in Gulf

Updated 46 min 23 sec ago
0

Davos organizer WEF warns of growing risk of cyberattacks in Gulf

  • Saudi Arabia, the UAE and Qatar particularly vulnerable
  • John Drzik spoke to Arab News about the state of cybersecurity in the Gulf

LONDON: The World Economic Forum (WEF) has warned of the growing possibility of cyberattacks in the Gulf — with Saudi Arabia, the UAE and Qatar particularly vulnerable.

Cyberattacks were ranked as the second most important risk — after an “energy shock” — in the three Gulf states, according to the WEF’s flagship Global Risks Report 2019.

The report was released ahead of the WEF’s annual forum in Davos, Switzerland, which starts on Tuesday.

In an interview with Arab News, John Drzik, president of global risk and digital at professional services firm Marsh & McLennan said: “The risk of cyberattacks on critical infrastructure such as power centers and water plants is moving up the agenda in the Middle East, and in the Gulf in particular.”

Drzik was speaking on the sidelines of a London summit where WEF unveiled the report, which was compiled in partnership with Marsh and Zurich Insurance.

“Cyberattacks are a growing concern as the regional economy becomes more sophisticated,” he said.

“Critical infrastructure means centers where disablement could affect an entire society — for instance an attack on an electric grid.”

Countries needed to “upgrade to reflect the change in the cyber risk environment,” he added.

The WEF report incorporated the results of a survey taken from about 1,000 experts and decision makers.

The top three risks for the Middle East and Africa as a whole were found to be an energy price shock, unemployment or underemployment, and terrorist attacks.

Worries about an oil price shock were said to be particularly pronounced in countries where government spending was rising, said WEF. This group includes Saudi Arabia, which the IMF estimated in May 2018 had seen its fiscal breakeven price for oil — that is, the price required to balance the national budget — rise to $88 a barrel, 26 percent above the IMF’s October 2017 estimate, and also higher than the country’s medium-term oil-price target of $70–$80.

But that disclosure needed to be balanced with the fact that risk of “fiscal crises” dropped sharply in the WEF survey rankings, from first position last year to fifth in 2018.

The report said: “Oil prices increased substantially between our 2017 and 2018 surveys, from around $50 to $75. This represents a significant fillip for the fiscal position of the region’s oil producers, with the IMF estimating that each $10 increase in oil prices should feed through to an improvement on the fiscal balance of 3 percentage points of GDP.”

At national level, this risk of “unemployment and underemployment” ranked highly in Bahrain, Egypt, Morocco, Oman and Tunisia.
“Unemployment is a pressing issue in the region, particularly for the rapidly expanding young population: Youth unemployment averages around 25 percent and is close to 50 percent in Oman,” said the report.

Other countries attaching high prominence to domestic and regional fractures in the survey were Tunisia, with “profound
social instability” ranked first, and Algeria, where respondents ranked “failure of regional and global governance” first.

Looking at the global picture, WEF warned that weakened international co-operation was damaging the collective will to confront key issues such as climate change and environmental degradation.