The economic consequences of Brexit (Vol 2)
Discussion
Murph7355 said:
cookie118 said:
http://news.sky.com/story/government-faces-brexit-...
It appears car manufacturers are not impressed with the governments approach so far!
The link was posted elsewhere/earlier.It appears car manufacturers are not impressed with the governments approach so far!
For a layman where auto manufacture supply chains are concerned the whole article seems a bit...off key to me.
As an example, the Mini example in the article was noting predictions of customs delays of 12-24hrs as one of their contingencies (so one assumes after a "bad" for them exit)...is the Mini end to end sales and manufacturing process so finely balanced that this would be a problem? (Despite being tinged with my usual cynicism, this is a genuine question
). And if product is genuinely flying off the shelves at such a rate that it is, is holding 50% more stock a real issue? (Ditto)It strikes me that the whole automotive industry should have been gearing itself for hefty change over the last few years. Building cars as fast as you can on prospective demand has never seemed sensible to me. Equally, if I want a brand new 'x' and the average wait time for it is 13wks (CarWow average wait time figures), would I wait an extra week? I suspect I probably would. If I really wanted car 'x' I'd probably wait a good deal longer.
It's been a long time since I was involved in the engineering side of such manufacturing, but it is not unusual for some production lines to demand stock to arrive only hours before it is assembled into product.
A need to double stock levels in your example could be a considerable disadvantage in a given supply chain. It is not only about the time taken for a product to reach a customer - typical benefits to an industrial process include:
- better quality products
- quality the responsibility of every worker, not just quality control inspectors
- reduced scrap and rework
- reduced cycle times
- lower setup times
- smoother production flow
- less inventory, of raw materials, work-in-progress and finished goods
- cost savings
- higher productivity
- higher worker participation
- more skilled workforce, able and wiling to switch roles
- reduced space requirements
- improved relationships with suppliers
An automotive manufacturer that has leaned out its production and maximised the benefits of custom free supply chains will be pretty hacked off if Govt fumbling on brexit shafts their hard won efficiency.
The suggestion that they should be preparing for hard brexit by inserting fat and inefficiency in their supply chains is frankly hilarious. Not quite up there with bankers into fishermen, but another example of how "ignoring experts" is not going to end well.
Is it enough to move a production facility? Quite possibly. As they say in the article - JLR even mention Slovakia today, an option I mentioned yesterday, just prior to the usual generic mocking from the brexiteerati.
Still Minford doesn't want all these car manufacturing jobs, and that's OK as he was a brexit economist, right?
Murph7355 said:
fblm said:
jjlynn27 said:
Digga said:
Not that I think strong sterling, for cheap imports is any sort of panacea, any more than weak sterling favouring exports, but it is interesting how Remainers latched onto the drop in sterling as some sort of evidence of crisis.
Crisis averted, or never there in the first place? https://uk.reuters.com/article/uk-britain-markets-...
Say what now? Crisis averted, or never there in the first place? https://uk.reuters.com/article/uk-britain-markets-...
GBPEUR 1.4
GBPEUR 1.13
One figure is just before the referendum, one is now.
Now that we've covered that, I think there might be a post by sidick one of the other threads that you didn't agree with yet.
There are some very inflated numbers there - which I'd entirely expect seeing as they are lobbying...
JLR may import expensive gearboxes from Europe - however a big chunk of their output is destined for export, and so is eligible for IPR and won't see any change for those vehicles. Their customers within the EU might.
MINI's supply chain is exceptionally tight, with an array of tier 1 suppliers co-located in the surrounding area. The entire burden for inventory is held by their suppliers, which is part of the cost of getting a massively lucrative supply contract. Suggesting they would need to double their inventory as contingency against customs delays completely ignores today's scenario where the ports are fairly often blockaded by shouty French. Do we really think they currently have no contingency? A number of sheds at Cowley would disagree...
As I stated months ago, no one will be talking about how happy they are. All are looking for a competitive advantage, and a really easy way of achieving that would be to release 'concerns' that the Remain supporting public lap up and lobby their MP over.
Any businessman not talking about their 'needs' over Brexit is either happy with pretty much any outcome, or is not doing their job properly.
JLR may import expensive gearboxes from Europe - however a big chunk of their output is destined for export, and so is eligible for IPR and won't see any change for those vehicles. Their customers within the EU might.
MINI's supply chain is exceptionally tight, with an array of tier 1 suppliers co-located in the surrounding area. The entire burden for inventory is held by their suppliers, which is part of the cost of getting a massively lucrative supply contract. Suggesting they would need to double their inventory as contingency against customs delays completely ignores today's scenario where the ports are fairly often blockaded by shouty French. Do we really think they currently have no contingency? A number of sheds at Cowley would disagree...
