Friday 13 March 2015

British cars contain more UK parts

British cars now contain more British-sourced components, according to new research reveals today.
Figures from a new Automotive Council report show that domestic component makers sold 19% more products to UK vehicle producers last year than in 2013.

The figures are a major improvement for the UK automotive supply base.

Even now, around one third of the components in a UK-built car are domestically sourced, compared to more than 90 per cent in the mid-1970s. This highlights the huge decline in Britain’s manufacturing base and from which the country is now trying to recover.

According to the report, British car production has increased by more than 50 per cent since 2009 – and this is creating new opportunities for domestic suppliers. Even so, local car content has a long way to go.

Business Secretary Vince Cable claims: “Our automotive industry has seen a resurgence in recent years and that success means work of some £1 billion has returned to the UK. This is testament to the strength and capability of our supply chain manufacturers and will no doubt lead to new jobs and further growth.”   

Cable suggests “This has not happened by accident but is the result of government and industry working together through the Automotive Council to strengthen our supply chain – meaning an increasing number of parts made in this country are contained in vehicles rolling off UK production lines.”

As already reported in this blog, Nifco – a plastics supplier to vehicle makers and based in Stockton, North East England – was on the brink of closure in 2004. However, the business has since turned around with increased demand and funding support leading to the construction of two new factories in 2012 and 2014. However, it should be recalled that Nifco is a Japan-based component supplier with manufacturing sites around the world.

It is not so long ago the country was home to well-established UK-owned manufacturing companies which, for one reason or another, have disappeared including for example Airflow Streamlines Ltd, Hawtal Whiting, Mayflower Corporation and TWR. There are many others, small family businesses which lived on the back of the UK automotive manufacturing industry which have been lost for ever in attempts by previous British governments to make the UK a service-based economy.

Mike Matthews, managing director, Nifco UK Ltd, said, “There is a renewed optimism and confidence in the UK automotive industry and this is reflected in our future projected growth. Our order book is full for the next five years and we have a clear strategy to grow the business into a £75 million company by 2016 and £100 million by 2018. We are moving our offer on, working closer than ever with our customers to develop products that help them to innovate.”

The new Luton-built Vauxhall Vivaro van is cited by the Automotive Council as another example of the recent upturn in local supply. The latest model, which started production last year, contains more than twice the number of British-sourced components at 40 per cent than its predecessor’s 16 per cent.

This represents an extra £600 million will be spent with British suppliers, allowing local companies to expand – and in some cases it has saved whole factories.

However, it should not be forgotten that General Motors (GM) closed the Vauxhall Motors manufacturing plant, ending car manufacture at Luton. And engines for the Vivaro are imported from France. GM latest disposal was that of the Millbrook Proving Ground in Bedfordshire – sold to a private investment company.

James Davies, chief executive officer and chairman of Calsonic Kansei Europe, has said, “Today’s report from the Automotive Council confirms what we are all experiencing – the increasing success story of the UK automotive supply chain. Calsonic Kansei’s ability to produce high quality and cutting edge products at a price which is competitive is opening up exciting opportunities to export our product to a global market.”

Calsonic Kansei Europe is a global supplier of automotive components such as interior mouldings, air conditioning and exhaust systems, employing more than 1,700 employees across four manufacturing locations in the UK. Significant recent investment into expansion at sites in Sunderland and Wales has secured and created 351 jobs.

Again, it should not be overlooked that Calsonic Kansei is a Japan-based company. The arrival of Honda, Nissan and Toyota created an influx of Japan-based companies to make components according to Japanese practices.

In recent years, India-based Tata Motors has helped, through acquisition, to pump new life into Jaguar and Land Rover where previous owners BMW and Ford Motor Company failed miserably.

The Automotive Council claims that much of Britain’s success can be attributed to UKTI’s Automotive Investment Organisation (AIO), which was set up in 2013 to bring more foreign investment into the UK automotive sector. Since its inception, AIO has secured or created more than 10,000 jobs, and delivered more than £768 million investment into the UK supply chain.

Joe Greenwell, AIO chief executive, a former public relations executive and until 2013 chairman of Ford of Europe, said, “This is fantastic news for UK automotive. As well as showing that the UK continues to grow as a serious global automotive destination, it demonstrates the dramatic power of foreign investment, which has helped to revitalise the UK supply chain and secure critical jobs and growth for the UK. We at UKTI will continue to work hard with our partners to address the growing opportunity identified in the report.”

By the same measure as before, Ford Motor Company has been responsible for part of the decline of UK automotive manufacturing, most notably ending car manufacture at Dagenham, creating instead an engine plant. Ford’s most recent UK plant to close was that at Southampton building Transit vans which are now produced in Turkey, even though in advance of the closure Ford hinted it would continue making specialised chassis-cabs at Southampton. The Transit van is coming up to its fiftieth anniversary. It is still seen as an iconic British vehicle even though it is not built in this country.

Mike Hawes, chief executive of The Society of Motor Manufacturers and Traders (SMMT), noted, “A strong domestic supply chain is critical to the success of the UK automotive sector. We want British suppliers to capitalise on the renaissance in UK vehicle manufacturing, and these figures show that positive strides are already being made.

“The work of the Automotive Council is central to this progress, and will continue to be while many component manufacturers still face issues such as access to finance and lack of incentives to innovate.”

Today’s report, Growing the Automotive Supply Chain – The Opportunity Ahead, identifies a further £4 billion-per-year opportunity for UK automotive suppliers to expand their business in the coming years.

However, amid all the euphoria of the report’s appearance, the automotive activity that was once the power base of British manufacturing should not be forgotten – nor the reasons that led to its demise.

1 comment:

Alan Bunting said...

The decline of the British-owned vehicle and component manufacturing industry, through five decades or more, can be directly linked to escalating labour rates. Those pay increases were extracted from companies by short-sighted union leaders unable to see that their demands would a) directly put up the price of products and b) starve R&D budgets - the effect of both being to make their companies' products less competitive.
The recent resurgence has arisen primarily through foreign investment (Japanese, German and Indian) being ploughed into highly-automated factories, where a consequently low head-count outweighs high wage rates.
Recommended reading (for those with a stomach for gloom and doom: 'The Slow Death of British Industry' by Nicholas Comfort, from Biteback Publishing.