Tuesday, 19 February 2019

Direct and indirect causes

Different people have reacted differently to the announcement by Honda that it is to cease production and close its plant in Swindon, depending largely on their views over Brexit.  Opponents of Brexit have been quick to claim that Brexit is clearly a factor, whilst Brexiteers have, quite rightly, pointed out that Honda’s statement placed no blame on Brexit; indeed, it specifically stated that it was not a Brexit-related issue.  That statement may not be quite as definitive as it sounds, though.
It’s certainly true that there have been major changes in the industry, and that the move away from diesel cars is happening faster than many would have predicted.  And it would be surprising if Honda, like other manufacturers, wasn’t looking more to a future which depended more on electric vehicles.  In that situation, ending production of a vehicle whose life-span is nearing its end anyway is an entirely normal, non-Brexit-related business decision.
More interesting, though, is the question which is not being asked as a follow-up.  As far as I can see, the company is not planning to produce fewer cars in total, merely changing the emphasis away from one type of vehicle to another.  And those new cars need to be produced somewhere – the company has decided to do that in Japan.  So, the question which hasn’t been widely asked is this: given that you already have a factory capable of producing vehicles with a trained and experienced workforce, why close that and invest in new capacity elsewhere instead of repurposing the existing facility?
The company’s own statement gives us the answer to that when it says that it is due to the relative size of the market in different locations.  Now we know that the original investment in the UK was part of a strategy to target the EU market from the inside rather than across tariff barriers; and we know that the new EU-Japan trade agreement facilitates trading with the EU directly, without needing a base within the EU.  We also know that the terms of trade between the UK and EU post-Brexit are a complete unknown at the moment, but there is no conceivable Brexit scenario (other than cancelling it completely) which will not make trade between the UK and the EU more difficult than it is at present – and potentially significantly more difficult than simply supplying the market directly from Japan.
So, in taking the short-term decision to stop production of the current model, I can well believe that Brexit was not a significant factor.  But in making the longer-term decision as to where to put future investment, not only can I not believe that the changes which Brexit is leading to are not a factor, but I also believe that if they weren’t, then the directors of the company would be guilty of a grave dereliction of duty.  And this matters; it matters a lot.  We are going to see a lot of changes happening, and in many cases it is going to be extremely difficult for anyone to say, with absolute certainty, that this decision or that decision was a direct result of Brexit. 
At the level of individual decisions, the Brexiteers will have a degree of what Nixon once called “credible deniability”, and they will attempt to use that to deny any causal link between their project and the economic damage which it does.  But we shouldn’t lose sight of the fact that whilst the changes resulting from Brexit may not be the direct cause in many individual decisions, they will undoubtedly be part of the context considered when those decisions are being made.  The influence of a deliberate decision to place the UK outside the world’s largest free trade area will not always be direct and obvious, but it will be extremely pervasive overall.


Spirit Of BME said...

A good post and a fair easement overall of the situation, as known today.
I would add however, that Japan never does “short term,” any change in their policy is driven by the inbred “Japan First” policy and individuals and institutions in the country comply with this totally.
For example, Japan has been technically bust for decades, but they are not exposed to international banks and so do not face the wrath of the markets, the Japanese lenders have no expectation of being repaid, maybe in their life time.
The only EU aspect I can detect is the new trade agreement recently put in place by Brussels, that might weaken the case for implanted production in countries that apply import tariffs.

Anonymous said...

Big deal, so what?

BREXIT wasn't about jobs, or industry or cars. It was about staying in or leaving the EU. No matter which way the vote had gone there would have been consequences.

Now get back to the real story. We are BREXITING. Everyone needs to shape up or ship out (early retirement). The days of milk and honey are over, we voted to get rid of them!

John Dixon said...


In the sense that the only question on the ballot paper was 'leave or remain', then I agree with you that "BREXIT wasn't about jobs, or industry or cars." It's a little oversimplistic, though, to argue that those issues played no part in the thinking of at least some of those who voted. The result and the reasons for that result cannot be so simply separated. I'm not sure that I would see membership of the EU as being "the days of milk and honey" as you suggest (and it certainly didn't look that way to many), but, to the extent that they are, then I agree with your assertion that people did indeed vote to get rid of that milk and honey, even if they didn't all realise that that was what they were doing.

But where I fundamentally disagree with what you are saying is your statement that "Everyone needs to shape up or ship out". A vote changes events but not beliefs; there is nothing about a majority vote in favour of any proposition which requires those opposed to that proposition to change their opinion. That way lies totalitarianism, not democracy. I entirely accept that, under the rules of democracy as they stand (and despite all the imperfections in both the rules and the way in which people did or did not stick to them), the majority, at a point in time, voted for the Brexit proposition. It doesn't matter whether or to what extent they understood the consequences; a vote was taken, and one side won. But, and it's a very big but, those of us opposed to a democratically taken decision have every right to seek to change the opinions of those who supported that decision; and if there is evidence that opinions have changed (and there is such evidence) then our elected representatives have every right to seek to allow a further democratic expression of that opinion before committing to a not-easily-reversible implementation of the original decision. If, as so many Brexiteers claim, the result of a confirmatory referendum would be exactly the same, then what is there to fear? Opposition to that suggests a fear that the opinion polls might actually be right, but if they are, imposition of the original decision taken in 2016, despite the new facts that have emerged and despite changes in opinion, is undemocratic. There's nothing about democracy which freezes opinion - any opinion - at a single poiint in time.

