Vehicle manufacturer purchasing managers have described the challenges facing the UK supply chain and frustrations they face in dealing with suppliers.
Speaking at a recent industry conference (the SMMT’s Open Forum event in Birmingham) the purchasing managers from Tata-owned Jaguar Land Rover (JLR) and General Motors addressed delegates on their requirements from suppliers and the challenges facing the UK automotive supply chain.
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Ian Harnett, Executive Director of HR and Global Purchasing, at JLR, said that his company is now focused on a global growth strategy, with manufacturing operations being set up in places such as China, India, Brazil and Slovakia, as well as contract manufacturing in Austria (with Magna Steyr).
He said that the ownership of Tata has brought JLR the security to develop and implement a strategy of “long-term sustainable growth for Jaguar Land Rover and all those that supply us.” He said that orders for the Jaguar F-Pace are already at 25,000 and that it will be an “outrageous success” while orders for the niche Range Rover Evoque Convertible are at 3,500 (half of the first year production plan). “The niches we are entering act as disrupters for others and drive further volume growth for us,” he said. Analysts forecast that the company could grow its annual output over 1m units in the medium term as new plants come on stream around the world and new models are added to the product portfolio.
Harnett outlined major investments in plant and new models and highlighted the new JLR engine manufacturing facility at Wolverhampton. “It’s a brand new engine factory, with a brand new engine. We are no longer dependent on other people to supply our power units. We spent around a billion pounds developing the Ingenium engine and the factory.”
He also pointed out that the UK produces more engines than it does vehicles, but lacks capability in engine parts. “That is a very strange phenomenon,” he said. “If I look around the country at my supplier base, I don’t have that many powertrain factory or suppliers and that’s something that we need to look at. Everybody is making engines here, some people just make engines and no cars. If we take the whole number of engines that are made here, there has to be critical mass now to get the powertrain suppliers to look at what makes sense to manufacture here.”
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By GlobalDataOn a more positive note for the UK supply chain, Harnett said that JLR is investing, as a strategic partner, some GBP150m in the UK’s National Automotive Innovation Centre based at Warwick University. It will open in 2017 and will employ 1,000 people – researchers and engineers – devoted to developing advanced emerging car technologies. “That will supplement our existing R&D and engineering activity,” he said.
He also told delegates that although JLR is planning rapid growth in overseas markets, the heart of its operations – engineering, manufacturing, purchasing, logistics, finance and all essential support functions – will all stay in the UK.
Raised local content at Jaguar
Harnett said JLR sits on the Supply Chain Working Group of the Automotive Council and that the UK supply chain has “considerably strengthened” in recent years. “The XE, XF and F-Pace at Jaguar have all achieved 55% UK supply sourced content. That is a 5% improvement since 2014 when our average was 50%. We recognise the benefits of having local suppliers where we can; it can reduce cost and increase responsiveness if change our minds about things.
“We are a global company, so we will make sure that we have a competitive supply base. The fact that we are shopping globally and have got to 55% is testament to the strength of the UK supply chain. It can compete and it can win.”
Harnett also said that some relatively small UK suppliers to JLR are now enjoying rapid growth on the back of increased orders from JLR.
“And we are also attracting international companies,” he said. “Magna International has announced a new world-class aluminium casting facility for Telford; there will be up to 295 new jobs. It’s based around JLR business and our growth plans. I remember foundries shutting down over the years and this is the first time I have seen a foundry opening up in the UK with significant investment. Similarly, Plastic Omnium have opened up a new facility in the West Midlands to supply plastic tailgates for JLR. They have also opened up a new paint facility in the northwest to support our Halewood operations.”
He also said that human capital is important; Bosch has set up an engineering team in the UK that is dedicated to supporting JLR. “They have taken some space at the Warwick manufacturing centre, so now we have the best of everything. The knowledge and the thinking from Warwick; the finest German engineering, matched with the finest British engineers at Coventry and Gaydon. It’s a perfect combination.”
Harnett said that the UK supply chain is in a positive position, with average local content edging up, despite some gaps in supply capability. However, he warned that “the rest of the world will not stand by and stay put. We need more improvements in productivity. And we need more training – people are a vital resource. We need the right skills in the right areas.”
His message to suppliers was to “offer the best value proposition, ensure that quality is exemplary and please make sure that capacity is available [to meet JLR volume plans].”
“Talk to us”
“I recall the days when we over-called volumes,” he said. We don’t do that anymore; we generally under-call them. And then the risk is parts shortages, gaps on the line. We cannot afford gaps on the line. The factories working by the end of this year will all be in three-shifts, fifteen shifts a week. And if we need to, we will work at weekends to satisfy demand. We need suppliers to deliver on commitments and not disrupt the supply chain. If you have an issue, talk to us. We are not scary. Well, maybe a little, but not too scary. If you tell us, we can fix things, change things, work with you. Please, no surprises – unless they surprise and delight us. Bring us your new ideas, bring us technology, bring us something that is different.
“And also when you respond to us, give us some options. Options are good because that gives us a choice on which way to go.”
Other speakers at the conference also said that the UK’s automotive supply chain needs to focus on being globally competitive – in terms of unit cost and quality. There is also a need to be able to support low volume OEMs as well as high volume ones.
Know your OEM customer
Mick Aiers, Purchase Manager at General Motors (Vauxhall), told the conference that he would like prospective suppliers to know more about his company’s operations and the global and regional context to the business. He painted a scenario. “What do you know about GM? If it’s not very much, the conversation becomes difficult after that point. My expectation is that you know something about us, GM. If you are going to be supplying Vauxhall, you’re not just going to be supplying Vauxhall. You are likely going to be supplying a number of plants around Europe. You better know where they are. It would be handy if you had someone who could speak the language in those countries. And once you have done that, you need to illustrate, fairly succinctly, why we should do business with you. I am perfectly happy with our supplier base. There is some work to be done, no question, but what is it that you are going to give us? Telling us that your price is great is really not going to tell me to tell my engineering colleagues to start talking to you.
“Go out and do some benchmarking. Go to a dealer and buy some of the parts, see if they are competitively priced. It’s that kind of thing that you need to be doing before you approach us.”
See also:
JLR’s internationalisation strategy continues – Analysis
Why raising UK local content won’t be easy – Analysis
ANALYSIS: Slovakia plant could lift JLR over 1m a year
