Engineered for Europe

ou will likely be reading this a few weeks before giving your personal endorsement to either our continued involvement in the EU or to our withdrawal from it. It should perhaps be a straightforward engineering-style analysis of the facts that would lead us to a decision? Yet, what appears to be missing most are those facts.

The ‘facts’ that have been presented to us, particularly by politicians, are cherry picked to make the appropriate case. More importantly they are often unsubstantiated. Only hindsight will determine whether or not they turn out to be true, but until then they’re guesses or educated opinions at best.

It appears that many are struggling with a heart vs head quandary. It makes sense to stay in the EU but emotionally it would be rather nice to be on our own again. Unless either IN or OUT campaigns deliver a knock-out blow, we can assume that this is the argument that will drive indecision right up to referendum day.

Thinking clearly

While the ‘heart’ side of the debate is crucial to its outcome, the issues that are most likely to have an impact on engineering companies are aspects such as trade and supply chain management, movement of and access to personnel, IP, standards and EU investment.

Most engineering firms import or export, and many source components overseas. As all trade tariffs are negotiated by the EU, this clearly affects not just the EU, but every other country that features either up or down the supply chain. As Barack waded in by saying he thinks that an EU exit will push us to the back of the tariff setting queue, Boris responds claiming there is no reason we shouldn’t have a tariff-free future as we do now. It highlights why politicians are perhaps not the best people to listen to in this debate.

So what are the opinions of engineers and engineering companies, which are interested in realities rather than agenda? Gary Livingstone is managing director of Basingstoke based motion technology specialists, LG Motion – a company that has considerable experience of dealing with Europe during good times and bad.

“We exported more to the EU when the pound was stronger against the euro,” he said. “When it got weaker, we got fewer orders from overseas because they went all protectionist and nationalist and didn't order from the UK. At least that was our own unique experience. Our exports went from 20% down to about 8% when the pound and the euro were almost at parity.”

Another company that relies on the European market is HepcoMotion, with around three quarters of its total sales being made up as exports. Chairman, Giles Forster, commented: “If it is possible to step away from the European Union and set up new stronger trade agreements with key markets including potential developing markets, this could provide further opportunities for exporters such as us. However, a reduction in potential markets would of course be a significant problem. As a business working globally, we appreciate that successfully negotiating trade agreement within the available two-year time frame will be challenging.”

This is a response typical of many. Cautious, uncertain, and exit or not, this decision is a gamble with potential big wins and losses as to what the future may hold.

Standards – changing the rulebook

Another aspect core to the debate is that of rules and regulations. Overly zealous red tape has given ammunition to Leavers, but IN campaigners claim most are a necessary evil. After all, anyone selling to Europe, whether we vote IN or OUT will need to follow Europe’s standardisation system anyway.

The British Standards Institution (BSI) looked at the possible outcomes of a Brexit. It analysed what would happen if the UK applies to join the European Free Trade Area (EFTA) and sign the European Economic Area (EEA) agreement. Norway and Iceland are both in this position. Switzerland has joined EFTA but not signed the EEA, leaving it to negotiate its own trade agreements with the EU.

The consequence of either course of action is that BSI would still retain its position with the European standards organisations CEN and CENELEC. However, BSI says that an OUT vote may affect its relationships with partner countries and the ability of the BSI to influence regulatory policy at a European level.

Were UK not to be accepted into EFTA, or apply to join it, then it would require CEN and CENELEC to change its statutes, if the UK was to be part of them. And that may be challenged on grounds of ‘lack of commitment to reciprocity of market access’.

As an independent and politically neutral organisation, BSI doesn’t offer an opinion one way or the other regarding the referendum, but it is clear from its analysis (a full version of which is on its website) that it feels trade and international relations would suffer from an exit. However, doubters retort that as a standards organisation use to playing at the top table it is in BSI’s interests to maintain its role in standards setting. They say, were we to leave, particularly when it comes to domestic trade, the standards framework could be less complicated and less expensive for British traders to adhere to.

"We have polled the membership and 66% believe that the UK should stay in the EU for the benefit of engineering and design. The general feeling is that any change to the existing state of play would be disruptive with changes to trade agreements and associated financial implications." Libby Meyrick, chief executive, Institution of Engineering Designers

The intellectual property position

The nature of Intellectual Property is even more global and, as with standards, staying in the EU will have no impact on IP laws for the UK. However, the Chartered Institute of Patent Attorneys (CIPA) believe that some changes could follow an EU exit, though they are likely to be limited.

