Committee report confirms motor industry”s concerns

29 March 2007 #SMMT News

SMMT welcomes the publication of the Trade and Industry Select Committee’s final report but is disappointed in the lack of strength and sense of urgency with regard to automotive manufacturing. The motor industry fears that this lack of direction, combined with the 100g/km CO2 aspirational targets for tailpipe emissions stated in the latest budget, threatens to consign car making in the UK to a historical footnote.

‘The conclusions of this report are not new and industry continues to highlight the competitive pressures on industry and the skills shortage,’ commented SMMT chief executive Christopher Macgowan. ‘Industry executives and SMMT have consistently warned government about these concerns through regular dialogue and the SMMT annual issues surveys.’

Published last November, the fourth Annual Issues Survey Automotive Manufacturing 2006 – the industry perspective gave results based on views from companies across automotive manufacturing. Respondents represented vehicle manufacturers, component suppliers and companies operating in the aftermarket. The full report can be downloaded free of charge from the publications area of

Originally launched in January 2006, the House of Commons Trade and Industry Select Committee broadened the remit of the inquiry and the final report has been much delayed. Broadly speaking, the majority of the key conclusions and recommendations mirror the messages that the motor industry has been highlighting for a number of years.


What should not be ignored is that automotive investment in the UK is not solely through the R&D outlined in the final report – several UK-based car makers are investing in the manufacture of new models.

The UK has been widely recognised as a fertile base for successful manufacturing and the motor industry has adopted many lean manufacturing techniques – as promoted by the ground-breaking SMMT Industry Forum based in the Midlands. This initiative has proved so successful within the automotive industry that it has been exported to other sectors such as aerospace.

But government must recognise that in a tough global market, suppliers are at greater risk in an unproductive environment and there exists a temptation to look east and relocate.

SMMT believes such exit strategies are a last measure but would support the idea of a governmental investigation into competitive costs for UK-based companies considering such matters.

Research & Development

The government’s R&D tax credit system still does not address the issue of incentives for larger companies making small profits.

R&D commitment depends upon a healthy and prosperous industry. Government needs to foster a sympathetic economy with a lean regulatory framework, allowing companies to develop sufficient budget for increased R&D.

Supply Chain

The report correctly identifies several factors which make some car plants more vulnerable to closure, including the relationship of the plant to the supply chain. The motor industry is a key sector of the UK economy, generating a manufacturing turnover of around £45 billion and supporting approximately 800,000 jobs. In spite of being an established base for global automotive manufacturing, the UK is particularly vulnerable to home country advantage – the tendency for companies to resist closing plants in the country they regard as their home base. Government must act to safeguard the local economy host companies that support so many small component manufacturers which often are unable to tap into the opportunities available to larger organisations.

Skill sets

The motor industry has worked hard and come a long way in plugging the skills gap, using conduits like the widely acclaimed SMMT Automotive Academy. This partnership of the industry and government proved so successful it was used a template for the recently launched National Manufacturing Skills Academy (NMSA).

SMMT urges that the effectiveness of this previously sector-specific programme be successfully translated to improve manufacturing and so benefit the UK economy as a whole.

SMMT applauds the Select Committee for the report’s clear consideration of motor industry evidence and its recognition that automotive manufacturing in the UK continues to face challenging trading conditions, not just domestically but particularly in an increasingly competitive global market. Government now needs to listen and act – and act before irreparable harm is done to this key sector of the UK economy.


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