Brexit casts cloud over £225m automotive investment plans
THE UK’s automotive supply chain is planning to invest £225m over the next three years to meet strengthening demand for components from the country’s major car manufacturers – but only if the UK remains within the EU.
The move is part of the demand to increase the percentage of British-produced components used in British-built vehicles.
Despite the success of its automotive industry, only around 40% of the components used are from British suppliers. We lag behind Europe in this respect where the figure is closer to 50%.
Should Brexit proceed then supply of components will be a critical issue for one of Britain’s major industrial success stories.
The issue was highlighted during the Automechanika exhibition at the NEC in Birmingham, where the Society of Motor Manufacturers and Traders released details of a new study into the automotive supply chain.
The survey, which was compiled from the responses by 100 SMMT members, showed 94% of firms said they planned to invest in their businesses over the next three years – at a total of £224,485,000.
Of these, almost four in five (79%) said they intended to invest in plant, machinery or tooling; three quarters (73%) in skills and apprentices; and two thirds (66%) in new product development.
The industry supports 78,000 people and almost 70% of firms said they planned to expand their workforce over the next three years.
Underlining but without directly referencing Brexit, SMMT said the potential investment did depend on “continued political and economic stability” and the long term growth of the UK automotive sector.
The trade body said the British supply chain was a critical element of the wider UK automotive industry, and consisted of more than 2,000 companies contributing an annual £4.3bn in value added (or tax receipts) direct to the UK economy.
Hundreds of these firms were represented at the Automechanika exhibition and a straw poll conducted among them by TheBusinessDesk.com suggested that the vast majority were in favour of the UK remaining in the EU.
One Midlands company, which also has operations in Sweden and Germany, has seen its turnover grow from £5m in 2012 to more than £30m this year – and a lot of this success has been attributable to opportunities offered by the single market.
Mike Hawes, SMMT chief executive, said: “Britain’s car industry is booming, exporting more than ever, and it’s encouraging to see this opening up huge opportunities for the UK supply sector. A strong domestic supply chain is critical to a successful automotive sector and we are confident that, with the right political and economic conditions, significant supply chain investment can be secured, delivering more jobs and growth.
“Many of the UK’s competitors have far larger and stronger supply sectors, however, so continued government collaboration through organisations such as the Automotive Council will be critical as we strive to re-shore more supply chain work.”
