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British Are Slow to See EC Promise

But Japanese firms anticipated value of European beachhead

By Alexander MacLeodSpecial to The Christian Science Monitor / December 30, 1992



LONDON

THE people in Britain best placed to take advantage of the Single Market are Japan's automakers.

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Early in the 1980s, Japan's "big three" - Nissan, Honda, and Toyota - spotted the advantages of having factories up and running in Britain when the calendar flipped to Jan. 1, 1993. Today they are regarded by Brussels bureaucrats as being "inside" the European Community for trading purposes, and the cars rolling off their assembly lines will be treated as true-blue British.

Government forecasts suggest that, by the year 2000, Japanese companies will be producing at least 1.2 million cars in Europe - about 80 percent of them from plants in Britain. By then, according to the London-based Economist Intelligence Unit, Japan will account for 20 percent of car sales in Europe - double the current figure.

By exploiting the provisions of the Single Market, Japan's automakers are bringing about some of the biggest changes in Europe's auto industry.

Garel Rhys, professor of motor industry economics at Cardiff Business School, says the Japanese "spotted an opportunity, purchased greenfield sites, insisted on single-union agreements in their factories, and applied their own high-grade management and manufacturing techniques to the task in hand."

Given the obvious advantages the Japanese will extract from the Single Market, top British industrialists are surprisingly divided about the benefits that can be expected to accrue to them.

Sir Patrick Sheehy, chairman of BAT Industries, is among the enthusiasts. He says he welcomes a "Europe without frontiers." His company has plans to expand into the EC insurance and cigarette market.

"Our real long-term economic and political future is at the heart of Europe," he says.

Lord Young, chairman of Cable and Wireless and a senior minister in the Thatcher government in the 1980s, is more skeptical. He doubts whether C&W will be able to take full advantage of what is supposed to be a Single Market. "The EC is closed to British telecommunications companies," he says, blaming the French for persuading the EC "to exclude us."

On the other hand, some large British companies have established solid footholds within the EC, well ahead of Jan. 1, 1993. The giant Guinness Corporation, for example, is already entrenched in Europe - it holds 24 percent of the shares of LVMH, France's largest consumer conglomerate. Sir Anthony Tennant, the Guinness chairman, says it is important to follow up implementation of the Single Market with speedy ratification of the Maastricht Treaty.

In the first nine months of 1992, some 56 percent of Britain's exports went to EC countries, and 52 percent of imports came from the EC.

As the Single Market loomed, many British businessmen were expressing concern about the complexities of value added tax (VAT) regulations that will require them to comply with new procedures. Any company doing 135,000 pounds ($205,000) of trade a year or more with the EC must complete monthly a new type of statistical form - or face criminal charges.

By mid-December, about 10 percent of the 30,000 firms required to fill out the new forms were saying they still had not received the statistical codes needed to complete their declarations. British Customs and Excise officials have been slow to visit and advise companies required to complete the forms.

"It will be a terrible shambles in January," says Ken Solomons of the accountants Wilson and Kyle.