As I stated months ago, no one will be talking about how happy they are. All are looking for a competitive advantage, and a really easy way of achieving that would be to release 'concerns' that the Remain supporting public lap up and lobby their MP over.
Any businessman not talking about their 'needs' over Brexit is either happy with pretty much any outcome, or is not doing their job properly.
///ajd said:
...
The suggestion that they should be preparing for hard brexit by inserting fat and inefficiency in their supply chains is frankly hilarious. Not quite up there with bankers into fishermen, but another example of how "ignoring experts" is not going to end well. ...
Far from ignoring experts I'm interested to understand how a 12-24hr customs delay is a material issue to a car manufacturer whose customers are, using industry averages, used to waiting 13wks.The suggestion that they should be preparing for hard brexit by inserting fat and inefficiency in their supply chains is frankly hilarious. Not quite up there with bankers into fishermen, but another example of how "ignoring experts" is not going to end well. ...
The article read far more as a vested interest party using/trying to use leverage rather than there being genuine, material issues.
If 13.14 weeks meant losing a sale when set against 13wks then I would understand. Equally I can imagine that with myriad parts involved, having bits turn up out of sync could cause major headaches. But then when parts of your system don't perform to expectations you don't just let the rest of it carry on regardless, you take a hard look at it and re-engineer it to accommodate.
I'm sure it isn't a case of the manufacturers not having to do anything at all to accommodate change. But no matter how much of an "early stage" their commitments are to building new model lines here, I'm sure the alternatives have to be significantly more risky otherwise they wouldn't have announced them at all.
Time will tell.
Perhaps, as alluded to in the article, the manufacturers are a little bit pissed off that they went to a meeting, that they thought was for the government to outline it's strategy, only to find it was actually a fact finding mission.
This confirms to them that with 18 months to go, the government doesn't understand what their needs are, how their production systems work, and has no plan in place. This is basic stuff that should have been in place before the referendum.
Indeed when I voted leave I rather thought that the government would have had the first clue how to deal with a leave vote. Nothing I've seen since last year has convinced me that they did.
This confirms to them that with 18 months to go, the government doesn't understand what their needs are, how their production systems work, and has no plan in place. This is basic stuff that should have been in place before the referendum.
Indeed when I voted leave I rather thought that the government would have had the first clue how to deal with a leave vote. Nothing I've seen since last year has convinced me that they did.
Murph7355 said:
///ajd said:
...
The suggestion that they should be preparing for hard brexit by inserting fat and inefficiency in their supply chains is frankly hilarious. Not quite up there with bankers into fishermen, but another example of how "ignoring experts" is not going to end well. ...
Far from ignoring experts I'm interested to understand how a 12-24hr customs delay is a material issue to a car manufacturer whose customers are, using industry averages, used to waiting 13wks.The suggestion that they should be preparing for hard brexit by inserting fat and inefficiency in their supply chains is frankly hilarious. Not quite up there with bankers into fishermen, but another example of how "ignoring experts" is not going to end well. ...
The article read far more as a vested interest party using/trying to use leverage rather than there being genuine, material issues.
If 13.14 weeks meant losing a sale when set against 13wks then I would understand. Equally I can imagine that with myriad parts involved, having bits turn up out of sync could cause major headaches. But then when parts of your system don't perform to expectations you don't just let the rest of it carry on regardless, you take a hard look at it and re-engineer it to accommodate.
I'm sure it isn't a case of the manufacturers not having to do anything at all to accommodate change. But no matter how much of an "early stage" their commitments are to building new model lines here, I'm sure the alternatives have to be significantly more risky otherwise they wouldn't have announced them at all.
Time will tell.
Read up on Just In Time manufacturing:
https://en.wikipedia.org/wiki/Just-in-time_manufac...
If you have been on a modern production line it is amazing how little stock they hold on the line. Parts appear to turn up just as they are fitted to e.g. a car. This brings several advantages as in the post above. Efficient smooth logistics are important - there is a reason manufacturers invest heavily in the technologies and methodologies that enable it - it pays off in profits and product agility.
jjlynn27 said:
Murph7355 said:
fblm said:
jjlynn27 said:
Digga said:
Not that I think strong sterling, for cheap imports is any sort of panacea, any more than weak sterling favouring exports, but it is interesting how Remainers latched onto the drop in sterling as some sort of evidence of crisis.
Crisis averted, or never there in the first place? https://uk.reuters.com/article/uk-britain-markets-...
Say what now? Crisis averted, or never there in the first place? https://uk.reuters.com/article/uk-britain-markets-...
