Issues Facing the UK Automotive Industry Professor Neil Barlow Chief Executive, Northwest Automotive Alliance
Background • Northwest Automotive Alliance (NAA) was established in 2004 to support the automotive manufacturing industry in the Northwest of England • NAA is a cluster organisation based on an alliance of major companies in the Northwest including Leyland Trucks (Paccar), Vauxhall Motors (General Motors), Jaguar/Land Rover (Ford) and Bentley Motors (Volkswagen) • Strategy focussed on a number of areas: • Supply chain development • Workforce development • Innovation • Internationalisation
Overview of Presentation • The Global Market • Challenges Facing the Industry • UK Response • The Future
UK Sector • The UK has the most diverse range of car producers of any country in the world – General Motors, Ford, Nissan, Toyota, BMW, Volkswagen, Honda and Peugeot. • UK has a wide range of specialist producers serving niche markets such as sports and track day cars, classic replicas and even an amphibious car manufacturer • Over a thousand automotive component suppliers are manufacturing in the UK • The automotive manufacturing sector contributes around £8.4bn added value to the economy which accounts for 1.1% of UK GDP • The industry in the UK employs some 237,000 people and has an annual turnover of some £46bn • It accounts for 9.5% of total UK exports (72% of total UK car production is exported).
Global Issues • Over capacity • Legislation • Competition
UK Issues • The majority of UK based vehicle manufacturers including those with outstanding productivity records are making losses • There is a major switch by VMs and tier one suppliers to source parts and materials from low cost countries • Many UK suppliers are falling short in key respects: • inadequate investment in both plant and equipment and product development • poor customer focus • shortage of skills • UK Employment Law makes it easier to close UK manufacturing plants ??? • Energy costs increasing substantially • Location re rest of Europe – we are still an island !
UK ResponseAIGT Report 2002: • National Supply Chain Groups • Automotive Academy • Centres of Excellence • Foresight Vehicle Programme
Supply Chain Groups • £15m support from DTI matched by £15m company cash/in-kind • Support for a host company to work with it’s UK based suppliers to improve the competitiveness of the whole supply chain (minimum of 8 suppliers) • Main output – improved value added and QCD improvements • 50 Supply chain group programmes established with some 400 + companies participating • Averaging an eight fold return on investment per supply chain project
Automotive Academy • Industry led • Set up to promote globally competitive standards of training and skill development for the UK automotive industry • Developed specific programmes for the industry: • Lean Manufacturing • Business Improvement Techniques • Team Leader Training • Graduate Development • Automotive Leaders • Executive Programme • ISO/TS16949 • Working with providers to build their capacity and capability to deliver these programmes in UK regions
Centres of Excellence • Low Carbon and Fuel Cell Technologies, • Transport Telematics and Technologies for Sustainable Mobility.
Foresight Vehicle Programme • Engine/Powertrain • Hybrid, Electric, Alternatively Fuelled Vehicles • Software, Sensors, Electronics and Telematics • Advanced Structures and Materials • Design and Manufacturing Processes
The FutureMore complex cars, built faster and cheaper: • Restructuring of the supply chain - more integration, mergers and alliances • More outsourcing of sub-assembly • Continued development of flex plants • More differentiated product • More use of common platforms • Shorter lead times • Diversification into finance, insurance, car hire, servicing and leasing