Set back by a disastrous election and the loss of her parliamentary majority, U.K. Prime Minister Theresa May is under more pressure than ever to deliver what she calls “the promise” of Brexit—that Britain will prosper when it leaves the European Union at the end of March 2019.
The vote was a stunning rebuke to the negotiating stance that May spent almost a year crafting. With divorce talks between the British government and the EU set to begin next week, there's now discussion of a softer Brexit in which May—or her successor if she fails to cling to power—reorients the talks towards safeguarding trade and away from its previous focus on winning back sovereignty over immigration and lawmaking.
While politics are in disarray, the economic realities have not changed. The testing grounds for any Brexit agreement—as indicated by a Bloomberg analysis of some key industries—will be such places as the English Midlands near Birmingham, the North East around Sunderland, and the old British rust belt around Liverpool. Many of these areas, traditionally loyal to the opposition Labour Party, voted to leave the EU. Their economies, however, are dependent on foreign corporations that set up shop there with an eye to the tariff-free movement of goods between Britain and the other member countries of the EU. These are the areas where a hard Brexit will hurt the most.
The interactive map below highlights some of the areas in which the health of the local economy will depend on how Britain negotiates Brexit—based on how those areas voted on Brexit and on manufacturing’s share of employment. Most are former areas of heavy industry focused on exports, typically with lower average incomes and higher levels of unemployment. The map also factors in the presence of more than 100 factories operated by large foreign manufacturers in key industries particularly reliant on EU trade or labor.
Much depends on the results of the Brexit talks and how much of present trade conditions May and her negotiating team can preserve. But there is already corporate anxiety. The U.K. government last year stepped in to calm carmaker Nissan Motor Ltd. about the consequences of Brexit, assuring the company that it would seek tariff-free access to the single market. The Yokohama, Japan-based company opened a factory in northeast England in the mid-1980s as a back door into the European market. The facility in Sunderland is the largest car plant in Britain and last year produced more than half a million cars.
The companies in our analysis make everything from cars and airplane parts to potato chips and medicine. Collectively, they represent more than 80 billion pounds ($101 billion) in U.K. sales and support more than 200,000 jobs. Most are household names—Nestlé, Pfizer, and Hitachi, to name just a few—operating at least four U.K. factories, each, on average.
74,722
Automotive employees
63,500
Conglomerates
Includes GE’s non-aviation
workers across sectors
from health care to
electricity transmission
30,000
Food & drink
34,000
Aerospace*
8,550 Pharmaceutical
74,722
Automotive employees
63,500
Conglomerates
Includes GE’s non-aviation workers across sectors from health care to electricity transmission
30,000
Food & drink
34,000
Aerospace*
8,550
Pharmaceutical
*Some companies included in aerospace sector are also defense contractors.
74,722
Automotive employees
63,500
Conglomerates
Example: Includes GE’s non-aviation workers across sectors from health care to electricity transmission
30,000
Food & drink
34,000
Aerospace*
8,550
Pharmaceutical
*Some companies included in aerospace sector are also defense contractors.
In addition to the Nissan plant, the area around Sunderland in the North East of England plays host to other multinationals, including Coca-Cola, General Electric, and Siemens, with the region as a whole sending over 60 percent of its exports to the rest of the EU.
Derbyshire, in the East Midlands, and the nearby city of Birmingham (population 1.1 million), are equally vulnerable. Bombardier makes trains here, Toyota and BMW assemble cars, and Mondelēz International produces Cadbury chocolate bars. In some parts of the Midlands, manufacturing represents almost 1 in 4 jobs.
Europe has been particularly key to the economic viability of north Wales and the adjoining rust belt of metropolitan Liverpool. Both sides of the Mersey have large export-oriented factories belonging to Ford, Unilever, and Tata Motors' Jaguar Land Rover division. Over two-thirds of Welsh exports go to the rest of the EU, more than any other U.K. region. Airbus SE manufactures the wings of almost all its civilian aircraft in Wales before transporting them to assembly lines in France, Germany, and even as far as the United States. Should the U.K. leave the single market without retaining some sort of access agreement, any resulting restrictions will clearly affect the manufacturing efficiencies of such a global supply chain.
