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UK industry body says things are picking up.

Publication: 
Editorial Staff
chiefofficersnet

With an increase in purchasing in the automotive sector from GBP20,600 million in a survey in 2011 to GBP23,600 million in the 2012 survey, The Automotive Council says that there are signs that things aren't so bad.

To be fair, there are obvious bright signs of hope: Jaguar-Land Rover is reaping the rewards of the last years of Ford's R&D and TATA, which moaned that its spend was too much is has recovered its costs in full and is now planning a new factory, in part due to the success of the Range Rover Evoque - a car that is singularly un-photogenic but extraordinarily good looking in real life.

Business Secretary Vince Cable, who has remarkably little grip on many of the topics he addresses, is co-chairman of The Automotive Council. Referring to the report he said "The strength and depth of the supply chain has not been keeping pace with the level of investment we’ve recently seen by vehicle manufacturers in the UK. Growing capacity in the automotive supply chain or bringing it back from overseas is a priority."

The UK produces approximately 2.5 million engines for mass produced vehicles (let's leave out the really clever stuff like racing equipment, shall we?) and that generates sales of engine parts of approx GBP540 million. It's not a lot - which is why Cable and his co-chairman Prof Richard Parry-Jones (who does know what he's talking about) are trying to hype the figures. The wish (it's probably not quite a hope) is that the supply chain will work to generate, in the UK, home-made batteries, exhaust systems and so on. They hope that the UK can leverage its skills base to make high-value forgings and castings.

But that may be a vain hope: the raw materials have to be shipped in, high labour and technology costs make mass production in the UK marginal.

But - and it's a very big but - Nissan is expanding in the UK, Rolls Royce and Bentley are selling more cars than ever and they have even seen off the only viable challenger, Maybach which Mercedes has abandoned. And provided the capital is consistently available, things are looking decidedly rosy at Lotus.

Parry-Jones hopes that the UK can be a centre for technical R&D and the production of components for electric vehicles but in that it will need to compete with China and its plans to move SAAB into exactly that market, except that SAAB will actually bolt all the bits together and sell entire cars.

Cable and Parry-Jones are setting out to show that the report their Group has authored is demonstrating a rosy future. Put into perspective, the 2012 report describes an industry-wide turnover of less than two thirds what the tax-payer pumped in - in the first round of helicopter financing - to keep the banking sector afloat.

It may be that their wishes are based on an industry that is struggling to come out of a long-term crisis. Don't get too excited but they might actually be right. To a point: it's never again going to be a truly large industry in the UK.