International Automotive Summit keynote speech – Ian Harnett, Director of Purchasing, Jaguar Land Rover

11 June 2014 #SMMT News

Ian Harnett, Director of Purchasing for Jaguar Land Rover delivers his keynote speech at the 2014 International Automotive Summit:


Good morning everybody and thank you Justin [Webb, Chair of proceedings].

For those of you who don’t know me, I’m Ian Harnett, director of purchasing for Jaguar Land Rover, a role I’ve held – and mostly enjoyed – for almost five years.  I’m delighted to be talking to you today.

Last year of course, Andy Palmer of Nissan stood here.  I worked with Andy at Longbridge 25 years ago, when he worked for Rover in Engineering.

Ian Robertson, now sales and marketing director of BMW, stood here the previous year. Ian hired me as a graduate buyer in 1982…

So some good did come out of Longbridge, at least for me…

The British motor industry, like Jaguar Land Rover, can rightfully celebrate a lot of good news at the moment.

Strong car sales. High consumer confidence.  A growing UK motor manufacturing sector.

We, at Jaguar Land Rover have had a strong year, based on growing demand around the world for our engaging products – last year global sales were up 16%!

We are now selling more vehicles to more customers, whilst continuing to invest in our growth plans – together these activities have driven a solid financial performance for the company.

We have expanded our employment, our manufacturing, our range of new vehicles, as well as our technology and innovation.

Jaguar and Land Rover are both long-standing car makers, with proud and distinguished histories.  But truly these two great British brands have never been so successful.  Their golden age is now.

We will invest in 50 new product actions over the next 5 years!

Why this turnaround?  Well, personally I would like to think it’s partly down to a fantastic purchasing department… but no one is going to buy that!

Our CEO Dr Ralf Speth, will tell you it’s down to innovation, and placing our customers right at the centre of all we do – among other things.

Dr Speth will tell you that the only way to stay successful is to innovate.  We’ve been doing that, and I’d point to the astonishing global success of our Range Rover Evoque – our fastest selling vehicle ever, one that has redefined a whole NEW segment of the market.

We’ve reinvigorated our brands – look at what the new F-Type has done to Jaguar’s image.

The rewards are clear: 85 per cent of our revenue now comes from exports, and that’s growing.  This helped us recently to win the Queens Award for Enterprise in International Trade.

We are now behaving like a truly global car maker, not just a British car maker.  Indeed, we now assemble Jaguar XFs and Land Rover Freelanders in Pune, India, and will soon make Jaguar Land Rover vehicles in Changshu in China, in what will be one of the world’s greenest car factories.

We have announced our plan to make cars in Brazil.

We are forging new relationships globally, to grow our business.  With Chery in China.  With our parent company Tata in India.

So, we have to think global to be successful.  That’s nothing new for a British company, although it’s a history lesson many of us forgot.

This country got rich on its global trade.  That is still the way to long-term success.

Despite the increasing globalisation of our company, we are enormously proud to be a British car maker.  Indeed, it’s a key value of our brand.  Let me be clear here: we are absolutely committed to manufacturing cars in the UK.

It’s why we will invest £3.5 billion in the coming year in product creation and factories, and why we’ve created 12,000 jobs in Britain in the past three years.  This includes the jobs we announced at our new Engine Manufacturing Centre in South Staffordshire near Wolverhampton – in which we’ve invested more than £500 million – and our expanded Solihull factory, will be up and running.  That number excludes the many extra jobs we have created among our suppliers and their suppliers and their suppliers.

We use British-based suppliers where possible and as long as they’re competitive and can deliver to our rigorous quality cost and delivery metrics.  Approximately 50 per cent of our components by spend come from the UK. 50 per cent of those UK suppliers are based in the West Midlands, our home.

We’d like to boost that figure.  There is good business logic, not naïve nationalism, behind that.

On average, for any large commodity – like a cylinder head – there is about a 10 % logistics premium by importing from mainland Europe, and more from further afield.  Plus, in the premium sector we’re trying to configure more and more expensive features as late as possible, to give ourselves a competitive advantage.  We’d like to configure them as close to our plant as possible – so in other words, in the West Midlands, where two and soon three of our big factories are based, or near Halewood on Merseyside.  Local suppliers help. Plus, local suppliers give us more flexibility to adjust to volume and production mix fluctuations.

