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[Funky Papa]

Why? (Not doubting, just want to understand the mechanic in this particular case.)

Import/export tariffs and duties on top of European regulations that would apply on countries without a proper trade agreement. Just a few weeks ago Toyota warned on 10% duties on UK-built cars. But this is just the tip of the spear.

Factories across Europe have to compete with each other in order to produce new models or keep the ones already in place. It isn't just salaries, but supporting partners in the region and the capacity to expand if necessary. This is a little known fact that is the cause of much bitterness in the industry. Japanese companies have already frozen investment at their UK plants due to the sheer uncertainty of the situation, which means that money will go elsewhere, propping factories in other regions and making Sunderland and other British locations less competitive. And this won't be just a 2016 thing. Nissan, Honda and Toyota will be extremely wary of making significant new investments in the UK for several years (at very least until the UK has exited the EU and the economic factors have stabilised), specially when they already have competitive factories in the continent that are more than willing to take in new models.

Sooner than later mainland factories will take some volume or even entire model lines, British parts providers (which are absolutely critical and can be used to measure the health of the automotive industry of a given country, since they are usually the fist to fall due to reduced margins and increased financial exposure) will start to fold/reduce their numbers due to the decrease in orders and the British automotive industry won't be competitive anymore. And Sunderland is a privileged location as it "only" exports 55% of its total production, which includes several models. It will be bled out of them over time. Other factories, specially those hosting a single model, exporting most of their output or simply taking most components from abroad will be even less fortunate. General Motors factory in Ellesmere Port is super fucked.

Financial and trade uncertainty in the British car industry is expected to last well over five years. It may take up to eight years before the climate allows for new investment in large quantities, meaning that trade with the EU is not severely impacted. Meanwhile, other locations will receive funding and models currently asigned to the UK as they become more competitive and trade restrictions take their toll. The entire European industry is going to go through some difficult times since the UK's market will contract (this is not an "if"), but the UK is going to take the most damage since its automotive renaissance was built on the back of Japanese companies, which are now incredibly vulnerable. Others such as GM aren't even that lucky.

Sources: I've been working for/in the automotive industry for nearly a decade and my girlfriend works at a major manufacturer that recently scored a huge win against a competing European factory not in the UK.

 

[accel]

^^ Thanks a lot, that really helps.

 

[Spookie]

Other factories, specially those hosting a single model, exporting most of their output or simply taking most components from abroad will be even less fortunate. General Motors factory in Ellesmere Port is super fucked.

All of that area will be super fucked as a majority of jobs come from there. They still voted leave though.

 

[Tyaren]

I heard Farage is a descendant of french immigrants. Talk about a long con.

I always wondered why its pronounced fa- ra- j and not fe-re-j

Funnily enough, they weren't just immigrants but French Huguenot refugees who were persecuted in Catholic France and fled to other Protestant countries like England or Prussia and were very welcomed there. Nearly a quarter of Berlin's population was French in the 18th century. Oh, the irony...

 

[Chinner]

Import/export tariffs and duties on top of European regulations that would apply on countries without a proper trade agreement. Just a few weeks ago Toyota warned on 10% duties on UK-built cars. But this is just the tip of the spear.

Factories across Europe have to compete with each other in order to produce new models or keep the ones already in place. It isn't just salaries, but supporting partners in the region and the capacity to expand if necessary. This is a little known fact that is the cause of much bitterness in the industry. Japanese companies have already frozen investment at their UK plants due to the sheer uncertainty of the situation, which means that money will go elsewhere, propping factories in other regions and making Sunderland and other British locations less competitive. And this won't be just a 2016 thing. Nissan, Honda and Toyota will be extremely wary of making significant new investments in the UK for several years (at very least until the UK has exited the EU and the economic factors have stabilised), specially when they already have competitive factories in the continent that are more than willing to take in new models.

