The construction vehicles pictured above are a JCB 3CX (on the left), manufactured in Rocester, UK, and two Volvo Construction Equipment machines (on the right), a , both manufactured in Arvika, Sweden.
My point of course – in light of comments yesterday by Chief Executive of JCB, Graeme MacDonald – is that in the future the Arvika Volvo plant might be still in the European Union, and JCB’s Rocester plant would not.
MacDonald confirmed that EU countries are an important export market for JCB, but said this:
What is needed is a lot less red tape and bureaucracy. Some of it is costly for us and quite frankly ridiculous. Whether that means renegotiating or exiting, I don’t think it can carry on as it is. It’s a burden on our business and it’s easier selling to North America than to Europe sometimes.
Now let’s think of the machines pictured above. Everything from the emissions standards from the engines, to the chemicals that are (or are not) allowed in the paint on the machines, through to the coolants permitted in the machines’ radiators is determined by EU law within the EU. If the UK were to leave the European Union that would make no difference whatsoever to any of these standards, and JCB – if it wanted to export to the European Union – would have to respect every single one of those standards anyway.
Yes, British construction workers might accept cheaper but less fuel efficient engines, paint containing harmful substances, and ozone-depleting coolants within the UK, but the rest of the EU sure will not – and they are not going to grant UK firms like JCB any special treatment. A Single Market means common rules that everyone respects – including competition law, even applied to companies headquartered outside the EU.
JCB could theoretically manufacture to one standard for the UK market, and one standard for the EU market, but manufacturing to two separate sets of rules would also come with at least some associated costs. If it’s anything like the mess when it comes to standards in the car business between the EU and the US then this is not to be underestimated.
So if the red tape that MacDonald has in mind can actually have nothing to do with the end product, what then, I wonder, does he actually mean? If the UK were not in the European Union then rules on working time, maternity and paternity leave, and workplace safety – the framework for which are currently set at EU level – could be set in the UK instead. The waste the JCB plant produces, and the energy it uses to manufacture its goods, would also possibly not be subject to EU norms. Accounting rules for large enterprises, and banking law and money laundering rules, could also probably be circumvented. However UK room for manoeuvre in these areas would still be restricted if the UK were to join the EEA upon leaving the EU.
So then, the next time some right-leaning captain of business (the Bamford family behind JCB donates to the Tories) in the UK complains about “red tape” in connection with the European Union, they need to be put on the spot and asked what law, precisely, they would actually want to get rid of, and what that would mean. Does freedom from the EU mean the freedom to exploit your workforce and pollute as much as you wish?
[UPDATE: 18.5.2015, 2135]
So it turns out that JCB was fined by the European Commission back in 2000 for unlawful distribution agreements. Red tape, eh?