Liverpool & North Wales
Midlands
North East
Coca-Cola
1,700
Employees
Irish Sea
2M
Cases of bottled water produced per year
Derby
General
Electric
Bombardier
Liverpool
Nestlé
Toyota
Siemens
General
Electric
Jaguar/
Land Rover
Nestlé
UTC
Unilever
General Electric
Unilever
Ford
Siemens
Newcastle
Nestlé
PepsiCo
Mersey
Nissan
Jaguar/
Land Rover
518,547
Cars made last year
5M
Walkers potato chip packs made per day
Dee
Sunderland
121 hectares
Size of facility
Leicester
UTC
North Sea
UTC
BMW
Jaguar/Land Rover
Toyota
PepsiCo
355
Manufacturing jobs affected by end-2017 plant closing
Birmingham
Airbus
Jaguar/
Land Rover
Arla Foods
Mondelēz
267,734
Car engines made
last year
1,200
Aircraft wings made
per year
Middlesbrough
Hitachi
300M
Cadbury Dairy Milk bars made per year
5 KM
10 KM
10 KM
5 MILES
10 MILES
10 MILES
Note: Jaguar Land Rover was acquired by India’s Tata Motors in 2008; UTC = United Technologies
Liverpool & North Wales
Irish Sea
Liverpool
Jaguar/
Land Rover
UTC
Unilever
Ford
Nestlé
Mersey
Dee
121 hectares
Size of facility
Toyota
Airbus
Arla Foods
267,734
Car engines made
last year
1,200
Aircraft wings made
per year
5 KM
5 MILES
Note: Jaguar Land Rover was acquired by India’s Tata Motors in 2008; UTC = United Technologies
Midlands
1,700
Employees
Derby
Bombardier
Nestlé
Toyota
General Electric
Unilever
PepsiCo
Jaguar/
Land Rover
5M
Walkers potato chip packs made per day
Leicester
UTC
UTC
Jaguar/
Land Rover
BMW
Birmingham
Jaguar/
Land Rover
Mondelēz
300M
Cadbury Dairy Milk bars made per year
10 KM
10 MILES
North East
Coca-Cola
2M
Cases of bottled water produced per year
General Electric
Siemens
Nestlé
General Electric
Siemens
Newcastle
Nissan
518,547
Cars made last year
Sunderland
North Sea
PepsiCo
355
Manufacturing jobs affected by end-2017 plant closing
Hitachi
Middlesbrough
10 KM
10 MILES
Liverpool & North Wales
Irish Sea
Liverpool
Jaguar/
Land Rover
UTC
Unilever
Ford
Nestlé
Mersey
Dee
121 hectares
Size of facility
Toyota
Airbus
Arla Foods
267,734
Car engines made
last year
1,200
Aircraft wings made
per year
5 KM
5 MILES
Note: Jaguar Land Rover was acquired by India’s Tata Motors in 2008; UTC = United Technologies
Midlands
1,700
Employees
Derby
Bombardier
Nestlé
Toyota
General Electric
Unilever
PepsiCo
Jaguar/
Land Rover
5M
Walkers potato chip packs made per day
Leicester
UTC
UTC
BMW
Jaguar/ Land Rover
Birmingham
Jaguar/
Land Rover
Mondelēz
300M
Cadbury Dairy Milk bars made per year
10 KM
10 MILES
North East
Coca-Cola
2M
Cases of bottled water produced per year
General
Electric
Siemens
Nestlé
General Electric
Siemens
Newcastle
Nissan
518,547
Cars made last year
Sunderland
North Sea
PepsiCo
355
Manufacturing jobs affected by end-2017 plant closing
Hitachi
Middlesbrough
10 KM
10 MILES
Few industries encapsulate what’s at risk in the Brexit negotiations more than British automotive production. In recent years, the country has returned as a net exporter of cars for the first time since the 1970s. Around 1.7 million vehicles were produced in the U.K. last year, a 17-year record. More than half of them were exported to the rest of Europe.
