SMMT today welcomed publication of the Trade and Industry Select Committee report on vehicle manufacturing which encourages closer ties between industry and government. The report highlights the importance of the sector to the economy and calls for ministers to promote motor manufacturing in the UK.
Chief Executive Christopher Macgowan said, ‘This significant investigation calls on ministers to take a lead from the industry, rather than reacting at moments of crisis. SMMT remains concerned, however, that the report fails to acknowledge the role of fiscal policy and the strong pound in eroding manufacturers’ competitive edge.’
Vehicle makers and component suppliers continue to struggle with the high value of sterling and weak Euro. The report recognises that manufacturers are either losing money or making a very small return on their investments. Increasingly, manufacturers are forced to source components from outside the UK, threatening jobs and the future of SMEs.
The Climate Change Levy on the business use of energy will increase net energy costs by 10 to 15 per cent. This will impact most heavily on the supply chain. SMMT calls on the government to widen discount criteria to include those companies that have invested in improving efficiency and cutting down on waste.
SMMT welcomes the report’s specific aims in the following areas:
Diesel
SMMT is encouraged by calls for government to re-examine its treatment of diesel. Significant CO2 emission reductions from diesel cars can be achieved by promoting its environmental benefits, reversing the downward trend in sales since 1994. As well as lower emissions, diesel drivers benefit from better fuel consumption. Diesel penalties in both the new VED scheme and company car tax send buyers the wrong message. The report states that this fuel penalty impedes the development of cleanest diesel technology in the UK.
Skills, Research and Development
SMMT supports the proposals to link grants for new technologies with training measures and review government research and development support in the automotive sector.
Labour legislation
SMMT is concerned by the report’s assumption that recent restructuring decisions were made on the basis of alleged ease with which a workforce may be shed in this country. Restructuring decisions by global vehicle manufacturers are the result of over-capacity in the market. However, the findings recognise that manufacturers have gone beyond statutory requirements in terms of voluntary redundancies and compensation packages.
Notes to editors
- The automotive industry is a key sector in the UK economy, generating around £46bn or 5.5 per cent of the country’s GDP. It employs 800,000 people, of which 300,000 are directly involved in vehicle and component
manufacturing. - The UK boasts the two most efficient car plants in Europe, Nissan’s in Tyne and Wear and the Toyota plant in Derbyshire. The Leyland plant in Lancashire is the most productive truck plant in Europe.
- Diesel continues to be penalised by unfair taxes. The new graduated vehicle excised duty scheme levies and additional charge for diesel cars over petrol equivalents. Company car tax changes in April 2002 include a three per cent diesel supplement.
- CO2 emissions are, on average, 20 – 30 per cent lower than petrol cars. By continuing to penalise diesel the UK government threatens the negotiated agreement with the European Commission to reduce CO2 emissions from cars throughout Europe by 25 per cent by 2008.
- Birmingham-based SMMT Industry Forum provides lasting business solutions to the constant pressures of quality cost and delivery. So successful is the programme that government is keen to apply the UK motor industry’s world leading principles to other industry sectors.
