Britain’s Society of Motor Manufacturers & Traders (SMMT) Meet the Buyer event in London’s rejuvenated docklands area this week was an apt choice of venue given the topics up for discussion.
Some forty years ago, this part of East London was a derelict wasteland, the docks were closing and the smart port money was moving to more competitive, strike-free and socially harmonious areas of Europe and elsewhere.
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Much as in some parts of Detroit today, the place became a self-fulfilling black hole, a vortex sucking in unemployment and despair, a downward spiral of economic difficulties as jobs moved out and decay moved in.
At the apex of all this gloom was the Conservative government led by Margaret Thatcher and which had come to power in 1979 promising to end the UK’s image as the ‘sick man of Europe.’
In practice this involved some painfully radical surgery to the British economy, which resulted in often State-funded, nationalised industries being forced to adapt to the realities of the market and engendering massive unemployment as a result.
One casualty of that brutal – but in many people’s eyes long overdue – medicine – was the docks area of London in which the ghosts of Statism were long ago eliminated and which has now become a glittering series of edifices and water as a result of – to many people’s surprise – Conservative backing.
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By GlobalDataThe legacy of that earlier challenging era was evoked at the SMMT event by former Ford of Britain chairman, Joe Greenwell, who used the occasion to remind delegates of the huge challenges facing the UK supply chain as it looks to recover ground lost a generation ago when the British economy moved largely from manufacturing to service-led industries.
Greenwell – now chief executive of the Automotive Investment Organisation (AIO) – highlighted the vast gap between locally-sourced British components – around 35% – and that of Germany with 60%.
“Our primary responsibility is to stimulate supply chain growth, recognising we have quite a lot of success with OEM investment,” said Greenwell in London.
“The difference between local content in the UK and Germany is quite significant and our task is to try and narrow that gap.
“The AIO has not made an assumption because OEMS are investing heavily, the supply chain, which has been hollowed out over a 35-year period, would necessarily follow.”
Rejuvenating the UK supply chain to encourage British sourcing, to redress that hollowing out, is not going to happen overnight, but the AIO is working strenuously to encourage foreign direct investment (FDI) through overseas suppliers to set up shop in the UK.
Part of that encouragement can be seen in the recent announcement by Sunderland City Council it will create a 100-hectare International Advanced Manufacturing Park (IAMP) as part of a City Deal.
The park is predicted to attract GBP295m (US$502m) of private sector investment and create an estimated 5,200 new jobs, targeted towards automotive, off-shore and other hi-tech businesses as Sunderland-based Nissan goes from strength to strength.
The AIO is government-funded and with the UK now less than a year from a general election the SMMT is keen to emphasise it expects the incoming administration – of whatever colour – to continue its support of the apolitical sector with the potential to generate concrete jobs and boost manufacturing.
UK Business Minister, Michael Fallon, who has won praise from overseas component associations such as Scandinavian supplier body, FKG, for his interest in the automotive sector, also used the SMMT event to announce a new GBP24m automotive supply tooling fund initiative.
“We can’t produce GBP24m every day,” Fallon told me, but this government has genuinely backed up its political rhetoric with some hard cash.
The tooling finance will originate, 50% from the Regional Growth Fund (RGF) and 50% from the West Midlands Pension Fund.
“It is creating and safeguarding a number of new jobs,” Fallon added. “I hope that demonstrates just how serious we are about the automotive sector and [we are] determined to make sure it has all the support it needs to prosper.”
It will take more than a politician’s wish list to address the UK’s underlying challenges of regenerating manufacturing on the lines of a generation ago, but 27 consecutive months of unremitting automotive growth is a massive step in the right direction.
The docklands area today is unrecogniseable from its past and although architectural cues are still there in the cranes and warehouses, they invariably form part of a modern craving to identify with an industrial past without all the soot and grime actually associated with it.
The area – no longer the preserve of the ludicrously rich – now has infrastructure and – crucially – people – living in it – this is no disneyland utopia any more.
Such regeneration is high on this government’s – and I dare say on any future adminstration’s – wish list to encourage British industrial know-how and demonstrate real committment through such bodies as the Automotive Council.
There is a groundswell of cross-party support, backed by the UK Treasury and private finance initiatives, as well as a resurgent British automotive industry, to hope the dockland’s rebirth is a metaphor for the sector as a whole.
The politicians will fervently hope it won’t take another generation to recover the UK’s manufacturing prowess of the 1970s heyday.
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