Brexit Thread IV - They're laughing with us, not at us

[Arakhor]

As fascinating as all these diatribes are on the evil European Empire, let's try restricting it to the UK's interactions alone, please.

 

[EnglishEdward]

The ‘very pro EU’ Grauniad is simply reporting what somebody else said.

Which is a welcome change in itself from un-critically publishing Remainer rants.

Now the BBC reports Justine Greening:

https://www.bbc.co.uk/news/uk-44840154

Justine Greening has called for a second referendum, labelling the prime minister's Brexit deal a "fudge". Writing in the Times, the former education secretary described Theresa May's proposals as "the worst of both worlds". The final decision should be given back to the people and out of "deadlocked politicians" hands, Ms Greening said. She states there are three options: the PM's deal, staying in the EU or a clean break from Europe with no deal. Ms Greening, who resigned after the cabinet reshuffle in January, said the referendum should offer a first andsecond preference vote so that a consensus can be reached.

.

 

[Arakhor]

Perhaps people should remember that the Chequers deal is only the pathetic result of two years of Tory backbiting and is (at most) merely 80% of a final deal with the EU.

 

[EnglishEdward]

By the way, my friends in the car industry tell me that the most cost-efficient way to deal with Trump's proposed car tariffs will be to close US-based car factories. With all of the resulting tariffs, producing cars in the US would become too expensive.

European car manufacturers may assume that they can close car factories based in the
USA or UK at will merely because own them and they don't like Trump/Brexit.

But consider this. If western corporates decided to close factories in China or Japan or Thailand etc
I rather think that the governments there might say, "sure you can stop investing,
sure you can walk away, but that factory, those production lines and employees
are in our country. If you regard that as worthless; well here is a dollar for them.
We will find a local Chinese, Indian or Thai company to take them over and run them."

Yes, they can refuse to sell parts or license IPR, there'd be an interruption, the employees get a long
holiday while car parts get sourced from someone, but those EU don't sell any cars there at all.

While Theresa May is too thick to think through all of this, the Donald and Jeremy Corbyn are not.
So the EU corporates' investment in the USA or UK quickly becomes a USA /UK asset instead.

 

[Arakhor]

I think that you're vastly overstating Trump's knowledge or understanding of anything that isn't interpersonal skills.

 

[Verbose]

We can always nationalize industries.

Russia already largely has. It might turn out to be the new model. Comes with a price of rather reduced economic activity overall though.

Will post-Brexit UK nationalize its industries? British Leyland comes to mind...

 

[Arakhor]

The only thing the Tories nationalise is the banks.

 

[Hrothbern]

European car manufacturers may assume that they can close car factories based in the
USA or UK at will merely because own them and they don't like Trump/Brexit.

But consider this. If western corporates decided to close factories in China or Japan or Thailand etc
I rather think that the governments there might say, "sure you can stop investing,
sure you can walk away, but that factory, those production lines and employees
are in our country. If you regard that as worthless; well here is a dollar for them.
We will find a local Chinese, Indian or Thai company to take them over and run them."

Yes, they can refuse to sell parts or license IPR, there'd be an interruption, the employees get a long
holiday while car parts get sourced from someone, but those EU don't sell any cars there at all.

While Theresa May is too thick to think through all of this, the Donald and Jeremy Corbyn are not.
So the EU corporates' investment in the USA or UK quickly becomes a USA /UK asset instead.

For the car industry there is anyway the time horizon of the combustion cars, when electric cars and their production facilities take over.
Current facilities in the UK could indeed be burdened with tariff effects between UK and the EU, but those tariff effects on the total cost price will, I guess, for EU car companies be less than the depreciation of the facility equipment in the cost price.
So it still makes sense for EU car manufacturers to run their facilities in the UK, because the retained equipment value if moved to other locations will, I guess, be too low, to make relocation worthwhile.

The other thing is that capacities of EU car in the UK are marginal capacities of the Brand. That means that the true marginal cost price of cars produced in UK facilities is lower than the full price on which normal profit calculation is based.
But that all will not take away that the EU car companies will make less profits after a hard Brexit. And in the UK no tax on those facilities running a loss (at a still positive cash flow).
Which on her turn means that the UK will plummet in reliability for foreign investments, although not as deep as with forced nationalisations.

 

[AmazonQueen]

The UK indeed has most of its trade with the EU. A strategic mistake made long ago. But one that can be corrected. May is to blame for not being hard at work correcting it already.



There is another way: break the EU. But May is a fool, she has the means to achieve that, but not the courage. BoJo, just like Trump, is underestimated. It's not how intelligent they are anyway, it is how far they are willing to go out of "the norms", and the power they command. The US-UK command a lot still... their real limits are set by internal politics, and both of them seem very adept at overcoming those limitations.





