At first glance, some of the headlines relating to the UK automotive industry in 2007 were not exactly positive: Jaguar losing money and put up for sale by owner Ford along with Land Rover and Aston Martin; a small but well-known specialist manufacturer, TVR, shut down; ongoing uncertainty whether car production would ever start again at Longbridge following the demise of MG Rover.

The wider industry situation, however, tells a rather different story; not only about car, commercial vehicle and components output, but also about the continuing attractiveness of the UK as a manufacturing base.

BMW announced in September at its MINI plant in Swindon, South West England that following a £200 million investment and the creation of 450 more jobs, MINI output would top 200,000 for the first time in 2007 and go on to reach 240,000 over the next few years.

Engines for the new models are no longer being produced in South America, but at BMW’s Hams Hall engine plant near Birmingham. The proportion of UK-made content in the cars has risen from 40 per cent to 60 per cent, providing another vote of confidence in Britain’s components industry. Indeed, the Hams Hall facility also produces all engines of below two litres for BMW cars as well as MINIs. The MINI operations have almost doubled their total head count to 4,700 since 2001.

Meanwhile Rolls-Royce, also BMW owned, is expanding its range and output at a plant at Goodwood in southern England. “We have invested a lot into the country,” says Ian Robertson, the company’s chairman and chief executive. “The business case works for us.”

Meanwhile Nissan’s car plant at Sunderland in North East England, for more than a decade the most productive car plant in Europe, has been chosen by its Japanese parent as one of only two company global training centres for manufacturing excellence. It is a tremendous accolade for the facility, which will train senior Nissan production staff from Europe, India, the Middle East and South Africa in the lean manufacturing techniques which have given Japanese car makers such global competitive advantage. Sunderland’s trainees, in turn, return to their own countries to raise the manufacturing skills of their own workforces. “It shows a huge amount of confidence in our ability,” says Kevin Fitzpatrick, Sunderland’s deputy managing director.

Ford has recently invested £129 million at its Southampton plant to produce a new Transit van which, for the first time, has been completely designed and developed in the UK. It has also continued to plough investment into Jaguar and Land Rover, with a total of £700 million at Land Rover’s Solihull plant for new models and factory upgrading even though the main beneficiaries will be new owners.

As 2007 was drawing towards its close, potential investors from India and the Gulf states were among those submitting bids for some of the best-known ‘heritage’ brands in the world. A group of Kuwaiti investors led by David Richards, chief executive of the internationally known Prodrive automotive engineering group, had already snapped up the luxury sports car maker, Aston Martin.

One of the biggest accolades for the UK’s advanced automotive skills, however, has come from Bahrain, whose state investment vehicle has acquired a 30 per cent stake in the famous McLaren racing and engineering group. “McLaren is first and foremost an investment, and a strategic one”, says His Highness Sheikh Salman bin Hamad al-Khalifa, the Crown Prince. “As a company it is aspirational to all our people the minute you start cross-pollinating managers, ideas and business practices then we have opened up a wholly new potential for Bahrain.” There remains, however, no sense of complacency about the ongoing need to further develop workforce skills and intensify research and development. A number of UK government-backed initiatives are in place nationwide to concentrate the UK automotive sector on the higher value-added business on which the UK sector will increasingly depend. “The UK has got to do the higher value-added stuff,” says Peter Cooke, KPMG automotive professor at Nottingham Business School. A big factor in its favour, he stresses, is the country’s very flexible, highly trained workforce. That is certainly a view shared by Honda which has recruited 700 extra employees to increase output at its Swindon plant in Wiltshire to its full capacity of 250,000 units a year. Of all motor industry activities in the UK, however, it is the arrival of Chinese investors on the scene that will be most closely watched. China is already the eighth largest inward investor to the UK and after a number of delays, the purchaser of the assets of MG Rover, Nanjing Automobile Corporation, finally resumed limited production of MG sports cars at Longbridge late in 2007. Wang Hongbiao, chairman of NAC’s UK operation, has praised the attitude of the workforce in resuming production and is tapping into the UK’s design and engineering skills by using a British facility as the nerve centre for new model research and development. The plant would produce 25,000 cars a year in 2008 and more than double that by 2010, according to Mr Wang. Nanjing is also in merger talks with another major Chinese car maker, SAIC, which is already making its own versions of cars bought off the MG Rover receivers. The UK is looking at, in short, the rebirth of MG Rover under another and for other wary European car makers potentially much more competitive name.

CONTACTS
Department of Trade and Industry
Automotive Unit
Tel: +44-(0)20-7215 1066
Fax: +44-(0)20-7215 1181
E-mail: info@autoindustry.co.uk
Web: www.autoindustry.co.uk

MIRA Ltd
Tel: +44-(0)24-7635 5000
Fax: +44-(0)24-7635 5355
Email: enquiries@mira.co.uk
Web: www.mira.co.uk

Motorsport Industry Association
Tel: +44-(0)24-7669 2600
Fax: +44-(0)24 7669 2601
Web: www.the-mia.com

Society of Motor Manufacturers and Traders
Tel: +44-(0)20-7235 7000
Fax: +44-(0)20-7235 7112
E-mail communications@smmt.co.uk
Web: www.smmt.co.uk
 

Back to Sector Report Contents