Auto firms facing difficulties maximising JLR opportunities

AUTOMOTIVE component firms in the West Midlands face a difficult task in maximising opportunities presented by the £1bn extension of orders from Jaguar Land Rover.

Many firms need investment if they are to reach the production and quality specifications outlined by the motor manufacturer.

However, many firms continue to find difficulties accessing the finance they need in order to improve their businesses.

The Greater Birmingham and Solihull Local Enterprise Partnership, in collaboration with LEP partners in the Black Country, Coventry & Warwickshire and Liverpool, has pledged its support to the firms.

It has said the £25m it is responsible for administering as part of Stream 2 of the Advanced Manufacturing Supply Chain initiative will be ringfenced for firms in the four areas.

The RGF-funded initiative is specifically designed to help manufacturers, especially those in the automotive industry, secure greater access to finance.

Paul Heaven, chair of the LEP’s business support sub-group and managing director of Blue Sky Corporate Finance, said: “A lot of firms are continuing to experience problems accessing finance and the reason is the world of finance has become more complicated.

“Many will be finding loan-to-value ratios being squeezed for things like new factory development, while funding for additional plant and machinery may be a little higher but is still below what it was.”

He said due to this many firms were reluctant to commit themselves to new investment.

Applications to the AMSC will be assessed by the Technology Strategy Board once the application process closes on June 13.

Firms trying to access the fund have to make a minimum application of £200,000 and then undergo a process of due diligence to assess whether they are suitable.

Stream 1 of the AMSC scheme is worth £100m and Finance Birmingham, the Birmingham City Council loan scheme initiative set up last year, is a delivery partner responsible for the financial appraisal of applications.

Applications to this stream must be for a minimum of £2m and therefore not as appealing to many of the smaller firms in the supply chain unless they opt to band together as part of a consortium.

However, Finance Birmingham said the initiative was proving popular and it had already received around 100 inquiries. The number of application won’t be known until the cut-off date.

Organisers have sought to reassure firms looking to apply that their submissions will be considered fairly.

The scheme is also supported by the likes of JLR and is backed by many leading banks.