Remember, it is not business as usual when dealing with the US, at least with the government it has now. Close those factories and abdicate the US market entirely? I believe Trump will be fine with that. Demand will still be there, and new owners would take it over. It would surely help him politically, contrary to what your friend counts on. He'll win the workers with the nationalist card, and the bosses with federal support to put up new factories to add to their business empires. Damn, you people remain as blind to the current circumstances as before that election!

The reason why we joined the Common Market was because we were struggling to trade. The Commonwealth was happy to sell to us but

European car manufacturers may assume that they can close car factories based in the
USA or UK at will merely because own them and they don't like Trump/Brexit.

But consider this. If western corporates decided to close factories in China or Japan or Thailand etc
I rather think that the governments there might say, "sure you can stop investing,
sure you can walk away, but that factory, those production lines and employees
are in our country. If you regard that as worthless; well here is a dollar for them.
We will find a local Chinese, Indian or Thai company to take them over and run them."

Yes, they can refuse to sell parts or license IPR, there'd be an interruption, the employees get a long
holiday while car parts get sourced from someone, but those EU don't sell any cars there at all.

While Theresa May is too thick to think through all of this, the Donald and Jeremy Corbyn are not.
So the EU corporates' investment in the USA or UK quickly becomes a USA /UK asset instead.

That works well for a country that invests around the world.
Goodbye City of London's financial dominance, goodbye anybody banking or investing here

 

[FriendlyFire]

European car manufacturers may assume that they can close car factories based in the
USA or UK at will merely because own them and they don't like Trump/Brexit.

But consider this. If western corporates decided to close factories in China or Japan or Thailand etc
I rather think that the governments there might say, "sure you can stop investing,
sure you can walk away, but that factory, those production lines and employees
are in our country. If you regard that as worthless; well here is a dollar for them.
We will find a local Chinese, Indian or Thai company to take them over and run them."

Yes, they can refuse to sell parts or license IPR, there'd be an interruption, the employees get a long
holiday while car parts get sourced from someone, but those EU don't sell any cars there at all.

While Theresa May is too thick to think through all of this, the Donald and Jeremy Corbyn are not.
So the EU corporates' investment in the USA or UK quickly becomes a USA /UK asset instead.

Problem 1
If the Orginal owners are moving there now unprofitable production lines overseas what makes you think the UK government can make them profitable ?

Problem 2
If eighty percent of cars are exported, then the internal market for UK is just twenty percent, if you building fewer car they become more expensive
How are you going to even compete when the Orginal oweners have moved production overseas are now producing the same cars in larger numbers but cheaper price now ?

Problem 3
Companies like BMW dont even produce its Car engines in the UK, How do you intend to build cars with engines ?
UK government is going to reverse engineer German engines and set up production line for engines ? and all the other parts ?

Problem 4
UK has its own car industries, you going to restart a rivial car manufactorers and subisdise it to compete with UK car companies now ?

 

[dutchfire]

Turn 439 -- 2019 AD:
Elizabeth (English Empire) adopts State Property

 

[AmazonQueen]

Problem 1
If the Orginal owners are moving there now unprofitable production lines overseas what makes you think the UK government can make them profitable ?

Problem 2
If eighty percent of cars are exported, then the internal market for UK is just twenty percent, if you building fewer car they become more expensive
How are you going to even compete when the Orginal oweners have moved production overseas are now producing the same cars in larger numbers but cheaper price now ?

Problem 3
Companies like BMW dont even produce its Car engines in the UK, How do you intend to build cars with engines ?
UK government is going to reverse engineer German engines and set up production line for engines ? and all the other parts ?

Problem 4
UK has its own car industries, you going to restart a rivial car manufactorers and subisdise it to compete with UK car companies now ?

Not much British car industry left
Morgan which produces a couple of hundred cars is still British owned. All the big names Mini, Austin-Rover, Jaguar, Landrover, Rolls-Royce are foriegn owned now
Main market for British made or assembled cars is Europe though
Thats why companies like Nissan invested here and why they are worried about Brexit

 

[uppi]

Yes, they can refuse to sell parts or license IPR, there'd be an interruption, the employees get a long
holiday while car parts get sourced from someone, but those EU don't sell any cars there at all.

A modern car factory isn't a self-contained operation that you can just take over. Without the supply and logistic network that the big car companies have, the factory is next to worthless. You cannot just source car parts from someone. A lot of those are built by suppliers to spec of the car companies and since every company does things a little bit differently, there is no option to choose another supplier. Sometimes even the established car companies are at the peril of a single supplier, because they cannot produce cars without parts from that supplier. Worst case, they take all the production lines with them when closing the factory so you end up with an empty building and a lot of people who know how to operate machines which are no longer there.

