Advanced engineering firms boosted with £25m fund
A £25M fund is set to provide vital investment for SMEs operating in the advanced engineering supply chain.
The Greater Birmingham and Solihull Local Enterprise Partnership joined forces with three other LEPs from across the UK to bid successfully for the £25m, which has been released as part of the second round of settlements from the Government’s Regional Growth Fund.
The Greater Birmingham LEP said the funding would ensure the supply chain sector could continue to take advantage of growth initiatives such as the expansion of Jaguar Land Rover, which has recently announced plans for a £355m engine plant north of Wolverhampton.
This application is the first time a group of LEPs has jointly applied for an RGF grant. In addition to Greater Birmingham and Solihull, the consortium comprises the LEPs representing the Black Country, Coventry and Warwickshire and Liverpool City Region – all areas where JLR has a presence.
The bid process was coordinated by Birmingham City Council and inward investment programme Business Birmingham. The funding, in the form of a repayable grant, will be awarded to advanced engineering suppliers based in the LEP areas and which require finance to fulfil orders.
The grant provides approximately 10% – 20% of the funding required by suppliers to prepare for orders. This reduces the level of risk for other lenders, making it more likely the supplier will be able to access the remaining funding required – boosting levels of inward investment into the sector.
As the grant must be repaid, it is renewable funding and will be used repeatedly to provide liquidity for a number of businesses in the supply chain.
Once firms receive a customer’s order, it can take several months to build up the workforce, invest in the tools required and then make the products that have been ordered. The funds will be used to tide firms over to ensure they can fulfil the orders.
Andy Street, chair of Greater Birmingham and Solihull LEP, said: “This bid for funding was shaped by a sector-led economic strategy for the benefit of the UK’s advanced engineering industry, rather than one specific region. Together, the LEPs identified an immediate need for these SMEs to receive finance, which will provide them with enough capital to take more orders and encourage job creation.
“By lowering the risk of investing in local supply chains, this funding will help to boost foreign direct investment into the LEP regions. It will create opportunities in a wide range of sectors, from aerospace and automotive to manufacturing and low-carbon R&D, further cementing the UK’s position as the leading European destination for inward investment.”
His counterpart in Coventry and Warwickshire, Denys Shortt, added: “This has been designed to boost cross-border economic growth for companies, particularly in the automotive and aerospace industries, with the specific aim of boosting economic growth. Our High Value Manufacturing Focus Group has worked very hard on this bid – along with partners – so this news is very welcome.”
Mike Whitby, leader of Birmingham City Council, said: “This renewable grant sets a precedent for a new type of finance, particularly for SMEs. At a time when many companies are struggling to secure funding through traditional routes, this kind of grant provides new opportunities for businesses development and economic growth, and a template that other sectors and LEPs can use.”
