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How are Emission Regulators and Brexit Uncertainty Impacting Car Companies Across the Globe?

Car Industry Faces Changes

How are emission regulators and Brexit uncertainty impacting car companies across the globe?

Ford plots to shut its engine producing plant in Bridgend threatening 1,700 jobs.

The UK’s fragile car industry is undergoing constant changes. Ford plans to shut its engine manufacturing plant in Bridgend, South Wales effectively threatening around 1,700 jobs, and Jaguar Land Rover has paired with BMW to reduce the overall costs of researching and building electric vehicles for a market that is showing increasing concerns with climate change.

The UK’s automotive sector is under immense pressure as diesel car sales drop as well as plummeting sales figures from China which was once a key driver of market expansion. Moreover, the political uncertainty that surrounds Brexit has crippled the UK’s once strong car manufacturing sector, as imported and exported vehicles and parts face the risk of levies should the UK depart the European Union without a trade deal.

Ford plans to shut its Bridgend plant risking 1,700 jobs

Ford’s decision to close its plant in south Wales comes after various other global car companies announced cutbacks and closures of their UK operations. 4 months ago, Honda announced its intentions to close its plant in Swindon by 2021 threatening nearly 4,000 jobs, as well as Nissan’s decision to axe the production of its latest X-Trail model SUV in its Sunderland plant.  

Last month in an email to employees, Ford’s CEO, Jim Hackett, wrote:

“To succeed in our competitive industry, and position Ford to win in a fast-changing future, we must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work and cut costs.”

Ford’s decision to close its Bridgend plant comes after announcements it made in May detailing the cutbacks of around 7,000 jobs across the globe, 600 of which are based in Britain.

A spokesperson for Unite, a British and Irish trade union, said: ‘Unite will be meeting Ford first thing and will comment further once the details of any announcement are known. Our priority is our members’ jobs, the communities and livelihoods in the supply chain that Ford Bridgend supports. Along with the workforce at the plant, many hundreds more people are employed in businesses that supply the plant, which has been in the town for 40 years.’

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Rebecca Long-Bailey, the Labour MP and Business Secretary made the following remarks regarding Ford’s decision to shut its plant in Bridgend: ‘This is worrying news, first and foremost for Ford employees and their families who are left unsure as to their futures, but also for the jobs across the supply chain and the impact on the local economy in Bridgend. Hot on the heels from Honda this would be another devastating blow to our car industry and to the UK’s wider manufacturing base. The Government must urgently meet with Ford to secure the plant’s future.’

A partnership between Jaguar Land Rover (JLR) and BMW has been merged to lower the costs involved when manufacturing electric and autonomous vehicles, as well as transmissions.

The two car giants have agreed to share the investment costs involved in researching and producing electrified vehicles which would give consumers the ability to substitute traditional petrol and diesel-fueled cars.

JLR and BMW partnership to share the costs of investing in electric vehicles.

The engineering Director for Jaguar Land Rover, Nick Rogers, said: “The transition to ACES represents the greatest technological shift in the automotive industry in a generation. The pace of change and consumer interest in electrified vehicles is gathering real momentum and it’s essential we work across industry to advance the technologies required to deliver this exciting future.”

“We’ve proven we can build world beating electric cars but now we need to scale the technology to support the next generation of Jaguar and Land Rover products. It was clear from discussions with BMW Group that both companies’ requirements for next generation EDUs to support this transition have significant overlap making for a mutually beneficial collaboration.”

Jaguar Land Rover is set to slash roughly 4,500 jobs worldwide as the company aims to cut 2.5 billion pounds from its expenses following faltering demand from China and the Eurozone and unprecedented losses of nearly 3.5 billion pounds in the fourth quarter of 2018. BMW, on the other hand, aims to reduce its costs by over 10 billion euros after announcing that revenue in 2019 will drop.

Car companies are facing increasing costs from the research and development processes of mass-producing electric vehicles for the global markets as environmental regulators and activists raise demands and standards of greenhouse gas emissions.

Klaus Froehlich, a BMW board member said: “together, we have the opportunity to cater more effectively for customer needs by shortening development time and bringing vehicles and state-of-the-art technologies more rapidly to market.”

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The proposed Fiat Chrysler and Renault merger shattered after the French government, which owns a 15 percent share in Renault, had concerns regarding job cuts.  

In an attempt to deflect criticism, the French Minister of finance and the economy, Bruno Le Maire said that the French government had approached all partners and members of the discussions regarding a possible merger, however a compromise for all the government’s conditions could not be made.

Hiroto Saikawa, Nissan’s Chief Executive Officer issued the following statement in response to the proposed partnership:

“I am aware that FCA’s merger proposal will be discussed by Renault’s board this week.”

“I believe that the potential addition of FCA as a new member of the Alliance could expand the playing field for collaboration and create new opportunities for further synergies.”

“That said, the proposal currently being discussed is a full merger which—if realized—would significantly alter the structure of our partner Renault. This would require a fundamental review of the existing relationship between Nissan and Renault.”

“From the standpoint of protecting Nissan’s interests, Nissan will analyze and consider its existing contractual relationships and how we should operate business in the future.”

Similarly, Renault conveyed its discontent with the breakdown of the proposed partnership saying:

‘Groupe Renault expresses its disappointment not to have the opportunity to continue to pursue the proposal of FCA (Fiat Chrysler Automobiles). We are gratified by the constructive approach of Nissan and wish to thank FCA for their efforts and the Renault’s Board of Directors for its continued confidence. We view the opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European based global auto powerhouse.’

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Last week Fiat Chrysler extended a proposal to Renault for a possible partnership. With car manufacturers across the planet facing growing scrutiny and tension to develop electric and autonomous vehicles, we are witnessing an increase of car companies that are teaming up as they try to reduce annual expenses. If the Fiat Chrysler-Renault merger had gone through it would have created the third largest global car company and could have reduced the cost of research by approximately 5 billion euros per year.  

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