Investment in engine production set to yield auto industry £2.5bn
MASSIVE investment in new engine production facilities is set to be worth £2.5bn to the automotive industry in the coming years, leading trade body The Society of Motor Manufacturers and Traders has said.
Jaguar Land Rover is the principal investor, having ploughed £500m into its new production centre at the i54 site near Wolverhampton.
The new plant, officially opened last autumn by HM The Queen, will give JLR greater control over its overall production operation. The plant’s Ingenium engines are set to power its new XE saloon, which goes on sale in the spring, while the same power unit is expected to be fitted in the newly-announced Jaguar F-Pace crossover.
However, it’s not just JLR that is ploughing money into engine production. Fresh investment has also gone into BMW’s plant at Hams Hall, while Ford is also looking to grow its operation.
The move has been welcomed by SMMT chief executive Mike Hawes, who said the outlook for UK engine production was very strong.
He was speaking as new figures showed engine manufacturing output returned to growth in December, up 6.7% on the same month in 2013.
However, over the course of 2014 output overall fell by 6.2% compared with 2013. This followed retooling at a number of facilities and a reduction in demand due to the slowdown in the Eurozone.
Nevertheless, Haws said: “Last year was one of underlying positivity for UK engine manufacturing with full year output down on 2013, due to retooling for new products at a number of plants.
“Investment exceeding £1bn over the last few years from manufacturers, including BMW, Ford and Jaguar Land Rover, is expected to add £2.5bn to the sector’s turnover in the coming years. This is beginning to manifest itself in monthly output growth,” he said.
In total, 2,394,668 engines were produced last year (2013: 2,553,316), with 62% of these destined for export.
There was also better news on the commercial vehicle front during December, with production rising 12.6% – the first month of growth since July 2013.
Growing domestic demand is thought to have been the main driver of growth.
Nevertheless, over the course of the year output fell 19.7%, with the number of vehicles exported falling by 27% compared with 2013.
“The growth of commercial vehicle manufacturing output in December represents a turning point in the sector’s fortunes,” said Hawes.
“A ramping up of new model production, as well as a thriving home market, is expected to yield a stronger 2015, while the effects of restructuring in 2013 will no longer be felt.”
The SMMT’s figures such 70,731 CVs were produced last year (2013: 88,110), with 35,909 (2013: 40,200) destined for the home market, a fall of 10.7%. Exports vehicles declined to 34,822 (2013: 47,910).
