A new Automotive Council report, to be presented to the UK automotive sector at the Society of Motor Manufacturers and Traders (SMMT) Open Forum on Wednesday (18 March), has revealed a big jump in demand from British vehicle manufacturers for British made components.
Domestic component suppliers saw a 19% year on year rise in sales to British vehicle manufacturers in 2014, according to the report.
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The figures “represent a turnaround for UK automotive supply chain, and a boost to local companies”, the SMMT said.
“The figures are an important step in the right direction for the UK automotive supply base,” the SMMT added, noting that around one third of the components in a UK-built car are sourced locally compared to over 90% in the mid-1970s. However, vehicle manufacturing in the UK is undergoing rapid growth – British car production has increased by over 50% since 2009 (up 1.2% year on year to 1,528,148 cars in 2014), and this is creating new opportunities for domestic suppliers.
The report, Growing the Automotive Supply Chain – The Opportunity Ahead, will be presented at the Open Forum in Leicester – a day where hundreds of automotive companies from across the country come together to discuss business opportunities.
SMMT chief executive Mike Hawes will tell senior industry executives: “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 vehicle manufacturing, and these figures show that positive strides are already being made.
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By GlobalData“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.”
Nifco – a plastics supplier to vehicles makers 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.
Managing director Mike Matthews 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 GBP75m company by 2016 and GBP100m by 2018. We are moving our offer on, working closer than ever with our customers to develop products that help them to innovate.”
General Motors’ new Luton-built Opel/Vauxhall Vivaro van is 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% than its predecessor’s 16%. This means an extra GBP600m will be spent with British suppliers, allowing local companies to expand – and in some cases it has saved whole factories.
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 at four manufacturing locations in the UK. Significant recent investment into expansion at sites in Sunderland and Wales has secured and created 351 jobs.
CEO and chairman James Davies said: “This report confirms what we are all experiencing – the increasing success story of the UK automotive supply chain. [Our] 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.”
According to the SMMT, much of this success can be attributed to UKTI’s Automotive Investment Organisation (AIO) which was set to bring more foreign investment into the UK automotive sector. Since 2013, AIO claims to have secured or created over 10,000 jobs, and delivered more than GBP768m of investment into the UK supply chain.
The report also identifies a further GBP4bn per year opportunity for UK automotive suppliers to expand their business in future.