In addition to Nissan in Sunderland, Toyota Motor Corp. committed to its Derbyshire plant, though not to building future models there. French carmaker Peugeot said that workers at its Vauxhall unit, which it recently bought from General Motors, will be given a “chance” to prove their efficiency, while Ford said job security for its more than 10,000 employees will depend on whether the U.K. maintains tariff-free trade with the EU.
Share of production exported to the EU in 2016
100%
Vauxhall
Ellesmere Port
75
Toyota
Burnaston
BMW
Oxford
Nissan
Sunderland
Vauxhall
Luton
50
Ford*
Bridgend
Ford*
Dagenham
25
Bombardier
Belfast
0
0
Employees
4,000
8,000
*Ford EU export figure is for combined
production at Dagenham and Bridgend plants
Share of production exported to the EU in 2016
100%
Vauxhall
Ellesmere Port
Toyota
Burnaston
75
Vauxhall
Luton
Nissan
Sunderland
BMW
Oxford
50
Ford*
Bridgend
Ford*
Dagenham
Bombardier
Belfast
25
0
Employees
2,000
4,000
6,000
8,000
*Ford EU export figure is for combined production at Dagenham and Bridgend plants
Share of production exported to the EU in 2016
100%
Vauxhall
Ellesmere Port
Toyota
Burnaston
75
Vauxhall
Luton
BMW
Oxford
Nissan
Sunderland
50
Ford*
Bridgend
Ford*
Dagenham
Bombardier
Belfast
25
0
Employees
2,000
4,000
6,000
8,000
*Ford EU export figure is for combined production at Dagenham and Bridgend plants
Theresa May called the spot election for June 8, expecting to solidify her majority in the House of Commons and crush her Labour opposition, but the actual results were far less decisive: The Conservatives lost a net 13 seats—and their majority in the process. May plans to govern with the help of Northern Ireland’s Democratic Unionist Party, which will have 10 seats in Parliament and favors closer relations with the EU.
Labour seat before the election
Labour seat after the election
Targeted personally by Theresa May
Flipped to Conservative
Theresa May targeted eight seats in the Yorkshire &
the Humber region, but did not flip any
54
49
37
33
28
25
26
26
25
24
14
15
West
Midlands
North
East
Wales
Yorkshire &
The Humber
North
West
East
Midlands
Labour seat before the election
Labour seat after the election
Targeted personally by Theresa May
Flipped to Conservative
Theresa May targeted eight seats in the Yorkshire &
the Humber region, but did not flip any
54
49
37
33
28
25
26
26
25
24
14
15
North
East
East
Midlands
West
Midlands
Wales
Yorkshire &
The Humber
North
West
Labour seat before the election
Labour seat after the election
Targeted personally by Theresa May
Flipped to Conservative
East Midlands
14
15
West Midlands
25
24
North East
Theresa May targeted eight seats in the Yorkshire & the Humber region, but did not flip any
26
26
Wales
25
28
Yorkshire & The Humber
33
37
North West
49
54
Her failure to win a Conservative majority means May won’t be as free to pursue a hard Brexit if the remaining 27 EU members present a unified and uncompromising front. Perhaps nowhere is more responsible for this state of affairs than the pro-Brexit manufacturing hubs Bloomberg analyzed: the Midlands, Wales, Yorkshire, and the north of England, constituencies where the Conservatives had hoped to make big inroads. Nearly half of the campaign stops May made were in these areas. Yet, of the roughly 30 such Labour-held seats she personally targeted, just three flipped to the Tory column.
This rejection of May’s vision raises the pressure for a successful Brexit negotiation. It will be up to her team now to either realign themselves with the softer Brexit approach, which voters seem to favor, or push ahead as planned and hope that industrial Britain is not left behind.