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Why Brexit-backer Dyson picked Singapore over UK for new electric car factory

·Senior Economics Correspondent at Yahoo Finance UK
Dyson founder and chief engineer Sir James Dyson at an event in New York. Photo: Getty
Dyson founder and chief engineer Sir James Dyson at an event in New York. Photo: Getty

One of the only big British businesses to publicly back Brexit has chosen Singapore to manufacture its new electric car.

Engineering firm Dyson announced on Tuesday it would complete construction of a two-storey electric car factory in Singapore by 2020 and cars would begin rolling off the production line by 2021.

The decision is raising eyebrows in the UK, but it makes sense: the global auto industry is increasingly shifting production and sales east to Asia, and the small city-state has developed deep trade ties with powerful partners.

“Singapore is obviously a beacon of free trade,” noted David Henig, a London-based trade expert and director at the European Centre for International Political Economy.

Singapore has 22 free trade deals covering world powers including China, India, Japan, Korea and the United States.

Dyson CEO Jim Rowan explained on Tuesday that Singapore’s “access to high-growth markets” played into the decision to build a new factory there.

Nearby China is the largest market for electric cars in the world, with Chinese drivers buying about half of all global electric cars in 2017, according to the International Energy Agency. The Chinese government has been a driving force behind electric car development and domestic sales, leading to a 72% increase in electric car sales in 2017.

By contrast, the UK does not have access to free trade deals with important markets like China, and runs the risk of losing access to free trade with the European Union and other partners after Brexit in 2019.

“You can see the benefits [of Singapore],” said Henig. “I suspect [trade is] not the completely determining factor, but it’s likely to be relatively important.”

Dyson has had a presence in Singapore for the past 11 years and employs 1,100 workers, who build millions of high-tech motors.

“Our existing footprint and team in Singapore, combined with the nation’s significant advanced manufacturing expertise, made it a frontrunner,” said Dyson CEO Jim Rowan. “Singapore also offers … an extensive supply chain and a highly skilled workforce.”

Meanwhile, the UK’s top business association CBI warned on Tuesday that investment in domestic manufacturing is slumping and concerns are rising about a lack of access to skilled workers.

“Planned investment is being scaled back in the face of deepening Brexit uncertainty,” said CBI’s chief economist Rain Newton-Smith.

Fears related to a lack of access to skilled workers hit their highest level in over 40 years, according to a new CBI manufacturing survey.

Dyson, one of the best-known engineering companies in the UK, has been developing its electric car technology in Wiltshire in western England, where it employs 400 workers.

Billionaire founder James Dyson, backed Brexit in the 2016 referendum, arguing that Britain’s future lies in building close ties with fast-growing markets in Asia, and not Europe.

Dyson manufactures products such as hair dryers, air purification systems and bladeless fans in Asia, while its research and development remains in Britain.

Britain has been working to promote itself as a top location for the development and sales of electric cars. It plans to ban the sale of petrol and diesel cars by 2040. However, it suffers from a lack of electric charging infrastructure and has only a modest market for electric car sales. Just over 120,000 electric and hybrid cars were sold in the UK last year, a fraction of the size of the Chinese market.

With files from Reuters

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