Vauxhall boost for Midlands as car production grows

CAR manufacturing rose by 9.3% in April, and was up 11.8% over the first four months of the year, latest figures show.

The Society of Motor Manufacturers and Traders said production levels were boosted by strong export demands.

The figures followed swiftly on from the announcement by General Motors that it is to build the new Vauxhall Astra at its Ellesmere Port plant – a decision which is expected to boost around 80 component suppliers in the West Midlands and safeguard the jobs of more than 2,000 workers.

The West Midlands suppliers are involved in the production of doors, frames, locks, insulation and seat components along with fasteners and electronics. The improving business follows on from the announcement earlier this month that Jaguar Land Rover is to create an additional £1bn of orders for the component industry to support production of its best-selling Evoque model.

Demand for the baby Range Rover is thought to be one of the factors driving up the car industry’s producion volumes.

Aside from car production, there was more encouraging news for commercial vehicle production which rose by 3.2% last month; although it still remains 9.2% down over the January-April period.

Engine production also rose, up 1.2% in April and was 1.7% over the year-to-date.

Paul Everitt, SMMT Chief Executive, said: “UK manufacturing of cars, commercial vehicles and engines increased in April, boosted by strong export demand that is almost 10% ahead of last year.

“Sustained investment is delivering desirable products to markets around the world and efforts by employees, trades unions and government are helping ensure the UK remains one of the most competitive locations for global automotive companies.”

In total, 94,352 cars were produced last month of which almost 86% were for export.

John Leech, the Birmingham-based UK head of automotive at KPMG, said: “UK manufacturing continues to buck the economic trend as the SMMT figures for April show that there were 11.8 % more cars built in the UK so far this year than in the same period last year.  

“General Motors has also announced that the Ellesmere Port plant will produce the new Astra which is welcoming news for the region and reflects an overall resilient UK motor industry.”  

He said the announcement followed a series of similar notices by other motor manufacturers so that now all car plants in the UK had long-term production plans in place.
 
“But what is the reason for this outstanding success?  Undoubtedly, the car firms, Government and unions have played a role as well as the UK’s heritage for making cars which means we have retained many of the skills that car companies are looking for, but a recent KPMG study also showed that weaker Sterling and recent tax initiatives has made the UK the most cost-competitive of all developed countries for car production,” added Mr Leech.

“Of course we should not rest on our laurels, the Eurozone crisis means that car companies and their supply chain should be making contingency plans for a possible Greek exit from the Euro.  In particular, we recommend reviewing long-term supply contracts now with Greek suppliers. In addition, for those with operations in Greece, it is important to create buffer liquidity and inventory to deal with any transition to a new currency.”

Prime Minister David Cameron said GM’s decision was a “fantastic vote of confidence” in the country and the company’s workforce.

Speaking to a business audience at the Institute of Directors in Manchester, he praised the company’s decision to build the next generation of Astra cars at the plant from 2015, which has not only saved it from closure but will also lead to a further 700 jobs being created at the site.

“The UK government gave this its full backing, the unions supported the necessary changes, the workforce responded magnificently,” said Mr Cameron.

“It is truly a British success story.”

The Prime Minister also praised the efficiency of other car factories around the UK, stating that in the first quarter of 2012 the UK exported more vehicles than it imported for the first time since 1976.

“It is difficult to find a car making company that isn’t investing in its factory. Jaguar Land Rover actually can’t produce cars fast enough to sell into the Chinese market,” he said.

He argued that the sector stood as proof that the manufacturing sector in Britain remained competitive.