Business

Has Nissan been sold an EU nonsense?

The prospect of shiny new Nissan X-Trails and Qashqais built in Sunderland roaring up the ramps of ships bound for EU ports without tariffs after Brexit came closer this week.

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Has Nissan been sold a false promise? These workers should know.

Business Secretary Greg Clark told Andrew Marr and the House of Commons that the Government’s approach was to secure tariff-free access to the EU for UK-made cars and effectively adopt a sectoral approach for others.

Britain’s car exporters may have taken some comfort from this. They have most to lose if such an agreement is not made. According to a House of Commons Committee, the average 9.7% tariff under WTO rules on cars would amount to an annual cost of £991bn for such EU exports.

The automotive sector would top the tariff league table – costing it six times as much as second-placed aircraft parts (£156m), oil (£155m), clothing and food if no pact is made.

So whilst the carmakers seem reassured, what about the many others sectors whose EU export prospects are threatened?

Stand by for campaigns from trade bodies representing the clothing industry, who face the prospect of 12% tariffs, or even our small but proud wine producers with an intoxicating 32% tariff.

They will be highlighting their importance to the local economy, the employment effect and their reliance on such trade for their overall business.

Others representing pharmaceuticals, agriculture and electronics will insist their plight is as deserving as Nissan’s.

With the sector-by-sector approach now signalled the scramble for sympathy is reinforced by the UK banking sector urging rules that will replicate or maintain the “passporting” arrangements allowing them to operate freely across Europe.

Similarly, bodies representing the construction, care and tourism industries will feel encouraged to press their case for allowing people from the EU free access to work in their sector where seasonal and other shortages frequently arise.

So the Government’s piecemeal approach will now galvanize trade associations. They will be jostling for attention with politicians and the media.

Their task is a tough one. The sector approach is based on a hope that the remaining 27 EU countries will be content to allow a series of exemptions to allow British businesses to operate pretty much as they did whilst in the bloc.

It could be wishful thinking. The incentives for the 27 to do this are not that great. Why would they allow club rules to apply when Britain is no longer a member and not paying its dues?

So that means trade organisations making representations to their EU counterparts to urge them to advocate to their Governments sectoral carve-outs for their industries.

Even for carmakers, including Nissan, the outlook is not especially good. Germany’s car industry federation boss Matthias Wissman told the FT last month that “The UK is an important market for the German car industry, but the cohesion of the EU27 and with it the single market is more important for this industry.”

Pro-Leave campaigners claimed during the referendum campaign the German carmakers need our market as much as we need theirs. But it now looks like they have much wider concerns.

So whilst we celebrate Nissan’s renewed commitment to Sunderland, let’s hope it has not been based purely on a pledge of EU sectoral favour. At the moment, it looks like optimism rather than practical politics.

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WhatsApp sends Brazil nuts as Latam highlights tech leapfrogging

Corny headline. But there has been a right old tussle in Latam as an estimated 100m Brazilians had their favourite message app temporarily suspended this month when the authorities sought to clamp down on criminals using the service.

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Brazil’s media reports WhatsApp ban as episode highlights tech boom in South

WhatsApp is owned by Facebook whose founder Mark Zuckerberg declared “The idea that everyone in Brazil can be denied the freedom to communicate the way they want is very scary in a democracy.” It wasn’t the first and won’t be the last time MZ has to utter such a riposte.

It’s an age-old debate balancing the right to security and freedom of speech. That’s for another day, but  I’ll just say for now I tend to favour my right to life over my right to speak when there’s a genuine (dictators please note: g-e-n-u-i-n-e) violent threat.

The episode also illustrates the huge growth in the use of smartphones in poor and emerging countries. I first became conscious of the power of WhatsApp not in Clerkenwell or Camden, but several years ago in Colombia. Almost everyone I spoke to there connected to me via the service. The same was true in Bolivia, Honduras, Paraguay and El Salvador.

No wonder Zuckerberg blew $19bn on buying it in 2014. Its wildfire growth then was a symptom of the rocketing takeup of digital tech fuelled by cheap smartphones, low fixed broadband use and a rampant desire to network.

It was also another important reminder of how, over the ages, the “South” has leapfrogged the “North” in so many tech advances and takeup.

Other examples include solar energy development, use of salt-and-water fuelled lamps and 3D printing to manufacture hearing aids or agricultural tools in remote areas locally.

I think 3D printing is going to be even bigger than the internet. Imagine having your car in 2o66 made in your local 3D depot. You pay for your custom design from BMW, Lexus or Mercedes who give you a password, you give it to the guys at the neighbourhood 3D depot who are paid to complete the job using the raw materials and “printers” they have there. It’s got to be more efficient and greener than transporting finished products over thousands of land and sea miles.

All that will be based on observing developing countries leapfrog the west in such pioneering technology meanwhile.

