Issues Facing the UK Automotive Industry

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Issues Facing the UK Automotive Industry

• Professor Neil Barlow
• Chief Executive, Northwest Automotive Alliance

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Background

• Northwest Automotive Alliance (NAA) was
  established in 2004 to support the automotive
  manufacturing industry in the Northwest of
  England
• NAA is a cluster organisation based on an
  alliance of major companies in the Northwest
  including Leyland Trucks (Paccar), Vauxhall
  Motors (General Motors), Jaguar/Land Rover (Ford)
  and Bentley Motors (Volkswagen)
• Strategy focussed on a number of areas
• Supply chain development
• Workforce development
• Innovation
• Internationalisation

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Overview of Presentation

• The Global Market
• Challenges Facing the Industry
• UK Response
• The Future

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World Passenger Car Production
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Proportion of World Market
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Car Production (2005)
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Net Profit/Loss 2005
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UK Sector

• The UK has the most diverse range of car
  producers of any country in the world General
  Motors, Ford, Nissan, Toyota, BMW, Volkswagen,
  Honda and Peugeot.
• UK has a wide range of specialist producers
  serving niche markets such as sports and track
  day cars, classic replicas and even an amphibious
  car manufacturer
• Over a thousand automotive component suppliers
  are manufacturing in the UK
• The automotive manufacturing sector contributes
  around 8.4bn added value to the economy which
  accounts for 1.1 of UK GDP
• The industry in the UK employs some 237,000
  people and has an annual turnover of some 46bn
• It accounts for 9.5 of total UK exports (72 of
  total UK car production is exported).

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Global Issues

• Over capacity
• Legislation
• Competition

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UK Issues

• The majority of UK based vehicle manufacturers
  including those with outstanding productivity
  records are making losses
• There is a major switch by VMs and tier one
  suppliers to source parts and materials from low
  cost countries
• Many UK suppliers are falling short in key
  respects
• inadequate investment in both plant and equipment
  and product development
• poor customer focus
• shortage of skills
• UK Employment Law makes it easier to close UK
  manufacturing plants ???
• Energy costs increasing substantially
• Location re rest of Europe we are still an
  island !

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UK ResponseAIGT Report 2002

• National Supply Chain Groups
• Automotive Academy
• Centres of Excellence
• Foresight Vehicle Programme

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Supply Chain Groups

• 15m support from DTI matched by 15m company
  cash/in-kind
• Support for a host company to work with its UK
  based suppliers to improve the competitiveness of
  the whole supply chain (minimum of 8 suppliers)
• Main output improved value added and QCD
  improvements
• 50 Supply chain group programmes established with
  some 400 companies participating
• Averaging an eight fold return on investment per
  supply chain project

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Automotive Academy

• Industry led
• Set up to promote globally competitive standards
  of training and skill development for the UK
  automotive industry
• Developed specific programmes for the industry
• Lean Manufacturing
• Business Improvement Techniques
• Team Leader Training
• Graduate Development
• Automotive Leaders
• Executive Programme
• ISO/TS16949
• Working with providers to build their capacity
  and capability to deliver these programmes in UK
  regions

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Centres of Excellence

• Low Carbon and Fuel Cell Technologies,
• Transport Telematics and Technologies for
  Sustainable Mobility.

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Foresight Vehicle Programme

• Engine/Powertrain
• Hybrid, Electric, Alternatively Fuelled Vehicles
• Software, Sensors, Electronics and Telematics
• Advanced Structures and Materials
• Design and Manufacturing Processes

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The Future More complex cars, built faster and
cheaper

• Restructuring of the supply chain - more
  integration, mergers and alliances
• More outsourcing of sub-assembly
• Continued development of flex plants
• More differentiated product
• More use of common platforms
• Shorter lead times
• Diversification into finance, insurance, car
  hire, servicing and leasing

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Future Hybrid Vehicle ????
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Any Questions ?