Why untangling Uk enterprise from Europe may be ‘impossible’

While Bavarian politicians rhapsodise about their “pc and Lederhosen” economic system, they maximum possibly have in mind groups such as Dräxlmaier in Lower Bavaria.

The slogan encapsulates the country’s transition from agriculture to hello-tech hub. And founded in 1875 as a circle of relatives commercial enterprise making the conventional leather clothes liked on this southern German country, Dräxlmaier has managed to do just that – cornering the worldwide market for leather-based dashboards as well as onboard digital systems for premium car brands, using 55,000 humans global.

On the organization’s headquarters in Vilsbiburg, craftsmen running with the precision of miniature train fanatics share a workspace with hi-tech robots.

Britain, a starving customer of German luxury vehicles, is also a key export market for the agency: it substances automobile parts for the Mini, Jaguar and Land Rover, with outside sites in Birmingham, Oxford, Solihull and Stoneleigh, in Warwickshire. In Bavaria, it isn’t always on my own in having fostered such near ties throughout the Channel: for 1,500 corporations in the location, Britain is the second one biggest export market after the us. Closing 12 months, Bavaria exported €15.5bn (£13bn) well worth of goods to the United Kingdom – up 22% on 2014.

If the ones in price of negotiating Britain’s exit from the european are to be believed, that change dating is the eu’s achilles heel. Once officers in Brussels threaten Britain with tariffs, they argue, German enterprise may be at Angela Merkel’s door in a flash, worrying the preservation of the reputation quo.

Tobias Nickel, Dräxlmaier’s head of corporate communications, overtly states that his industry would lobby Berlin against barriers to exchange: “Permit’s say we’d do our best to draw interest to the results that tariffs might have.”
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Frank Dollendorf, director of monetary affairs for the Bavarian Chamber for industry and Commerce – which has described the referendum result as “a slap in the face” – informed the Mother or father that “we might do the whole thing to elevate our voice”, in particular after his industry had to appearance on as politicians imposed trade sanctions on Russia.

However a more in-depth appearance internal Dräxlmaier’s workshops in the Alpine foothills reveals a extra complicated photograph. The argument recommend via advocates of a tough Brexit, where Britain leaves the eu with a minimal or no trade deal, is that its alternate deficit lends it a little leverage in negotiations: if automobiles made via BMW or Volkswagen grow to be too luxurious, British clients may want to truly switch to Nissan or Toyota rather.

The trouble is that German car manufacturers now not build all their motors in Germany, and even in the event that they do, they do no longer necessarily construct them with fully “German” components.

At Dräxlmaier’s HQ, employees construct prototypes for dashboards. As soon as crash-examined, the plastic middle is 759af83dbac04511979469e6f58100a3 in Poland, bit-elements are manufactured in Tunisia and Japan, leather-based is crafted from Austrian cows and all components are eventually assembled in Tamworth, Staffordshire, earlier than being introduced to the applicable car manufacturer.
Dräxlmaier has graduated from making Lederhosen to hello-tech vehicle parts.
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Dräxlmaier has graduated from making Lederhosen to hi-tech automobile parts. Image: Dräxlmaier Group

Nickel likens trade members of the family among Britain and Germany to the onboard structures that his organization produces: complex, hand-thatched strings of colourful cables that are available in billions of versions. “British and German production are so deeply intertwined, untangling these ties is basically impossible,” he said. “within the Nineteen Fifties, perhaps, But no longer now. You can bake English bread the use of only English flour. However You could’t make English automobiles from English components. It’s impossible.”

While barrier-free change with Britain is critical to German production, so are open borders. “Freedom of motion is hugely important for us,” Nickel stated. In Vilsbiburg, a big part of the body of workers is targeted solely at the logistics of transporting distinct components to the right location At the proper time. At the height of the Arab spring protests, the agency needed to improvise no longer to interrupt the supply chain from Tunisia, at one point flying in character components.
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Unpredictable queues at border points would probably damage the so-referred to as “long workbench” model of production that has allowed German carmakers to thrive in a globalised age.
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free movement additionally matters to Bavarian industry because the location has a scarcity of professional labour. With 37,000 empty Bavarian apprenticeship posts, one of the few silver linings that many German enterprise leaders see in Britain’s vote to depart is that it is able to drive jap European skills to Germany that has formerly opted for the UK.

At Bavaria’s Chamber for industry and Trade the principle fear is that Britain leaving the eu will lead to greater bureaucracy. When Bayern Munich travels to Moscow for a soccer match, the chamber currently has to difficulty them with a Carnet ATA, an international customs file that certifies the us of a of foundation and confirms that the team will return its coach, shirts and boots after the suit rather than selling them out of doors the unmarried marketplace.

If Britain had been to grow to be significantly breaking trade ties with the european, Dollendorf fears that his trade frame would turn out to be having to spend about one greater day a week processing documents of this type. Medium-sized, or Mittelstand, agencies without their very own tariff branch, he said, would be hit in particular tough.

“If we had been pressured to make a desire among get right of entry to the British marketplace and retaining the not unusual market in Europe, we would move for the not unusual market,” said Dollendorf.