Sooner than later mainland factories will take some volume or even entire model lines, British parts providers (which are absolutely critical and can be used to measure the health of the automotive industry of a given country, since they are usually the fist to fall due to reduced margins and increased financial exposure) will start to fold/reduce their numbers due to the decrease in orders and the British automotive industry won't be competitive anymore. And Sunderland is a privileged location as it "only" exports 55% of its total production, which includes several models. It will be bled out of them over time. Other factories, specially those hosting a single model, exporting most of their output or simply taking most components from abroad will be even less fortunate. General Motors factory in Ellesmere Port is super fucked.

Financial and trade uncertainty in the British car industry is expected to last well over five years. It may take up to eight years before the climate allows for new investment in large quantities, meaning that trade with the EU is not severely impacted. Meanwhile, other locations will receive funding and models currently asigned to the UK as they become more competitive and trade restrictions take their toll. The entire European industry is going to go through some difficult times since the UK's market will contract (this is not an "if"), but the UK is going to take the most damage since its automotive renaissance was built on the back of Japanese companies, which are now incredibly vulnerable. Others such as GM aren't even that lucky.

Sources: I've been working for/in the automotive industry for nearly a decade and my girlfriend works at a major manufacturer that recently scored a huge win against a competing European factory not in the UK.

Good post. I'm intrigued and also worried to see what happens to these areas (such as Sunderland) when these redundancies start to happen. I have no basis for my assumptions, however I fear that this country is currently swinging towards becoming far right politically. This could be used to fuel these beliefs, and could be damaging towards our society.

 

[Goodlife]

I honestly can't believe the 2012 Olympics took place in the same United Kingdom that is currently experiencing its death throes. It's unfathomable.

Yet, we keep voting for the tories

 

[PdotMichael]

Immigration is bad.

Both of the leading Brexit figures have immigration backgrounds.

QED

 

[Chinner]

Yet, we keep voting for the tories

https://youtu.be/e1l1XGiXgo0

 

[Lovely Salsa]

Anyone into economics? How low can the pound possibly sink? When will they start rising the prices of the electronics? Im debating when to strike

 

[Funky Papa]

All of that area will be super fucked as a majority of jobs come from there. They still voted leave though.

One of the biggest issues with the automotive sector is the fomentation of industrial monoculture. Those are huge facilities that employ thousands of workers and some times twice as many people among providers, contractors and R&D firms, which in turn drive all kinds of smaller businesses spread all over the region.

A single factory closing down is a complete catastrophe that will savage entire communities and decimate smaller towns.

 

[Kabuki Quantum Lover]

A single factory closing down is a complete catastrophe that will savage entire communities.

It sounds like England could potentially get a bunch of Flint, Michigans on their hands.

 

[Philly40]

Anyone into economics? How low can the pound possibly sink? When will they start rising the prices of the electronics? Im debating when to strike

I was in Greggs yesterday and everything seems to have gone up by 10-20 pence.
We're absolutely fucked.

 

[Jezbollah]

Anyone into economics? How low can the pound possibly sink? When will they start rising the prices of the electronics? Im debating when to strike

Well, that's already happening. I've been wanting to buy a EVGA Nvidia GTX1080 Hybrid and it's gone up to £800 - an increase of £50 in a week.

I think the pound is going to hit parity with the dollar by Christmas. So if you're looking at spending on electronics, now is the time.

 

[kmag]

One of the biggest issues with the automotive sector is the fomentation of industrial monoculture. Those are huge facilities that employ thousands of workers and some times twice as many people among providers, contractors and R&D firms, which in turn drive all kinds of smaller businesses spread all over the region.

A single factory closing down is a complete catastrophe that will savage entire communities and decimate smaller towns.

They almost to a town voted to leave. Fuck them. Votes have consequences. They thought that fear of the other was more important than their jobs.

 

[Hazzuh]

For many of us even staying and successfully opposing this would be bittersweet.

