What a difference 30 years make

Having hit a high in 1972, when 2 million vehicles were produced in the UK, the low followed in 1982, when production had fallen to around 900,000 units. Thirty years later, we are on the cusp of breaking 1972's peak, according to the SMMT/KPMG, with a figure of 2.2 million vehicles predicted for 2016. As Machinery observed in its centenary issue, published in September, much metalcutting automotive component business has been offshored since the mid/late-1990s and some of it is never coming back. We were quoting 'Growing the automotive supply chain', published last year by the Automotive Council. But work there is to be won for the UK – some £3 billion of it, according to the more recent 'Capturing opportunity' report by KPMG, which also references the Automotive Council's 'Growing the UK automotive supply chain' of August this year. Heading the list of opportunities is engine castings (£370 million); seventh is alloy wheels (£140 million); engine forgings are in 10th place (£170 million); hot stampings (£70 million) sits in 17th place; cast aluminium sub-frames, at 20th place, are worth £60 million; followed immediately by brake callipers and then drive shafts (£50 million each). According to the KPMG report, the UK component market is expected to increase from in excess of £11 billion in 2012 to £21.5 billion in 2016. (UK component suppliers currently satisfy £8.4 billion, hence the £3 billion opportunity identified today.) The Automotive Council says it will "actively pursue this £3 billion of new business by proactively raising awareness of the scale of the demand and facilitating and encouraging engagement with prospective suppliers. These will include existing UK-based automotive suppliers, UK suppliers in other sectors looking to diversify into the automotive market and overseas-owned companies, including existing investors and potential new or re-entrants to the UK". One effort in support of this is the Supply Chain Finance (SCF) initiative announced in October. This sees large companies help their supply chain access credit at a much lower cost, improve cash-flow, and has already been successfully implemented by Rolls-Royce and Jaguar Land Rover. Through this, leading companies could deliver up to as much as £20 billion of new cheaper, finance to their suppliers, including many UK SMEs, it is suggested. And last month, the SMMT brought together some of the UK's largest financial lenders and automotive supply companies at a specialist Meet the Funder networking event, designed to enhance dialogue, strengthen relationships and ramp-up lending in the auto industry. As The Economist observed in its November 17 edition: "Britain now exports most of the fancy cars it makes, while importing most of the basic ones it drives. It is in a much stronger position than France, Spain and Italy, which are stuck at the commodity end of car making and sell mainly in the euro zone, where sales have slumped and a price war is raging. Britain's factories have become almost as busy as Germany's, as those in the other three countries have become more idle." High value car manufacturing is now what the UK is about and it clearly offers renewed opportunity for engineered component suppliers. What a difference 30 years make. First published, Machinery, December 2012