EU Regulation in UK Industry

Before reading this post, why not read the first few blog posts in this series, to help you understand more about what affect the EU has on the UK automotive industry.

•  The UK Automotive Industry in the EU – An Introduction
• The EU as an Export Market for the Automotive Industry
• The Power of the Scale of the EU in Trade Negotiations

One of the primary arguments for leaving the EU surrounds the restrictions and regulations placed upon UK industry – including the automotive industry – by the EU.

From CO2 emissions to safety specs, vehicle production in the UK must meet the EU regulations otherwise they cannot be sold in the either Europe or the UK. Withdrawal from the EU would mean that the UK would have complete control over the regulations required for vehicles in the country, but crucially, would still have to meet the necessary regulations in other countries for any cars exported there. The implications of this are that some manufacturers would have to add costly extras to cars destined for export, thus increasing the list price, and reducing a competitively priced edge.

However, current EU regulations still place tight restrictions on manufacturers. Many small British marques have found themselves disadvantaged in the market as a result of regulations which can cost millions of pounds to implement. Whilst this is a problem for all companies, low volume manufacturers will struggle to absorb to cost of the funds far more than larger, mass production manufacturers.

For example, the EU recently proposed an initiative which would have seen welding by hand replaced with an automated process. Not only would this process cost huge amounts to implement, but it would also risk hundreds of jobs and negate one of the key selling points of many small manufacturers – that there vehicles are crafted by hand.

Thanks to the UK’s significant involvement and influence in the EU, they were able to negotiate an amendment that allowed for greater flexibility, especially for companies whose car output was under 10,000 cars per year, such as Aston Martin.

It has been said before that in order for the UK to maintain a harmonious relationship with the EU, it is essential that the approach to regulation bears in mind the benefit to businesses. Jaguar Land Rover commented that, “The EU does need to become more business focused in how it regulates. However, it is far better for the UK to be involved and influencing the conditions for the world’s largest free trade than not at all.” The chief executive of a UK supplier also supported this saying, “It’s not the EU that causes the issue. It’s our application of the rules. Often the regulators are seeking purity rather than pragmatism.” What is clear, is that, in terms of the industrial regulations at least, there needs to be a reform in the way the UK works with the EU, and the way the EU sets regulations. A business approach is essential, and something that a number of manufacturers have found lacking in the EU government. Read part five of The UK Automotive Industry in the EU here.