Over the past few years, Britain has seen a dramatic turn of events in the car manufacturing industry. Rather than foreign imports being brought into the country from developing nations such as China and India, now the UK is exporting to these countries instead, with respected companies such as Honda and Jaguar Land Rover pouring investment into UK manufacturing commercial properties.
Furthermore, the UK is well ahead of the rest of Europe when it comes to its car industry, with record production levels expected to be made by 2016. This year alone will see output reach pre-recession levels once more, thanks to the annual 9 per cent increase in vehicle production forecast by the Society of Motor Manufacturers and Traders (SMMT). Fuelling this demand is the fact that Britain now exports vehicles to 150 countries worldwide, with the list increasing year by year.
Unfortunately, the SMMT has warned that, thanks to the combination of banks refusing to lend to suppliers and a lack of skilled workers in the UK, the expansion of the car manufacturing industry is expected to be limited in the future. In a report entitled Capturing Opportunity, which was released to coincide with the first day of the Paris Motor Show, the SMMT claims to have already identified over £3 billion worth of missed opportunities for UK companies.
Paul Everitt, chief executive of the SMMT, says; “We are on a roll. With robust global markets and a diverse mix of models produced here, we are more resilient than other countries to Eurozone weakness – a key factor in encouraging businesses to invest in the UK.
“The problems we face are those caused by success; supply firms with good business prospects are finding it hard to borrow the money they need to finance their expansion.
“Traditional banks make risk assessments based on the short term. This needs to change.”
In the current financial climate, it is expected that banks are more wary than ever before about lending to SMEs with only a small amount of capital to back them up. However, if Britain is to ever leave the state of recession we currently find ourselves in, it seems logical to assume that businesses need help to get the economy moving again.
At the moment, Britain has 2,862 independent suppliers to the motor industry. This is a significant drop from the peak numbers set in 2005, which totalled 3,446 – although it is not necessarily the effect of the downturn in the economy which caused this. Many businesses chose to purchase from Eastern European suppliers in recent years, thanks to a manufacturing boom in the area making it cheaper in cost than many UK businesses.
Yet even if the banks do change their tactics and begin lending in earnest to businesses associated with the motor trade, the report highlights that there is a very real problem which must still be addressed. Skilled workers are in short supply in the UK at the moment, with the car manufacturing industry urgently in need of factory maintenance staff, plant managers and electrical and software engineers in order to fuel further expansion.
The report claims; “To keep pace with change, urgent action is required to address an impending skills shortage in key industry areas.”
However, overall, the future of the British car manufacturing industry looks extremely bright. Not only is Britain becoming one of the leading lights in vehicular export, it is also gaining a name in parts construction, with 2.5 million engines produced in the country in the past year.
The SMMT’s report concludes; “UK vehicle production appears on target to recover to pre-recession levels in 2012.
“Production of both cars and commercial vehicles was up 12 per cent over the first half of 2012.”
Do you think that, should the banks continue to refuse to lend, Government intervention is required in order to boost both the British car manufacturing industry and the economy? Would offering a more diverse range of modules within the education system, concentrating on creating more skilled labourers in the UK, be a good start in ensuring the manufacturing industry continues to go from strength to strength, or would on the job internships produce better results in your opinion?
