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Author Topic: ANDREW ADONIS: Rail disaster will be next  (Read 438 times)
grahame
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« on: February 22, 2019, 11:28:00 am »

From The New Eurpoean

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ANDREW ADONIS: Rail disaster will be next

After Honda’s decision to close its Swindon car plant, the former transport secretary says the rail industry will follow.

Honda this week gave its 3,500 staff the same notice of closure – two years – as the UK gave of its intention to leave the EU.

Two years seems to be the going rate for deliberately planning an economic and social catastrophe. It takes much longer to build afresh. Witness the experience of Japanese investment into the UK over the 30 years of Honda’s operations in Swindon.

I speak from personal knowledge as the transport secretary who a decade ago helped persuade Hitachi, arguably the world’s greatest modern train builder, to construct their highly successful train factory in Newton Aycliffe in County Durham. And to locate the headquarters of Hitachi Rail Europe – note the title – in London.

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stuving
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« Reply #1 on: February 22, 2019, 12:06:22 pm »

There were two points about Honda's shock decision that struck me at once. First, was it connected to the EU/Japan trade agreement just signed and due to be implemented over the next few years? Answer (from yesterday's CityAM) yes, at least as an enabler, as the current 10% tariff on cars imported from Japan will reduce to zero. Thus moving production there could well look "safer" then staying here, under current circumstances.

The second point was about Honda implying that 160,000 units per year was too small for a stand-alone factory. That puzzled me, as my impression (based on not a lot of things I've read) was that for highly-automated production systems such as for cars that the trend is towards smaller volumes - from mass production of one model, to mass customisation (with a mix of models and chosen options fitted) towards third party factories that could make many marques of car. The key to that being, of course, the use of generalised and programmable robots in place of specialised production machines. I've heard nothing about that yet.

Making trains does not seem to be much like making cars, and the duty on them under WTO rules is only 1.7%. So the read-across is by no means obvious to me - though the more general poi9nt about trading across borders being more difficult even when the rules are known, is valid enough. When the fog clears ...
« Last Edit: February 22, 2019, 02:26:13 pm by stuving » Logged
ellendune
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« Reply #2 on: February 22, 2019, 01:23:07 pm »

There were two points about Honda's shock decision that struck me at once. First, was it connected to the EU/Japan trade agreement just signed and due to be implemented over the next few years? Answer (from yesterday's CityAM) yes, at least as an enabler, as the current 10% tariff on cars imported from Japan will reduce to zero. Thus moving production there could well look "safer" then staying here, under current circumstances.

Car manufacturing goes in cycles - there is a decision point at every new model when re-tooling is required. The issue always for Honda therefore was less what they do now, but what they do at the end of the model in 2021.  It will be the same with other car manufacturers. The shock was particularly as they had said they were saying regardless of Brexit as recently as the end of last year. 

The difficulty for any new investment decision is even if May's deal were to get through it does not define what would happen at the end of the 2 year transition period. In that sense it is a blind deal.  What with Spain already creating issues over Gibraltar and the PM's red lines I can't see it being an easy negotiation. That is without the ERG's capacity to still cause trouble which could still block any deal then. No deal at the end of the transition period is therefore still a possibility even if the withdrawal agreement is signed. 

So any manufacturer faced with an investment decision will look at other options and the alternatives may indeed look better than the uncertainty. 

Making trains does not seem to be much like making cars, and the duty on them under WTO rules is only 1.7%. So the read-across is by no means obvious to me - though the more general poi9nt about trading across borders being more difficult even when the rules are known, is valid enough. When the fog clears ...

A good point and train factories don't have the same investment cycles. Hitachi now have a plant in Italy as well so enough UK orders may be a key point here.  The other point I don't know is what the duty might be on components of trains or cars and how many times they cross borders. 


When the fog clears ...

As I said above I fear that is a long way off yet
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Clan Line
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« Reply #3 on: February 22, 2019, 01:34:39 pm »

Would this be the same Lord Adonis who seems to know more than, Ian Howells, the Senior Vice President of Honda (Europe) ?  Mr Howells has stated on several occasions that the closure of Honda Swindon has nothing to do with Brexit - yet Lord Adonis has said : "The Japanese are systematically withdrawing their 30 years of manufacturing investment in the EU, because of Brexit".

Hitachi have actually managed to hugely increase the sale of their rail products in the EU - Honda's EU sales have fallen by half in the last ten years.

Still, don't let political dogma get in the the way of facts !
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Red Squirrel
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« Reply #4 on: February 22, 2019, 04:37:31 pm »

I think these motor plant closures may have more to do with the fact that no-one in their right mind is buying ICE vehicles at the moment unless they have to, due to uncertainty (or is it certainty?) about forthcoming emissions regulations...
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mjones
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« Reply #5 on: February 22, 2019, 04:58:47 pm »

Would this be the same Lord Adonis who seems to know more than, Ian Howells, the Senior Vice President of Honda (Europe) ?  Mr Howells has stated on several occasions that the closure of Honda Swindon has nothing to do with Brexit - yet Lord Adonis has said : "The Japanese are systematically withdrawing their 30 years of manufacturing investment in the EU, because of Brexit".

