There is ‘no good Brexit’ for UK car parts boss

A Mini on the assembly line in Oxford, UK. Car-sector companies are shaking up manufacturing processes because of fears that Brexit will make trade harder. (AFP)
Updated 17 November 2018

There is ‘no good Brexit’ for UK car parts boss

CANNOCK: “There is no good Brexit!” insists Greg McDonald, chief executive of Goodfish Group, a UK-based company making plastic components for the country’s key car sector.

The small company, nestled in the Midlands not far from Birmingham, the UK’s second largest city, sells one third of its products to mainland Europe, with weekly shipments to Poland and one every 10 days to the Czech Republic.

In addition, most of what the group sells in the UK ends up being shipped overseas.

To help Brexit-proof the business — and the whole auto industry is worried about potential disruption at ports — Goodfish is looking at possibly setting up production facilities in central or eastern Europe.

“It’s our way of combating potential loss of business and also (ensuring) future growth,” McDonald, 56, told AFP.

“If you’re a business owner and all your investment and all your wealth is tied up in your business, which is mostly the case (here), you don’t wait to be told by the politicians what the final outcome is.

“You make plans to address the situation as you see it,” said McDonald, who has lived in France, Germany, Ireland and Switzerland.

Goodfish is not alone among car-sector companies shaking up manufacturing processes because of fears Brexit will ultimately make trade harder.

The industry body, Society of Motor Manufacturers and Traders (SMMT), has blamed Brexit uncertainty for plunging UK investment, warning about the harmful impact of new, post-Brexit customs controls.

The Midlands is home to 40 percent of the UK’s 186,000 auto sector workers, including Indian-owned Jaguar Land Rover (JLR), which has already taken the plunge into Europe.

JLR recently opened a €1.4-billion ($1.6-billion) factory in Nitra, western Slovakia, its first in continental Europe ahead of Britain’s planned EU departure on March 29.

UK companies’ manufacturing processes are complicated by the need to import raw materials, which have become more expensive owing to a sliding pound — caused in turn by Brexit jitters.

“Of course we’re suffering from weak sterling because of the fears of Brexit,” McDonald said.

UK manufacturers who have survived previous difficult financial cycles “are the exporters,” McDonald pointed out.

A young company with 125 staff, Goodfish was founded in 2010 and has annual turnover of more than £10 million ($12.8 million).

How it builds on its success is likely to depend largely on the final terms of the UK’s post-Brexit trade agreements.

The draft document agreed with Brussels this week states that during a transition period ending on Dec. 31, 2020, EU law will apply to give businesses time to prepare for new ties.

This means the UK will continue to participate in the EU Customs Union and the Single Market.

It allows Britain continued market access to the remaining 27 EU countries but it must respect the rules on free movement of goods, capital, services and labor without having any say in EU decision-making.

“Of course a customs union gets around most of the problems but having to follow the rules of the EU without actually having any say on what these rules are — that’s definitely a worse position” than now, McDonald said.


Huawei's third-quarter revenue jumps 27% as smartphone sales surge

Updated 16 October 2019

Huawei's third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.