Jaguar Land Rover’s new plant likely to boost UK engine production by around a third

THE revenue generated by engine manufacturing in the UK is expected to increase by up to £2.5bn in two years, boosted by new developments like the opening of Jaguar Land Rover’s new £500m engine plant.

The Society of Motor Manufacturers and Traders said if the impetus could be sustained then turnover would increase by almost one third (31%).

Over £1bn has been invested in UK engine production since 2011 and forecasts suggest that the value of engine manufacturing will increase to £10.5bn by 2016.
 
The industry has seen a spate of new investments come to fruition this year alone. In addition to JLR’s i54 plant, there is also Ford’s £490m low carbon engine development in Dagenham and the investment by BMW into its own engine plant in Hams Hall.

The SMMT said these were all helping to ensure that the UK retained its position at the cutting edge of powertrain development and production.

Development programmes like these would help total UK engine output surpass three million units per year, increasing volumes by more than a fifth over current levels, it added.
 
Mike Hawes, SMMT Chief Executive said: “Recent events, such as the opening of Jaguar Land Rover’s new engine facility and Ford’s new engine range are clear evidence of the UK automotive industry’s intention to become a leading force in the design, development and manufacture of engines.
 
“The recent success is testament to the expertise of UK engineers, a flexible workforce and the competitive and supportive business environment. It will create more jobs, bolster the supply chain and help attract overseas suppliers back to UK shores.”
 
In 2013, the UK produced 2,553,316 engines, of which 60% were exported to overseas markets. Overall, UK automotive manufacturing generated £64bn turnover last year, adding £12.4bn to the economy.

More than 770,000 UK jobs are dependent on the sector, which has seen nearly £13bn investment announced since 2011. In the coming years, UK car manufacturing is expected to surpass the current record production level of 1.9 million units in a year, which was set in 1972.

Local suppliers

Within the West Midlands, the Manufacturing Advisory Service (MAS) has been working with local suppliers to ensure they can meet JLR’s increasing demands.

Speaking on the opening of the new plant, Lorraine Holmes (left), MAS Area Director, said: “This is a massive day for the West Midlands automotive industry and a fitting milestone in our emergence as a renewed global manufacturing force.

“JLR’s decision to locate its engine plant here is a clear indication of its commitment to the region and its appreciation of the skills we possess and the appetite we all share to make it a huge success.

“More importantly, it is providing some fantastic opportunities for the supply chain to either increase volumes or become a supplier for the first time and this is already creating new jobs across the area.”

The support body has also been working with other organisations like the Automotive Council to promote the ‘Made in the UK’ brand and to influence a new report that will identify extensive opportunities further down the automotive supply chain.

‘Important to be realistic’

Mike Haynes (left), Professor of International Political Economy at the University of Wolverhampton, said the arrival of the new plant was a welcome boost for the West Midlands in what was still, an uncertain economic climate.

“The speed of the building of the plant and the remodelling of the road system has been remarkable. When the plant is fully operational it will be producing cylinder heads, blocks and crankshafts and assembling petrol and diesel engines at the rate of nearly two a minute. This will help the JLR luxury brand compete globally with the likes of BMW, Mercedes and Audi,” he said.
 
He said what was being made at the plant was also important.

“The engines from this plant will replace those that have been brought in from Ford. Enthusiasts hope that this will be the basis of a local reinvestment strategy in skills and technology which will help local economic recovery and boost local engineering,” he said.
 
Outlining the plant’s plant in JLR’s global manufacturing strategy, he said it was important to be realistic.

“There is an irony in the fact that this huge investment ‘in Britain’ and the ‘West Midlands’ is being done by JLR’s owners – the giant Indian conglomerate Tata. Tata seems to have the cash, foresight and appetite for risk that has been lacking under JLR’s previous owners. But the global car market is fiercely competitive so Tata’s strategy, and within it JLR’s, is a global one too. Alongside the West Midlands, production is also being geared up in several other parts of the world including Brazil and China,” he said.
 
“The luxury car market is vibrant. This is partly because the world is getting a richer but much more because the rich are getting richer a lot faster still. Most of the JLR cars ‘made in Britain’ will go for export to feed the appetite of the super-rich, what their critics call the 1%,  and not least those in the BRICS – Brazil, Russia, India and China.  
 
“And we need to be realistic about the production process too. A half century ago, when the Midlands car industry was at its peak, supply chains were local – now they tend to be global. So while there will be a boost in terms of some Midlands produced components the fact that much of the work of the i54 plant will involve assembly is also important.”

He also said it was important to retain a sense of perspective about the number of jobs which would be created by the new plant.

“(This is) something that economists call capital intensity,” he said. “This is the balance between workers and machines. Once manufacturing employed millions because machines needed a lot of people to feed and operate them. But technological change means that machines have become more sophisticated. Capital intensity has risen. Any manufacturing renaissance, nationally or locally, is unlikely therefore to produce an enormous job boost.
 
“We simply do not know how much the plant has actually cost and how many jobs will be created. But assume that the publicity figures are right and the plant does cost £500m and will create 1,600 jobs. Then crudely this means that the amount of capital per worker is around £300,000. This is huge in global terms but increasingly commonplace in the advanced countries.  

“As manufacturing output increases, the number of workers employed to make it is diminishing.   When the plant is fully up and running, therefore, it will be interesting to see how the workforce figures break down between production workers and office staff, security guards, cooks and cleaners.”