The state of the automotive industry in the UK

The automotive industry in Britain is alive and well and still a major global player, Professor Garel Rhys, director of the Centre for Automotive Industry Research, told delegates at a seminar looking at the future of the UK automotive industry, hosted and organised by Corus, a leading material supplier to the industry. The annual event attended by representatives from many of the UK's leading automotive tier-1 suppliers was held at Corus' Port Talbot plant on Thursday 13 October, 2005. Professor Rhys stressed to delegates that 28% of UK car plants' output was bought in Britain and that over 72% was exported.
'The automotive industry accounts for 9.5% of UK manufacturing exports by value and UK factories turn out 3% of the global production and 9% of European production, with GBP 8.5 billion added to the UK economy'.

Source Manufacturing Talk

This optimistic presentation needs to be seen in context. The talk was directed at UK tier one automotive component suppliers, and hosted by Corus. Professor Rhys went on to point out that:
“Nissan in Sunderland, Toyota in Derby and Honda in Swindon are the top three car plants in Europe and envied in other parts of the Continent.”
It is notable that the top three car plants in Europe are all Japanese (albeit Renault own 45% of Nissan), and we are fortunate to have them located in the UK.

It is important to the overall strength of our manufacturing base to have a viable motor industry. The automotive industry accounts for 9.5% of UK manufacturing exports by value and UK factories turn out 3% of the global production and 9% of European production, with GBP 8.5 billion added to the UK economy. However what is probably even more important is the component sourcing policies of the Car Manufacturers. I have increasingly in the past two years seen UK engineering companies lose business to new plants located in Eastern Europe, where lower labour costs and overheads enable them to offer much lower prices. Professor Rhys quite rightly pointed out that to stay ahead of the competition we need to invest more in research and development. To fund R&D companies need to generate healthy profits, and the irony is that the price pressure on the automotive component manufacturers (who he was addressing), is such that profit margins are very tight or non-existent.

Traditionally the car producers have “squeezed” the component manufacturers who in turn have put price pressure on the steel suppliers. In an unusual turn of events in 2004 the component manufacturers found themselves caught between a “rock and hard place” as steel suppliers became bullish on prices and the car producers resistant on increases. The component industry is not an easy business to be in.

Maybe we should appoint Jeremy Clarkson as Minister for Manufacturing. Whilst he might not be a fan of British cars (but according to the statistics quoted by Professor Rhys, most Brits aren’t), as a champion of British Engineering it would be difficult to find an equal. Oh and as a bonus he’s taken up fishing! And he smokes! Bugger it let’s make him Prime Minister on the electoral “ticket” I WON’T BAN STUFF!