GBPEUR 1.4
GBPEUR 1.13
One figure is just before the referendum, one is now.
Now that we've covered that, I think there might be a post by sidick one of the other threads that you didn't agree with yet.
Blue Oval84 said:
Perhaps, as alluded to in the article, the manufacturers are a little bit pissed off that they went to a meeting, that they thought was for the government to outline it's strategy, only to find it was actually a fact finding mission.
This confirms to them that with 18 months to go, the government doesn't understand what their needs are, how their production systems work, and has no plan in place. This is basic stuff that should have been in place before the referendum.
Indeed when I voted leave I rather thought that the government would have had the first clue how to deal with a leave vote. Nothing I've seen since last year has convinced me that they did.
Unfortunately, despite calling the referendum, Cameron expressed prevented the Civil Service from doing any planning related to a Leave win, as well as banning any support for any member of the Leave campaigns... This confirms to them that with 18 months to go, the government doesn't understand what their needs are, how their production systems work, and has no plan in place. This is basic stuff that should have been in place before the referendum.
Indeed when I voted leave I rather thought that the government would have had the first clue how to deal with a leave vote. Nothing I've seen since last year has convinced me that they did.
It's s
t, but it is what it is. This stuff is pretty basic, and it's patently obvious what the industry's wants are - those may differ from their needs, indeed with 18 months to go I'd have expected the businesses to be able to articulate with far greater insight what their predictions and actions would likely be against any of the three main outcomes.
jjlynn27 said:
It was an answer to the quoted post that somehow last few days are the reversal of a trend since the referendum. It's not.
Now that we've covered that, I think there might be a post by sidick one of the other threads that you didn't agree with yet.
Not really. You were suggesting that 1.40 is where it was, presumably where you think it should be at, what we should be comparing against and, one also assumes, what should be regarded as "good". Otherwise why mention 1.40 at all?Now that we've covered that, I think there might be a post by sidick one of the other threads that you didn't agree with yet.
You were advised that the long running average was actually far less than that. Indeed forget the last few days...has the GBP:EUR exchange rate been closer to the long running average this last 12mths or the 1.40 figure you picked out?
Ref sidicks' posts, it just seems this way to you. Don't let it get you down. If you post something I agree with I'll do the same to you
///ajd said:
If you have been on a modern production line it is amazing how little stock they hold on the line. Parts appear to turn up just as they are fitted to e.g. a car. This brings several advantages as in the post above. Efficient smooth logistics are important - there is a reason manufacturers invest heavily in the technologies and methodologies that enable it - it pays off in profits and product agility.
I work in manufacturing (not Car industry) - if manufacturers have issues with supply chain logistics and customs clearance in this globalised world they have two choices1. Centralise manufacturing where no logistics or customs clearance affect them
or
2. Source locally where no logistics or customs clearance affect them
Could go either way but I'm putting a few quid on local sourcing being how the manufacturers will react longer term
B'stard Child said:
///ajd said:
If you have been on a modern production line it is amazing how little stock they hold on the line. Parts appear to turn up just as they are fitted to e.g. a car. This brings several advantages as in the post above. Efficient smooth logistics are important - there is a reason manufacturers invest heavily in the technologies and methodologies that enable it - it pays off in profits and product agility.
I work in manufacturing (not Car industry) - if manufacturers have issues with supply chain logistics and customs clearance in this globalised world they have two choices1. Centralise manufacturing where no logistics or customs clearance affect them
or
2. Source locally where no logistics or customs clearance affect them
Could go either way but I'm putting a few quid on local sourcing being how the manufacturers will react longer term
The risk is that option 3. "Do Nothing" is avoided which leads to either 1 or 2.
The risk here is that JLR has an option 1 already set up on Slovakia. MINI has an option 1 set up in the Netherlands. etc.
Transit and the 207 prove it can happen to efficient plants with long histories. The accountants don't & won't care, sadly.
B'stard Child said:
///ajd said:
If you have been on a modern production line it is amazing how little stock they hold on the line. Parts appear to turn up just as they are fitted to e.g. a car. This brings several advantages as in the post above. Efficient smooth logistics are important - there is a reason manufacturers invest heavily in the technologies and methodologies that enable it - it pays off in profits and product agility.
I work in manufacturing (not Car industry) - if manufacturers have issues with supply chain logistics and customs clearance in this globalised world they have two choices1. Centralise manufacturing where no logistics or customs clearance affect them
or
2. Source locally where no logistics or customs clearance affect them
Could go either way but I'm putting a few quid on local sourcing being how the manufacturers will react longer term
Still no justification for the massive percentage they're claiming would be a result of a day's delay in clearing customs.
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