I've always been weirdly patriotic (compared to my other left leaning chums). Too much Daily Mail and civilization growing up I think. However, this result has utterly extinguished that in me. I've never felt so utterly ashamed and embarrassed to be British. I've gone from firmly believing in the union and our system of government, to now wishing Scotland well on their independence and thinking that parliament is an utter failure. I constantly feel like I'm second guessing "Did they vote for leave" when I meet people.

I honestly don't think I understand or know the country anymore. In 4 years we've gone from hosting the best Olympics in years, throwing open our doors to the world and demonstrating the value the UK has to offer, to a country where I have to apologize to my foreign friends for why they now feel afraid and unsure in the country they have lived in for decades.

It just doesn't feel like the country I loved, and was proud of, actually exists anymore. Even if we reverse thi, 52% of people still voted for a campaign that was self-evidently both racist *and* moronically stupid.

The thing is, in lots of ways the country you were proud of never existed. All this has done is expose the rifts that already existed in British society. I like a lot of people, myself included, were deluding ourselves when it came to the views of British people. There has to be a certain amount of cognitive dissonance involved in thinking the UK is some progressive society when the most popular newspapers are the Mail and the Sun.

If there was a referendum on the death penalty all evidence is that people would bring that back too.

 

[Lovely Salsa]

I was in Greggs yesterday and everything seems to have gone up by 10-20 pence.
We're absolutely fucked.

Yikes

Well, that's already happening. I've been wanting to buy a EVGA Nvidia GTX1080 Hybrid and it's gone up to £800 - an increase of £50 in a week.

I think the pound is going to hit parity with the dollar by Christmas. So if you're looking at spending on electronics, now is the time.

Im actually looking to buy gtx1070...looks like its time

Sorry for trying to win something out of this, UK gaf

 

[Funky Papa]

It sounds like England could potentially get a bunch of Flint, Michigans on their hands.

I live in a big-ish city of ~1 million people, give it or take. Everybody has at least one or two relatives working at the local factory. My family is relatively small yet two cousins and my girlfriend work there (not counting a couple of retired uncles). If the factory were to close, the entire city would look like that "possible nuke area" meme.

This is what is going to happen in a bunch of British cities unless some kind of miracle allows to keep trade as it is.

 

[mehrmantrout]

I was in Greggs yesterday and everything seems to have gone up by 10-20 pence.
We're absolutely fucked.

The true barometer of where we are. Once a steak bake gets to £1.75 I'm out

 

[Micael]

Yikes



Im actually looking to buy gtx1070...looks like its time

Sorry for trying to win something out of this, UK gaf

You're not trying to win something out of it, you're boosting their economy XD.

 

[Philly40]

The true barometer of where we are. Once a steak bake gets to £1.75 I'm out

It's not all doom and gloom, once steak bakes reach £2.00 the government can re-introduce the 'pasty tax'

That would single-handedly neutralise the loss from the entire banking industry.

 

[Theonik]

Anyone into economics? How low can the pound possibly sink? When will they start rising the prices of the electronics? Im debating when to strike

Your first question depends on what actually ends up happening for this year the GBP might hit as low as 1.16-1.22 to the USD. But the market is volatile atm.

For your second question, prices on imported goods will start rising in good time as foreign currency reserves run out and stocks sell through. For electronics this could mean that UK retailers stop being so generous on deals as their margins thin, unless their suppliers decide to front the cost instead.

Based on this, it could be that even though the price of the GBP drops more, you end up not saving more money on ransacking amazon.co.uk.

 

[Jisgsaw]

It's only important if you have an industry left which can export something in the first place.
Even if exporting is cheaper now, there is nothing that could compensate the increase of import costs.

The argument didn't make sense for Greece, it doesn't make sense for the UK. Strong industry nations like Germany or Japan that are the kind of countries which would celebrate a weaker currency.

