Ford – the car company that insists Britain should dump the pound
Ford, the second biggest car manufacturer in the US, wants Britain to dump the pound and hand over control of its economy to un-elected officials in Frankfurt and Brussels, so that it can make a bit more money.
That might not be exactly what Sir Nick Scheele, president and chief operating officer of the Detroit-based company, said in an interview on Tuesday morning with BBC Radio 4’s Today programme.
But it would certainly be the outcome of the action he called for.
Scheele used to make a habit of calling for Britain to join the euro when he was chairman, Ford Europe, but he has been silent on the subject since his promotion to the US parent company, or at least his remarks on the subject have not percolated through to Europe.
On Tuesday, at the opening of the Birmingham motor show, Scheele said Britain should make a commitment to join the euro soon, because that would help Ford make money in Europe.
According to Scheele, Ford UK was a huge exporter but suffered a competitive disadvantage to companies inside the euro zone which enjoyed more certainty on exchange rates.
“I’d like to see us [Scheele is a Briton] move, I’d like us to move quickly. I’d like to see a declaration because that would adjust the level at which sterling traded relative to the euro,” Scheele told the BBC.
Scheele, along with other outspoken foreign car companies like Nissan, is in dangerous territory here.
Sure, it would make life easier for Ford, and Nissan, if Britain was in the single European currency. Come to think of it, it would be easier for the company if there was a single world currency.
It would be easier for organisations like the North American Free Trade Area, grouping the US, Canada and Mexico, if there was a single currency. But for NAFTA nations this would be unthinkable because of the political implications. Americans wouldn’t stand for Canadians and Mexicans taking power over their economy.
But the real world is different. Nations are not going out of existence. Exchange rate risk is a given for companies. They will have to be managed.
MORE IMPORTANT THAN ECONOMICS
So why do the likes of Scheele and Nissan president Carlos Ghosn think that Britons are any different from Americans, Canadians and Mexicans?
Scheele and Ghosn believe, as professional bean counters, that a single currency would make sense economically. But they apparently can’t see that the issue is much more important than economics. It is above all a political issue, much less resistant to business logic, and which will turn around and bite back companies like Ford and Nissan which are seen as supporters of the hated European Union and its Vichyite conspirators.
Ford and Nissan, and to a lesser extent Toyota (Honda has shrewdly stepped back from this debate and said it is happy with any decision the British people take), are jeopardising their businesses in Britain by taking these positions.
If British Prime Minister Tony Blair calls for the long delayed referendum on euro entry and the political debate hots up again, Ford and Nissan will be identified as foreign political intruders in a domestic debate. Potential car buyers will go elsewhere. Ford and Nissan business will suffer.
SHUT UP ABOUT THE EURO
There is one way for them to avoid this. Shut up about the merits of Britain joining the euro. Take account of the fact that opinion polls in Britain consistently show a huge majority against joining.
There is one final potential irony for Scheele to contemplate. If the famous five economic tests for Britain’s entry are met, if there is a referendum on joining, and if the euro wins – quite a stiff set of fences to jump I’d say – and if British negotiators sit around a table to seek terms for entry, it is quite obvious that the exchange rate offered will be something quite close to the present rate, which the likes of Scheele and Ghosn feel is so damaging.
So the net result of all this would be an unhealthy rate for Ford and Nissan, in perpetuity.
So button it, gentlemen. The bottom line says it makes sense to stay out, and you understand that better than anything.