Layoffs arrive in Brexit Britain; and auto workers are up first

Bloomberg

In his 50 years working in Britain’s car industry, John Cooper has survived plenty of upheavals. None is scarier than the prospect of Brexit. Being split off from their biggest market means the job cuts and production slowdown UK carmakers have imposed the past few months could be just a prelude to wholesale shutdowns.
The shock is only beginning to hit. Since October, 650 of Cooper’s colleagues have lost their jobs at the factory where Vauxhall Motors churns out Astra hatchbacks. The remaining 1,200 staff worry the plant may close if the UK loses tariff-free access to Europe. Across the River Mersey from Vauxhall’s factory, Jaguar Land Rover is planning production cuts.
“People shouldn’t underestimate the dangers that Brexit’s bringing,” Cooper, a union representative, said outside the sprawling factory in the town of Ellesmere Port, near Liverpool, where he’s worked since he was 18. “Why would Nissan continue to invest in the north east when it’s got a plant in Spain where it can build the same car without a 10 percent tariff?”
If Prime Minister Theresa May gets her way, by next year Britain will start severing ties with the bloc after a transition period, including quitting the customs union it’s been part of since 1973. Whether duties are imposed after that is still up in the air as London and Brussels wrangle over the terms of their divorce.
Tariffs and other hurdles to trade could be disastrous for the automotive industry since parts routinely move across borders several times during the manufacturing process. Take the BMW Mini, manufactured in Oxford. Before reaching the production line, each engine crankshaft is made in France, shipped to BMW’s UK engine plant in Hams Hall near Birmingham and then to Steyr, Austria for assembly.
The fate of the Vauxhall plant depends on whether its French parent company, PSA Group, decides to build the next Astra, a 2021 model, there. PSA, which bought Vauxhall from General Motors Co. last summer, has other options: it designs Peugeots and Citroens in France and Opels in Germany and could ship those to Britain with Astra logos.
Foreseeing these risks, Cooper had ardently campaigned against Brexit by canvassing workers at the plant, yet the leave vote still prevailed in the neighboring area—along with most of the other towns where UK carmakers operate factories.
“It’s hard to see how anybody could sanely vote for anything that would make the business more difficult,” said Peter Southwood, 44, who’s worked at Vauxhall for 21 years. “They see the cars coming down the line, they see how many are going abroad, they see where the parts come from.”
Southwood’s grandfather and two uncles worked at Ellesmere Port and he hopes his son or daughter might uphold the tradition. But, Brexit or not, employment in Britain’s automobile industry isn’t what it used to be. In the heyday of the 1970s, 12,500 people worked at the Vauxhall plant. Headcount has since fallen 90 percent, largely due to automation.
The EU departure is dealing the industry an additional blow just as it scrambles to adjust to the transition into electric cars and government plans to phase out gas and diesel
engines in the coming two decades.

Brexit uncertainties put $57bn fund off London real estate
Bloomberg

A $57 billion Finnish fund that’s increasing its real estate holdings said there’s one market it’s definitely not touching, and that’s London.
The simple reason behind that decision is Brexit, according to Mikko Mursula, the head of investments at Ilmarinen Mutual Pension Insurance Co. His team has opted to skip London opportunities it would once have considered because the risks associated with the UK’s confusing exit from the EU are too big, he said in an interview.
“I think it’s fair to say Brexit made us take a couple of steps backward,” Mursula said in Helsinki. “Too many moving parts, that’s the biggest reason for us. Too many uncertainties. We really don’t know what will be the political outcome, what will be the real outcome at the general agreement level.” Ilmarinen has about 15 percent of its portfolio in real estate, and could raise the share to about 20 percent. A fifth of that is outside of Finland.
Since the Brexit vote in June 2016, Ilmarinen has bought real estate in Amsterdam, Berlin, and the US. It also has holdings in Brussels and Frankfurt, and acquired about 50 percent of a new office property at the heart of Manchester in late 2017. But investing in the UK requires getting “a higher risk-reward than investing in Brussels and Berlin and Frankfurt,” Mursula said.