That's certainly not true for Germany. They are the ones pushing for a strong Euro, just as they were pushing for a strong DM before that.
First there's the fact that German products are high quality (so less price sensitive), and Germany hasn't that much resources. So it's the most lucrative for them to import raw materials for cheap, and build high quality product they can sell for premium prices. You don't necessarily need a weak currency (or force it to be kept week, like Japan) to be a successful exporter, Germany was the biggest exporter up 'till ~2006, even before Japan and China, despite the strong Euro.
But mainly, there's still the fear that a weak currency can induce inflation, which didn't turn out so well after the first Great Depression for Germany, they really don't want to reproduce that.

 

[Beefy]

 

[jimbobsmells]

Dell is raising prices by 10%.
http://www.theregister.co.uk/2016/0...e_rise_post_brexit_vote_as_uk_pound_stumbles/

 

[Theonik]

That's certainly not true for Germany. They are the ones pushing for a strong Euro, just as they were pushing for a strong DM before that.
First there's the fact that German products are high quality (so less price sensitive), and Germany hasn't that much resources. So it's the most lucrative for them to import raw materials for cheap, and build high quality product they can sell for premium prices. You don't necessarily need a weak currency (or force it to be kept week, like Japan) to be a successful exporter, Germany was the biggest exporter up 'till ~2006, even before Japan and China, despite the strong Euro.
But mainly, there's still the fear that a weak currency can induce inflation, which didn't turn out so well after the first Great Depression for Germany, they really don't want to reproduce that.

The Euro has always been much weaker than a German currency would have been due to much less export focused countries also using it. Germany is inflation averse not necessarily in favour for a strong Euro.

 

[daviyoung]

Dell is raising prices by 10%.
http://www.theregister.co.uk/2016/0...e_rise_post_brexit_vote_as_uk_pound_stumbles/

it begins

 

[maquiladora]

it begins

Tip of the tip of the iceberg.

 

[Zaph]

Dell is raising prices by 10%.
http://www.theregister.co.uk/2016/0...e_rise_post_brexit_vote_as_uk_pound_stumbles/

High street pressure begins. Need a lot more of this to make those mugs realise what they've done.

 

[Jisgsaw]

The Euro has always been much weaker than a German currency would have been due to much less export focused countries also using it. Germany is inflation averse not necessarily in favour for a strong Euro.

The Euro started at almost 1 EUR = 2 DM; IIRC, the Euro, even now, is stronger than the DM ever was (vs Dollar)...
But yes, as I said, the main reason is aversion to inflation, for which having a strong currency isn't a bad idea. Especially since the german industry is used to it and has adapted to it.

 

[8bit]

I was in Greggs yesterday and everything seems to have gone up by 10-20 pence.
We're absolutely fucked.

A pasty based economy.

 

[Joni]

One of the biggest issues with the automotive sector is the fomentation of industrial monoculture. Those are huge facilities that employ thousands of workers and some times twice as many people among providers, contractors and R&D firms, which in turn drive all kinds of smaller businesses spread all over the region.

A single factory closing down is a complete catastrophe that will savage entire communities and decimate smaller towns.

Yeah, when Ford Genk closed in Belgium, Ford fired 4.210 people and another 1.209 people lost their job in the direct suppliers. Opel Antwerp was 2600 Opel employees and 2400 suppliers. That is the type of numbers we'll see in the UK when a closure is announced, just the direct job loss will be 50% higher than that number.

 

[Helensmith]

Dell is raising prices by 10%.
http://www.theregister.co.uk/2016/0...e_rise_post_brexit_vote_as_uk_pound_stumbles/

I might buy an Apple laptop sooner rather than later then.

 

[Purkake4]

Ah yes, Figel Narage quite an interesting fellow that one.

 

[Lego Boss]

Am l going to have to pre-order a shitload of videogames so that l'm not paying 60 quid when Mafia 3 comes out?

 

[D4Danger]

 

[Tuffty]

[Paris making noises to attract London's banks

If that isn't enough reason to not activate A50, then nothing will be. The country's future wealth and prosperity is at risk.