It said: “Leaving the EU would mean that the UK would no longer be bound by legislation and would be able to change its IP laws. However, the UK would still be bound by international treaties and because a substantial part of IP laws is internationally harmonised, it is improbable that there would be any change in national IP legislation.”

Moreover, the European Patent Office is not an EU body and so UK membership would continue. There may be some differences though if we do choose to leave. Registered Community Designs (RCDs) that register the appearance of a product will no longer be recognised in the UK. Also the Unitary Patent, which effectively allows protection throughout the EU rather than on a country by country basis, would also fall by the wayside.

Investing in the community

EU investment is one of the most interesting and potentially most significant issues. For those involved in science, engineering and technology, investment comes in different forms than that of farming. The amount of direct funding for developing innovative ideas could be expanded, as this network already exists through various Innovate UK programmes.

“There's a lot of good brains coming in and out of Europe to do science projects such as Rutherford, Diamond, BSA,” added LG’s Livingstone. “Does that all stop when we're out of the EU? So I'm more concerned for long-term science funding as I don't think the UK will necessarily do it all on their own. Transfer of skills sets and knowledge would be a concern, as well.”

Europe’s most glamorous laboratory, CERN, incidentally, is funded by its 21 member states with about half that funding coming from Germany, the UK and France. It, and our involvement in it, would therefore remain unaffected by Brexit. Perhaps, it could be argued, CERN could be a model for further British involvement in European research? But when research programmes originate from the EU, a Brexit is not going to exactly help encourage our involvement.

According to figures from the Royal Society, expenditure on research in the period 2007 to 2013 (the period of the EUs Framework Programme 7) was €226bn but only 3% of this came from the EU. This compares with 11% from our own Government.

What is interesting is that the vast majority - €4.9bn out of €6.9bn - of the EU money goes to universities. A related fact may be that UK universities occupy 12 of the top 25 places in European university rankings. Our research institutes may not have developed to the same extent as Germany’s Fraunhofer, for example, but the universities remain world class and play an important role in the collaborative science effort across the continent.

A prime example is the National Graphene Institute set up at the University of Manchester and at the heart of the EU’s €1bn Graphene Flagship project. Writing in the Guardian, Dr Sylvia McLain of Oxford University took this as an example.

He said: “The Graphene Flagship project is exactly the kind of investment that will be jeopardised if the UK withdraws from the EU. The UK benefits enormously from EU science funding largely because Britain is at the vanguard of shaping policy and direction, and it is not some peripheral partner hoping for a knock-on benefit. If a comparison is needed for what it could be like, just look at Switzerland. The European Commission responded to their referendum on immigration by freezing them out of several important Horizon 2020 funding streams; the UK could well suffer the same fate. It is a pretty simple equation really: if you have no seat at the table, you have no influence over policy.”

Space race

A specific application area is the space industry – a sector the Government recently claimed would be 10% British, in terms of the global industry, by 2030. It is an industry the Government funds partly through the UK Space Agency and partly through the European Space Agency (ESA).

Paul Febvre, chief technology officer at the Satellite Applications Catapult, describes the positive position that the UK space sector finds itself in: “We are witnessing unprecedented recent inward-investment into the UK by both European primes and by other multi-national space sector organisations, largely thanks to the recent focus and growth as well as innovation and clusters such as Harwell across the UK.”

As it stands only 20% of the ESA budget originates directly from the EU, but the two organisations are, according to ESA, ‘increasingly working more closely together towards common objectives’.

Moving forward there is a real opportunity for the UK in developing the market for microsatellites like cubesats as well as creative, commercial use of the data that is beamed down from near space. However, bigger satellites and space projects are beyond the budget of the UK on its own and will require the financial and technical muscle of the ESA. EU membership is not a requirement of being in the ESA – Canada is a member – but, as Febvre observes: “I imagine there would need to be significant work to facilitate a change.”

Conclusion

Sadly, the EU referendum will probably be decided by unsupportable ‘facts’ regarding immigration and the economy. However, there are some real issues for engineering that need to be considered and while this article might not have provided the answers, it hopefully has highlighted some of the considerations.