Sure, you can try to build up a new car industry from scratch, but it would take years until the first car is rolling of the line. Meanwhile the "holiday" of the former employees would be better described by "unemployment" and you would be lucky to get any of the capable ones back once you were at the point of reopening the factory.

China and India know this as well and therefore they try to lure the Western companies to invest as much as possible until their own companies have copied all of this. Throwing them out (or alternatively, making business there unprofitable enough that they leave on their own) would be a very stupid mistake.

 

[EnglishEdward]

Turn 439 -- 2019 AD:
Elizabeth (English Empire) adopts State Property

Well there is that Jeremy Corbyn chap.

Not much British car industry left
Morgan which produces a couple of hundred cars is still British owned.

Thank you.

All the big names Mini, Austin-Rover, Jaguar, Landrover, Rolls-Royce are foriegn owned now
Main market for British made or assembled cars is Europe though

Well that is a consequence of 45 years in the EEC, EC, EU.
Their owners were all planning to transfer production elsewhere anywhere.

Thats why companies like Nissan invested here and why they are worried about Brexit

They may have to change to make more right hand drives.

A modern car factory isn't a self-contained operation that you can just take over.

I never said it is.

Without the supply and logistic network that the big car companies have, the factory is next to worthless.
You cannot just source car parts from someone. A lot of those are built by suppliers to spec of the car companies

All you need is a copy of the spec or one actual part to reverse generate the specification for that part.
People keep 40 or 50 years old cars going long after the original parts supply chain has closed down

Worst case, they take all the production lines with them when closing the factory so you end up with an empty building

They can only do that if the government is stupid enough to let them.

Sure, you can try to build up a new car industry from scratch, but it would take years until the first car is rolling of the line.

Neither the USA nor the UK are in the position that they need to build a car industry from scratch.

Meanwhile the "holiday" of the former employees would be better described by "unemployment" and
you would be lucky to get any of the capable ones back once you were at the point of reopening the factory.

If the factory closes and there is a recession on, many of them won't find an equivalent job.

Throwing them out (or alternatively, making business there unprofitable enough that they leave on their own) would be a very stupid mistake.

I agree, but I am not proposing to evict the corporates. If the corporates choose to abandon their operations, someone else can run them.

 

[AmazonQueen]

Well there is that Jeremy Corbyn chap.


Well that is a consequence of 45 years in the EEC, EC, EU.
Their owners were all planning to transfer production elsewhere anywhere.

.

Its a consequence of the longterm decline of British industry because British manufacturers didn't invest enough in their businesses. It isn't as if British industry and exports were doing well before we joined the EU. They weren't.

 

[EnglishEdward]

Its a consequence of the longterm decline of British industry because British manufacturers didn't invest enough in their businesses.

Relative long term decline was inevitable from being the workshop of the world in the 19th century.

It isn't as if British industry and exports were doing well before we joined the EU. They weren't.

They were doing OK.

Britain was paying its way in the world, and paying off war debt to the USA too, quite satisfactorily before joining the EEC.

If you look at the attached graph; you will see that the UK's balance of payments account was in balance before 1973.

https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/hbop/pnbp

It was after the UK joined the EEC that it all started to go wobbly, and the UK started running up horrendous deficits.

 

[Arakhor]

Is there anything you won't blame on Remainers or the EU, Edward?

 

[really]

Well that is a consequence of 45 years in the EEC, EC, EU.

Yet Germany, France and Italy retain national car industries despite being in longer...

Copying parts from a Morris Minor isn't going to have the brand's current (Chinese) owner chasing you down in court for infringement.
Copying the parts of a Nissan Qashqai would be a bit different.

The country that springs to mind when you talk about keeping 50 year old cars on the road is Cuba - I have an image of a post Brexit Corbyn run Britain looking like Cuba but without the sun.

 

[Cheetah]

All you need is a copy of the spec or one actual part to reverse generate the specification for that part.

 

[uppi]

All you need is a copy of the spec or one actual part to reverse generate the specification for that part.
People keep 40 or 50 years old cars going long after the original parts supply chain has closed down

You won't get specs for all parts. Even the car companies themselves don't have them all. It's incredibly naive to think that you can create a proper spec from one part. Yes, you can restore old cars with a lot of manual labor, but that is extremely expensive and not suitable at all for mass production.

They can only do that if the government is stupid enough to let them.

Now you're suggesting that the government robs the companies? That is surely going to reassure investors an lead to a booming economy.

Neither the USA nor the UK are in the position that they need to build a car industry from scratch.

The US doesn't. The UK would need to. It doesn't really have a car industry any more.

If the factory closes and there is a recession on, many of them won't find an equivalent job.

Most of them won't. But the best ones, those that you really need, will.