Palmer, Part 3: Aston Martin CEO on Brexit, Breaking into the Auto Industry
Navigating Aston’s business through rocky political waters
As a brand closely tied to the fortunes of Britain, Aston Martin has had to deal directly with the business challenges of the UK's vote to remove itself from the European Union—commonly known as Brexit. Interestingly, Aston CEO Andy Palmer believes his company is uniquely positioned to handle the future fallout, no matter how it ultimately shakes out. Palmer also offers up his advice to young people trying to break into the auto industry and lessons he learned in his youth in part 3 of New York bureau chief Jamie Kitman's interview.
JK: I was just hoping you could talk a little bit about Brexit.
AP: The UK is the oldest democracy in history. Whatever I think about Brexit, it would be a travesty of democracy if a bunch of intellectuals were able to overturn a decision, which is democratically decided.
JK: If there was another vote, for some reason?
AP: Brits are a stubborn bunch. So if you put it to another vote, I suspect it will go even more in the Brexit direction. Because, it will be seen as clever people in Europe imposing their thoughts on them. The people that voted for Brexit weren't morons. They made a decision. They may have a whole set of different reasons, but there was a compelling vote for Brexit.
JK: They're not going to change their minds.
AP: I don't think they're going to change their mind. And I think you have to accept this. If you live in a democracy, whether you'd like it, or not, whichever side of the bar you're on, you have to accept when you enter to vote, you live by the result.
JK: Oh, we're experiencing that right here, now.
AP: You are indeed. You are indeed. (Laughter.) So, nobody ever said democracy was the perfect solution.
JK: Well there's the great H.L. Mencken quote, "Democracy is the most perfect form of government, because it gives the American people what they want…good and hard." (laughter.)
AP: Very true. (more laughter.) So, I mean, at the moment there's a lot of noise around... I saw this morning, [EU Brexit negotiator Michel] Barnier saying that we're not making progress. Well, I've never been into a negotiation, where you go in, you have a negotiation, you walk away with agreement. Because, if you walk away with agreement easily, you probably didn't get the best agreement. I think it playing out in the media is not very helpful, the media assuming that because you come out of a negotiation, and you haven't got full agreement that you're approaching the cliff edge, is nonsense.
I think if we can't find an agreement then both sides put the wrong people into negotiations. Because, at least when I send people to negotiate, I tell them to walk away with an agreement, eventually. You know, it's your job. Any negotiation you have has to come to [an agreement]... And I believe that we will. Theresa May has said that she wants a two-year transition period. Business welcomes that, because it softens the landing. My own position in front of the Prime Minister, and our policy…
JK: I gather you've been to see her.
AP: I was with her last Monday. Number 10. But, you know, continuously, my worries are first, and foremost, non-tariff barriers. Because, non-tariff barriers are something you just can't control. Number two is rules around local content. Because, whilst we have very high British local content, we only have 45 percent local content, if we don't consider the rest of Europe. We're 95 percent, if we consider Europe. Harmonization regulations, we don't want to have a unique set of homologation standards for the UK Portability of labor, access to global talent, don't mind how you do it. Take a U.S. model if you want, or take an Australian model, but I need access to the best talent in the world.
JK: That would be the old U.S. model.
AP: The old U.S. model, yes. And lastly, tariffs. So, I'm not so worried about tariffs. Because, tariffs work in both directions. So, you know, whilst it will make an Aston more expensive in Germany, it will also make a Ferrari more expensive in the U.K. To some extent, we can price for it. Against all that, there's almost an equal, and opposite force going on. So, every time they walk away from negotiations, and things aren't moving very well, guess what happens? The pound weakens. Every time the pound weakens, I make more profit.
So, as long as it's not affecting consumer confidence, we've got this... If the Brexit negotiations are good, no tariffs, but maybe the pound strengthens. If there's tariffs, the pound weakens. There's almost a self-correcting mechanism, at least, from my perspective. So, those are the things that worry me, but not a lot. There are a lot worse things in the world than Brexit to be worrying about, including trade relations with the United States, for example, and border taxes, and stuff like that.
JK: Last words about what your advice to a young person wanting to join the automobile industry, based on your experience.
AP: There isn't a better industry in the world, in terms of the range of skills that you can work in. I mean, you can be an accountant, and work in the auto industry. You can be a creative, and work in the auto industry. So, it is a beautiful industry to work in. It gives you the satisfaction, the way everybody in a car company can look to something that's on the street, and say there's a little bit of soul in that car. I was part of the creation of that car. Even if I was adding up the invoices, there's a little bit of me in that, which I think is unique. And you don't get that when you're designing a software program for Google, or a washing machine for Bosch. You know, there's a real sense of satisfaction. It's a small family. You know, we all know each other, pretty much, in the auto industry.
I would say, look at yourself. When you're 16 years old, or 15 years old, look at yourself. Don't follow what your teachers necessarily say. Because they'll tell you to go to university and study law. At least, they do in the UK.
And even if they're open-minded, they'll tell you to go to university, and study engineering. But, there's a parallel path, which is what we call the apprentice path. And I was fortunate enough to have a dad that understood that getting your hands dirty, and learning the industry from the bottom up, is not a bad place to start. So, I left school at 15, and started working at 16.
I worked for a company called Automotive Products [AP]. Brakes and clutches. I'm a gearbox guy. So, ultimately, I ended up in advanced engineering, doing this dual-clutch transmission.
JK: Did you have to go back to school, at some point?
AP: Yes, I went back. Now, I have a bachelor's in management, a master's in engineering, a Ph.D. in engineering, an MBA, professor of this, professor of that, all the rest of it. But, the point was-
JK: You were a whiz kid.
AP: But, I learned my trade. Important word. I learned my trade from the base. Now, that's not decrying those people who are suited to go and get their honors degree. There are places in the world for those. But, what I always say is there's another route. There's always another route. And you don't have to have gone that route, or that route. Ultimately, the auto industry is a wonderful meritocracy. If you're good, you'll rise.