So, thanks Brazil for reminding me that my northern-centric view of the world is horribly skewed and narrow. Think I’ll WhatsApp a few people with that message.

 

Plotting a safe regulatory course

Google has been in the news this week with the EU issuing antitrust charges over alleged abuse of its dominant position with its Android operating system. Luckily it had Microsoft’s earlier tussle with Brussels on similar charges to draw on.

It also has its own superb team to handle such matters. They’ll be busy in the next twelve weeks.

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How close to the regulatory wind can Google sail?

The online giant knows ignoring regulation destroys businesses. If your CEO relegates its management to a remote part of the company, s/he’s going to be moved on pretty sharpish.

I have been a regulatory poacher and gamekeeper. Fishing for a break from competition authorities to reward enterprise when at places like Sky and Millicom, and forcing through changes to help markets work more fairly when working at Ofcom.

It requires a lot of intellectual heavy lifting. I recall one very senior official telling me that part of the regulator’s job was to know more about the companies overseen than the companies knew themselves. That’s why his organisation was stuffed full of PhDs and MBAs (who often then got poached to the poachers’ side) who dug deep and thought hard.

Back inside the company, smart lawyers and economists ran models demonstrating the fairness of its commercial stance and the iniquity of our competitors’.  I’ll never forget the CEO’s 7am call to me from an airborne plane to say we’d been let off, just, by the competition regulator after an inquiry. There was only a cosmetic wrist slap and some grandstanding to endure.

We were a basis point away from further action – showing just how well-tuned the business was. My CEO had made sure that the regulatory team were fully across all the firm’s activities and embedded knowledge and practices there to avoid fines, disposals and public opprobrium. So the company maximised profits by sailing as close to the regulatory wind as allowable without capsizing and drowning it in ruinous anti-trust penalties.

But such scrupulous management is not enough by itself. Demonstrating strict adherence to the rules to investigating authorities is indispensable. But too narrow a legalistic approach can weaken the case. Compliance needs to be matched by smart communications too.

One barbed remark, from a super-smart senior colleague managing such matters at one company, highlighted this for me as a communicator by asking “What value are you adding to the company on this exactly?”.

I was quite offended. But, on reflection, it was fair. He had a very dim view of the press and media. He had supreme confidence in his own intellectual ability and a sneering attitude to his peers at the regulator. He believed only his team’s objective evidence would be admissable and would win the day with them.

I did the autopilot speech about broader strategic reputation management also subjectively influencing such matters. Such soft talk met with derision.

So I took him by a reluctant hand to do some tactical briefings for broadsheet and business media whilst gently turning up the volume on our innovation and others’ competition. It was the classic convert opponent-to-neutral and neutral-to-support operation. The fruits of such labour duly appeared: less hostility and even some signs of support.

That, with many other activities, made the job of the regulator easier when adjudicating our case. They’re not purely po-faced pointy-headed institutions. Even they have a persona and care how they are perceived. The “public” ground had been prepared sufficiently well to enable it to make a reasoned judgement without being accused of bias or incompetence.

Of course we protested at its suggestion of any anti-competitive behaviour just as our rivals complained too. Result: happy regulator, not pleasing anyone and thereby being seen as fair and impartial.

That’s the course Google will be plotting. Stand by for some clever comms from them in the next few weeks as it deploys its considerable firepower. Anchors away!

A friendly digital divide

My best friend is a leading travel journalist. He champions the consumer. We have collaborated on articles and videos from numerous destinations over the years.

Although an Uber user and no luddite, he has reservations about and through Airbnb and some hostility towards online discount hotel booking services like Trivago, majority owned by Expedia.

That has caused a digital divide between us.

This week, in Majorca, he only half-jokingly mocked my substantially reduced-rate reservation at our supercool hotel through one such “evil” service. Once again, I insisted they are only doing for the discerning traveller in need of a room what Uber is doing for the traveller in need of a ride.

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Palma: scene of a digital rift this week

I say it is just a clever technical platform built to respond to personal tastes and price preferences. Hotels are not forced to become its partners but, if they don’t, their rooms will slip off the retail radar.

No wonder a report last year showed executives in the hospitality and travel industry stand out as believing more than in any other that their business is most at peril from digital disruption.

Friend says these services are unfair to the poor hotel owner whose margins are being squeezed by anonymous and remote multinationals. Furthermore, a direct booking is often cheaper and might offer occasional extras like a free ride in from the airport.

Fair enough, I retort, but the online service at least gives travellers a chance to compare deals and my heart is not going to bleed that much for hotel multinationals who dominate the industry and who need kick-up-the-arse competition.

As for Airbnb, it’s just an Uber with beds. No one is forced into offering or renting rooms through them. If taxes are being avoided, that’s not their fault – politicians and their public revenue authorities need to toughen up.

And so the argument went on over the ensaïmadas and coffee: enjoyed at an 18th century Palma cafe but discovered through 21st century technology.