Manufacturing round-up: EV tariffs, steel solidarity and Rolls-Royce cuts

Wed 18 Oct 2023
Posted by: Benjamin Roche
Trade News

Manufacturing worker in a factory

The IOE&IT Daily Update’s round-up of news from manufacturing industry the covers reports that persistent shortages of electrical components are limiting the development of green energy technology and infrastructure, while Rolls-Royce and others look to shed jobs off a global slowdown in manufacturing.

SMMT urge EV agreement

The Society of Motor Manufacturers and Traders (SMMT) today (18 October) issued a plea to the UK and EU governments to “strike an immediate agreement” on new rules set to enter force that would see “damaging Brexit tariffs” implemented on electric vehicles (EVs).

The implementation of new rules of origin requirements in 2024 could, the group say, “render EU- and UK-made EVs uncompetitive in each-others’ markets”.

It comes as the SMMT launches a new report into the UK’s car trade, Open Roads — Driving Britain's global automotive trade, as well as hosting a conference for auto manufacturers today.

SMMT CEO Mike Hawes said:

“Unnecessary, unworkable and ill-timed rules of origin will only serve to set back the recovery and disincentivise the very vehicles we want to sell… The industrial competitiveness of the UK and continental industries would be undermined.

“A three-year delay is a simple, common-sense solution which must be agreed urgently.”

Electrical part shortage could spark trouble

EV manufacturing could face struggles beyond the borders of Europe, too.

The Institute for Supply Management’s (ISM’s) monthly manufacturing purchasing managers’ index (PMI) has this month reported a sustained shortage in electrical components and transmission products, as highlighted by Bloomberg.

Bloomberg also drew attention to an International Energy Agency report on supply chain stress related to production of transformers, which will play a crucial part in the transition towards clean energy.

The report says there is a shortfall of grain oriented electrical steel (GOES) as demand rises following the growth of EV manufacturing and supply remains limited due to Russian steel sanctions.

GOES is an important material used in the production of energy efficient transformers, as well as large, high-performance generators.

Steel club

The EU and US could be set to agree a ‘joint tariff zone’ that will stem the flow of steel internationally further, as they seek to stem an influx of steel from China and other “sources of non-market excess capacity”.

That is according to coverage published by Politico last week, where it is reported that the US and EU could impose 25% tariffs on steel from outside the two regions, and 10% tariffs on imports of aluminium.

Ursula von der Leyen, president of the European Commission (EC), will be in the US on Friday (20 October) to discuss the proposal, which is also part of a bid to avoid the reimposition of US tariffs on imports of steel from the EU first introduced during former president Donald Trump’s administration.

Rolls’ choice

Rolls-Royce has announced a decision to cut 2,500 jobs across its international operations.

The major international manufacturer of aircraft engines is still experiencing financial difficulties, going back all the way to the Covid-19 pandemic, when air travel was limited . Of its 42,000 global employees, half are based in the UK, with 13,700 based in Derby.

Its Power Systems project in southern Germany is likely to be worst-hit by the job losses, according to a BBC report.

CEO Tufan Erginbilgiç said “we are building a Rolls-Royce that is fit for the future” by achieving “cost efficiencies”.

The company outlined that its development of small modular nuclear reactors (SMRs) in conjunction with US and Qatari would be unaffected. The project entered step 2 of the UK’s nuclear regulator’s Generic Design Assessment earlier this year.

Rolls-Royce aren’t the only ones hoping to put the mini, moveable reactors into production. A job listing posted by Microsoft this week seeks someone capable of rolling out a plan for a series of small reactors to power the computing giant’s data centres, which are growing even more data-hungry as they train the company’s new AI models. That’s according to The Verge.