UK automotive industry gearing up for jobs boost as manufacturers bring production back home

December 5, 2014
By

Nearly 50,000 jobs will be created in the UK automotive industry over the next two years as manufacturers bring production back to Britain, according to a major report published today.

The upbeat Lloyds Bank report, Fuelling Growth, which surveyed manufacturers from across the automotive supply chain, found that 70% are looking to ‘on-shore’ some of their operations by the end of 2016.

Some 45% said they had already repatriated, on average, a fifth of their production, citing cost and time reduction, improving UK economic conditions and the desire to support local communities as reasons behind their decision.

The report paints a highly-positive picture for a sector vital to Swindon’s economy but which has suffered job cuts, capacity reductions and lower exports sales over recent years.

The town’s two major auto firms – BMW and Honda – have continued to invest in their Swindon plants despite the economic turmoil.

Just over three-quarters (76%) of manufacturers in the sector expect to grow by up to 25% over the next two years, with an average of 18% expansion predicted. On average, each business plans to create 27 jobs over this time period, which equates to 49,635 jobs.

While production is being brought back to Britain, the automotive sector is also looking beyond domestic markets to achieve growth. Some 68% stated that entering new markets was key to achieving their growth ambitions and 74% are looking to invest in or engage new international customers over the next two years, with Western Europe and North America the most popular targets.

Lloyds Banking Group head of manufacturing, SME, David Atkinson, said: “Britain remains one of the leading players in automotive manufacturing, with a complex supply chain of high-value engineering that is attracting significant inward investment. The sector’s growth in recent years has made the automotive industry the ‘jewel in the crown’ of the nation’s economy, and this looks set to continue with thousands of new jobs predicted to be created.

“It is particularly encouraging to see the commitment of many firms to bring their manufacturing processes back onshore as a way of helping to support both local communities and the wider economic recovery of the UK.”

High on the agenda for automotive manufacturers appears to be the emerging carbon and electric vehicle technology markets. Some 63% of businesses in the sector intend to upskill or change processes to develop products for these ‘green’ industries, and just over three-quarters of those respondents plan to invest in this area over the next two years.

The sector also appears ready to move from defensive corporate strategy with those surveyed planning to invest, on average, as much as 38% of their annual turnover into their businesses over two years. On average, firms will dedicate 21% of their annual turnover to R&D spend by the end of 2016.

Mr Atkinson continued: “It is clear that automotive manufacturers are looking to the future with confidence with so many having earmarked funds to reinvest into their businesses. Replenishing R&D budgets to maintain Britain’s competitive edge in the global market, particularly in the development of electric and low emission technology, will be at the top of their agenda, while on-shoring is a trend that clearly has further to go.

“There is no denying that the industry faces some challenges. Most respondents feel the global economy is the greatest concern for the automotive sector. But the industry has emerged from tough economic times in remarkably good condition, putting many businesses in a strong position to overcome hurdles in the future.”

The Society of Motor Manufacturers and Traders chief executive Mike Hawes said: “We welcome the findings from the report, which is further evidence of the renaissance in UK automotive manufacturing seen over recent years.

“The UK has some of the most productive vehicle manufacturing operations in the world and a supply chain with the potential to compete anywhere. We want to see this recent domestic success develop further, to help encourage the re-shoring of the supply chain and the growth of UK based companies’ international markets. To ensure this growth continues, we must maximise the UK's structural advantages; flexible labour, design and engineering expertise and a globally competitive business environment.”

 

 

 

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