 

[Joni]

If that isn't enough reason to not activate A50, then nothing will be. The country's future wealth and prosperity is at risk.

The problem is that they not only have to not activate article 50, but also publically announce they will never do so and renew their commitment to prove this. Not activating article 50 is the current situation. Saying you won't will just seem problematic, as nobody will believe it will last.

 

[Phantast2k]

[Paris making noises to attract London's banks

If that isn't enough reason to not activate A50, then nothing will.

Meanwhile Berlin is going for London's (fintech) start-ups: Berlin bids to replace London as post-Brexit fintech capital - FT.com

 

[Linkstrikesback]

[Paris making noises to attract London's banks

If that isn't enough reason to not activate A50, then nothing will be. The country's future wealth and prosperity is at risk.

Except don't put it that way.

If we want to get anything out of this, make use of the UK publics hate of the french.

 

[Chittagong]

[Paris making noises to attract London's banks

If that isn't enough reason to not activate A50, then nothing will be. The country's future wealth and prosperity is at risk.

...aaand it's on! Waiting for London to counter with a return of non-dom status to perpetuity and free repatriation of offshore gains

 

[Tuffty]

Except don't put it that way.

If we want to get anything out of this, make use of the UK publics hate of the french.

I'm not seeing it. Financial services makes up a greater part of England's GDP than any other country, and this can be done because London is the financial capital of the world. Where's the fight to keep it that way?

 

[Theonik]

I'm not seeing it. Financial services makes up a greater part of England's GDP than any other country, and this can be done because London is the financial capital of the world. Where's the fight to keep it that way?

It's cool to hate bankers now that won't work on voters.
You must instead use something they hate more. The French.

 

[Joni]

I'm not seeing it. Financial services makes up a greater part of England's GDP than any other country, and this can be done because London is the financial capital of the world. Where's the fight to keep it that way?

Since 2007 bankers have been villainized. They are lucky they aren't tarred, feathered and shipped to France.

 

[Mr. Sam]

Meanwhile Berlin is going for London's (fintech) start-ups: Berlin bids to replace London as post-Brexit fintech capital - FT.com

My girlfriend's just starting a career in tech, I speak a little bit of German, we're going to Berlin on holiday soon, and we're definitely going to be scouting it as a future home.

Since 2007 bankers have been villainized.

I read this as "bakers." I was confused.

 

[Micael]

I read this as "bakers." I was confused.

Not sure what all the confusion is, as Boris put it, bakers are an important part of the British economy, it's one of it's main exports apparently, so they are getting all the credit while chefs only get some crap tv shows.

 

[Fistwell]

[Paris making noises to attract London's banks

It's been talked about quite a bit over here in France. The situation is seen as a great opportunity to absorb a significant part of the City. I hear Frankfurt is all over that shit as well. If either France or Germany has anything to say about it, UK's banking passport is gone forever.

 

[Tuffty]

I'm not even talking about the public. Those in government behind the wheel are steering into an iceberg of their own making and nobody has the sense to stop it.

 

[Micael]

I'm not even talking about the public. Those in government behind the wheel are steering into an iceberg of their own making and nobody has the sense to stop it.

They have gotten to this point without using common sense, why would they start now.

 

[Linkstrikesback]

I'm not seeing it. Financial services makes up a greater part of England's GDP than any other country, and this can be done because London is the financial capital of the world. Where's the fight to keep it that way?

Sorry, what I meant was, make use of the Britishs hate of the french to twist arms in keeping us in the EU.

"Sure, we could leave the EU, but then that'd mean the French get to be the leaders in one of the things we were the best at, and do you really want that?"

 

[KingSnake]

[Paris making noises to attract London's banks

It's a logical move. I'm surprised that there aren't more out there for blood, not only for banks. There are more areas impacted by this whole situation, it's a good opportunity for some regions to steal some factories and so.