Hitachi have actually managed to hugely increase the sale of their rail products in the EU - Honda's EU sales have fallen by half in the last ten years.

Still, don't let political dogma get in the the way of facts !

 And one of those facts that we mustn't let dogma get in the way of is that Honda, along with the rest of the car industry, has been warning about the risks posed  by  Brexit all along. See  below for very recent concerns expressed by Honda.
https://www.theguardian.com/business/2019/feb/21/honda-european-chief-outlined-no-deal-brexit-concerns-in-2018

Brexit supporters may take comfort from the most recent statement, but as they have made clear there are, not surprisingly, several factors involved, but they can't pretend that Honda or any other car manufacturer, thinks that  Brexit is  bringing them anything  but problems.  Where are all the opportunities we were promised?



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Western Pathfinder
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« Reply #6 on: February 22, 2019, 05:26:27 pm »

Andrew may know a lot about the Railway world ,however when it comes to Cars and the production of said he's sadly lacking, as I've told him once or twice.
Honda and the decision to close the plant at Swindon,is more complicated than just the B word ,it also falls very heavily on the governments position on the usage of Diesel fuel and the change of policy from having actively encouraged it,to now condemning it as the devils favourite fuel, leading to an inevitable downturn in sales of diesel units of which Honda made many at Swindon.very good ,clean and economical&reliable engines they are as well.
One last thing whilst I'm having my tuppence worth,Honda exports a fair number of units made at Swindon into Europe,however that's not the only place they send their cars too,a fair number go from Swindon to the USA and are now being subjected to a recently increased import duty /tariff ,thank you Mr Trump.
Hopefully the fog will start to lift sooner than later and then party's involved may get on with sorting out what is to become of the Plant and the employment of the professionals who work there.
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Chris from Nailsea
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« Reply #7 on: February 22, 2019, 05:35:32 pm »

Perhaps to rebuild a railway engine manufacturing facility there?  Shocked Roll Eyes Grin

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TaplowGreen
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« Reply #8 on: February 22, 2019, 05:51:57 pm »

Would this be the same Lord Adonis who seems to know more than, Ian Howells, the Senior Vice President of Honda (Europe) ?  Mr Howells has stated on several occasions that the closure of Honda Swindon has nothing to do with Brexit - yet Lord Adonis has said : "The Japanese are systematically withdrawing their 30 years of manufacturing investment in the EU, because of Brexit".

Hitachi have actually managed to hugely increase the sale of their rail products in the EU - Honda's EU sales have fallen by half in the last ten years.

Still, don't let political dogma get in the the way of facts !


Adonis is just another unelected has-been using Brexit to try to raise his profile, blaming it for everything from oddly shaped vegetables to economic disaster...…..and No, I'm not a Brexiteer, far from it.
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Bmblbzzz
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« Reply #9 on: February 22, 2019, 07:01:28 pm »

Perhaps to rebuild a railway engine manufacturing facility there?  Shocked Roll Eyes Grin


I blame Brunel. If it wasn't for him, Swindon would just be a little village no one had heard of and we wouldn't mind what happened there.
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« Reply #10 on: February 22, 2019, 07:59:53 pm »

 Where are all the opportunities we were promised?


As Brexit hasn't yet happened and the likes of Lord Adonis et al are doing their utmost to see that it doesn't happen that question is unanswerable - so why do you ask it ??  It's rather like asking why Man City/Liverpool/etc haven't won the Premiership/FA Cup/European Cup - as "we were promised", months before the football season has ended. A totally pointless question in both cases.

I will ask you a similar question - the answers to which are already well known.
What happened to all the disasters that were forecast to happen before the referendum if the electorate dared to vote Leave ? Remember George Osborne's "emergency budget" which would happen within days of a "Leave" vote ? Still waiting for that one...  Absolutely none of them happened, bar one (which was well forecast by the money markets) - a fall in the value of sterling which actually did UK exporters a power of good.

"Project Fear" has now been replaced by "Project Hysteria" - which informed me recently that the UK would run out of toilet rolls (that came from that well known, totally unbiased, news outlet called the BBC - look it up if you don't believe me !).

It saddens me to see that the once sensible discussion about the pros and cons of Brexit has descended into such infantile behaviour.


 
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CyclingSid
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« Reply #11 on: February 22, 2019, 08:23:36 pm »

This could degenerate into Project Boredom
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rogerw
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« Reply #12 on: February 22, 2019, 08:44:01 pm »

In my view it already has
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Red Squirrel
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« Reply #13 on: February 22, 2019, 09:26:17 pm »

This could degenerate into Project Boredom

To paraphrase erstwhile Bristol MP Edmund Burke, the only thing necessary for the triumph of evil is for good men to get bored.

It saddens me to see that the once sensible discussion about the pros and cons of Brexit has descended into such infantile behaviour.