Anonymous said...

John Dixon, I don't disagree with much you have written on your right to continue the argument ad infinitum. That's politics and that's democracy.

But as a democratic society we do tend to coalesce around certain rights and wrongs to ensure the democratic process is sustainable. The BREXIT vote could be re-run every day and each day we might well get a different result. That's why the concept of a 'generational vote' hovers over all discussions of a re-run, it provides some form of reference point around which to coalesce.

But, again, you have every right to shout 'no, it ain't so' right up until the point you get what you want.

John Dixon said...

"The BREXIT vote could be re-run every day and each day we might well get a different result. That's why the concept of a 'generational vote' hovers over all discussions of a re-run, it provides some form of reference point around which to coalesce." Actually, I wouldn't support re-running the vote over and over again, but neither do I accept the notion of a 'generational vote', the problem with which is about how much damage needs to occur during that generation before we are allowed to vote again. I do, though, accept that anyone arguing for a second vote has an obligation to spell out why, and under what circumstances, he or she thinks it reasonable to ask for a revote.

For what it's worth, here are my criteria: one or both of the following must be true:

a) there has been a significant change in circumstances,
b) there is clear and sustained evidence of a change in opinion

Whilst accepting that the leave campaign never 'promised' anything in relation to Brexit (they were not in a position to make any promises) and whilst accepting also that the vote was not for any particular kind of Brexit (merely a simple yes or no) it is nevertheless true that the sort of Brexit we are now facing (following a lengthy period of negotiation and clarification) does not match any of the descriptions which were outlined in advance. It is arguably the case that that represents a change in circumstances meeting the requirement of part (a) above.

Opinion polls show that there is now a clear pro-Remain majority, and that majority has been in evidence for some time. I have no doubt that that meets the second of my criteria.

Now, of course, meeting my criteria doesn't mean that other people won't have rather different criteria; all I'm doing here is explaining why I think it reasonable to seek another poll. You and others may well disagree - but that is democracy and debate.

What I really disagreed with in your previous comment was the "shape up or ship out" part, which I really did take to imply that you thought no-one had any right to challenge the inevitability of implementing the decision of the 2016 referendum.

Anonymous said...

John Dixon, thanks for the reply.

I would contend that during the YES/NO referendum almost every possible outcome was postulated in print, discussed and debated at some point. Yes, it now looks like it is all going to be chaos and it may well remain chaotic for a good long time but I don't really think we were ever guaranteed any particular outcome by anyone at any stage. We were just served up a lot of hot air covering everything from paradise to hell. And, in the main, we all saw it for what it was, electioneering (not the best word but you know what I mean).

As for the second point, I think you might be right when it comes to Wales. But probably not throughout the UK. I voted to Remain but have, for a long time, believed we must honour the result (meaning leave) and then re-consider (meaning re-join) shortly thereafter if there is clear evidence of a change in opinion.

Democracy is the most important thing here, we must allow it to function and function correctly no matter the cost (human, financial, in terms of time and so on).

John Dixon said...

"Democracy is the most important thing here, we must allow it to function..."

I find this a very difficult issue in that I agree with you in principle, but have some reservations, because it seems to me that there's bit more to this 'democracy' lark than simple majoritarianism. Being hypothetical for a moment (purely in order to illustrate the point) if a majority were to vote for the extermination of the Welsh language, does democracy demand that parliament follow that through? You might argue that it's unlikely that such a vote would ever be called or that the result would go that way, so let's look at a real example from more recent history. It's not so long ago that a majoritarian system was in operation in the north of Ireland under which the minority population were systematically excluded from some jobs and roles and discriminated against. Does democracy demand that we accept that? And turning to the matter in hand, as a direct result of the Brexit vote, some people will lose their jobs, others will lose their right to live in the UK and so on. Is it really enough to say that "the majority have spoken, the minority must accept their fate"?

I don't have a simple answer to my own question here. I'm certainly not suggesting that parliament should simply overturn the decision of the electorate. I am arguing, however, that neither should we expect that parliament must blindly implement what they think the people might have voted for regardless of the consequences, which I think is what you're suggesting when you say "no matter the cost (human, financial, in terms of time and so on)".

The lesson for the future, perhaps, is that parliament should not hold a public plebiscite between two options unless both of those options are sufficiently well-defined for people to know what they are voting for or against, and unless parliament is prepared to implement any option it puts on the ballot paper. I can well understand that some people are angry that parliament hasn't just implemented what they thought they voted for (even if it isn't what others who voted the same way thought that they were voting for), and Cameron has a lot to answer for here. But we are where we are, as the saying goes, and the question is how do we move forward in a way which respects the result of a flawed referendum and also protects the interests of the people. A confirmatory vote (for or against a specific set of arrangements) looks to me like the least-worst option at this point.