I'm not sure if the discussion about the pros and cons of Brexit was ever sensible - it was always a visceral thing. What I have never understood is why the anti-European camp imagined that a narrow victory in a referendum would be the end of the matter. To push your football simile, if Liverpool City beat Manchester Rovers, Rovers don't disband and dig up their pitch - they get a new manager and some new players, just like Leave did in 1975. The argument will never end.

Meanwhile:

Quote
On Monday, with no fuss or publicity, the Bank of England and a group of City interests reached an apparently boring deal in Paris with the European Security and Markets Authority. It follows a similar deal with the European commission last December. Both state, in effect, that, as far as the City is concerned, if there is a no-deal Brexit, Brexit did not happen. It was just play-acting by idiots down the road in Westminster.

Up to £41tn in financial guarantees, insurances, hedges and other derivatives, all within the EU’s regulatory regime, is said to be at risk in the City’s clearing houses. For everyone involved, this is a grownup business, not to be left to the mercies of the likes of Boris Johnson and Jacob Rees-Mogg. The regulators have duly issued licences to the clearing houses, allowing Europe’s banks to disregard EU rules and continue trading on London’s derivatives platforms. Financially speaking, London is to become a “free port”. Sighs of relief all round.

...

Britain’s car industry can tear its hair. Its plane-makers can get stuffed, along with the food retailers, drug companies, care homes, builders and truckers. They can all go down on their knees and pray to the Johnsons and Rees-Moggs to send round their promised “deals with the rest of the world”, supposedly bringing crocks of gold, one day. Not for them a light lunch in Brussels, a pat on the back in Paris, a quiet handshake and let’s call it a bad dream.

...

The real gap that Brexit will widen yet further is not just between financial services and trade in food and manufactures. It is between London and the rest of the country. Already the Treasury’s staggering £4.2bn “for Brexit preparations” is tipping jobs into the capital. The greatest irony is that London and the south-east of England, which voted overwhelmingly for remain, will emerge from a hard Brexit richer than ever. It is the provinces that voted leave that will suffer. Manufacturing will slide towards recession, while Londoners smile all the way to the bank – a bank for which Brexit will not exist.

Source: The Guardian

So that's a relief - the boys in the red braces will be OK. Who'da thunk it.

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eightonedee
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« Reply #14 on: February 22, 2019, 10:38:08 pm »

Quote
Quote
On Monday, with no fuss or publicity, the Bank of England and a group of City interests reached an apparently boring deal in Paris with the European Security and Markets Authority. It follows a similar deal with the European commission last December. Both state, in effect, that, as far as the City is concerned, if there is a no-deal Brexit, Brexit did not happen. It was just play-acting by idiots down the road in Westminster.

Up to £41tn in financial guarantees, insurances, hedges and other derivatives, all within the EU’s regulatory regime, is said to be at risk in the City’s clearing houses. For everyone involved, this is a grownup business, not to be left to the mercies of the likes of Boris Johnson and Jacob Rees-Mogg. The regulators have duly issued licences to the clearing houses, allowing Europe’s banks to disregard EU rules and continue trading on London’s derivatives platforms. Financially speaking, London is to become a “free port”. Sighs of relief all round.

...

Britain’s car industry can tear its hair. Its plane-makers can get stuffed, along with the food retailers, drug companies, care homes, builders and truckers. They can all go down on their knees and pray to the Johnsons and Rees-Moggs to send round their promised “deals with the rest of the world”, supposedly bringing crocks of gold, one day. Not for them a light lunch in Brussels, a pat on the back in Paris, a quiet handshake and let’s call it a bad dream.

...

But there is a subtle but very important difference. Whatever the public view of folk in the City, they do have expertise and offer services that are not readily available elsewhere in Europe or indeed in some cases, the world. They have also attracted a lot of money into the UK that has cascaded down through the economy, creating many ancillary jobs, not only in ancillary service and professional jobs, but also in the industries that supply the goods and services that those who make their money there spend it on.

Honda may have made reliable cars in Swindon (apparently some of the best in Honda's world wide business) but they were not the cars people in Europe want to buy. Their European market share slipped form 2% 12 years ago to 0.8% now. They have simply not produced the right products, and as one of the smaller mass market world car makers they have concentrated more on products for the markets where they do well - Japan and North America.

There is a surplus of car production capacity in Europe, and increasingly it is concentrating in countries like Spain and Slovakia where costs are lower. There VW Group, Renault and others are producing models that European (and British) customers want that are designed for them. Honda have to decide where to put resources - propping up production in Europe, a marginal market for them, or investing in the move to electric cars for the markets where they know they can sell cars. It's a shame that the plant and workforce at Swindon who have a good reputation for building them well will soon no longer do so. Let's hope that jobs can be created locally to replace those lost.

I for one am glad that the City has avoided becoming yet another victim of the Brexit misadventure, and sincerely hope that a way is found to avoid this too for all the other sectors outlined above. It's such a shame that the UK has picked itself off the floor from its low point in the 1970s benefiting from a single market we did so much to set up, only to see it all put at risk now. I hope Mrs T's ghost haunts Rees-Smug for the rest of his days if it all goes wrong.....
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