It’s more environmentally friendly to source locally – carbon footprint is always worse when you have to transport parts over a long distance.  Finally, as customers want more variety and customisation, so we need the flexibility and speed of local partners.

This includes encouraging major global suppliers to come to Britain.  We visit our major mainland European suppliers regularly.  Many have spare capacity near their homes that they’re keen to utilise.  But our message to them is: we don’t want to take up your spare capacity.

If you want to work with us, and share in our success, move to the UK. I’d like to think my business is important enough to warrant your coming to the UK, to invest in the UK.

Some are. I’ll give some examples in a moment. More need to.

So, yes, we’re keen to ‘’source in Britain’’.  And, we’re keen to buy locally.  We believe we can offer enough incentive to entice many of the very best global suppliers, as our UK production booms.  Once in the UK, they can then take advantage of other successful UK makers – such as Nissan, Bentley and BMW Mini – also keen to source locally.

I don’t believe we can truly claim to be a successful car manufacturing nation until we can source a large selection of components from the UK. And, just as important, many of those components manufactured here should also be designed and developed here. So it’s manufacturing AND R&D.

A strong supply chain is crucial, to a successful manufacturing nation. We’re not there yet.

There really are some daft anomalies with UK manufacturing and suppliers.  Our new state-of-the-art engine plant will soon make very fuel efficient new four-cylinder Ingenium engines.  And Britain, of course, is now a major manufacturer of engines – for BMW, Mini, Ford, Nissan and Toyota, among other makers.  Indeed, we make many more engines in this country than we do cars – how strange is that.

Yet we have to import blocks, heads, most cranks, and all fuel injection units – there are simply no UK-based suppliers. They all come from abroad.

As we expand – we have to go abroad for more plastic injection mouldings.  There is no more capacity left in the UK.

We as a country are in desperate need for more capacity in castings and large stampings.  These may sound unsexy compared with, say, lithium ion battery capacity – but they are actually just as important in creating jobs, and there is a demand and need for such basic components.

Sometimes we lose sight of the basics.

Of course there have been a number of success stories.  Bladon Jets, which works hard on potentially brilliant turbine engines, now has substantial investment from our owners, Tata.

Bosch has brought some welcome R&D here.

Borg Warner has opened a new production line at its factory in Bradford to make turbochargers for our new Ingenium engine to be built in our new plant.  It is building a new engineering centre, and is collaborating with the nearby University of Huddersfield on turbocharger engineering – all very welcome developments.

Plastic Omnium has brought plastic tailgate and fender technology to the Midlands.  A whole factory is dedicated to supplying Jaguar Land Rover with high quality painted exterior parts.

Johnson Controls is moving from a small factory to a big factory in Halewood, to meet booming local demand for its seats.

Lear has also moved from a small unit to a massive unit in Coventry to support our growth in the West Midlands

Gestamp, the Spanish multinational engineering company, is setting up a hot stamping facility in Wales, along with two further press lines transferred from the US.

Tenneco has brought a unit twice the size of it’s existing facility in South Wales to supply JLR demand.

But we need to do much better, to attract quality global auto suppliers to come to the UK.

We need a strong active UK PLC to court major component suppliers from around the world.

We need a competitive environment for investment.  We want UK suppliers to have access to finance to enable them to invest and grow.

This is a really important point, and one I hope enthusiastically supported by everyone in this room this morning.

We need our government to provide more attractive incentives for new overseas suppliers to invest in the UK – simple, easy-to-access incentives.

The Welsh government here is a good role model.  They’re fast, decisive and proactive, way less bureaucratic than their English equivalent.

It’s often simply too complicated for suppliers to get the support theoretically offered by the UK government and by local development agencies.

For years, the American, German, French and Chinese governments have done more to encourage manufacturing industries than the British government.  We have made big improvements. We’re catching up.  More needs to be done.

There are many fine examples of government encouragement, of course.  I have personally experienced great support from our ambassadors in Germany and Spain. Both hosted events in their embassies to promote UK industry and Jaguar Land Rover in particular.  They promoted the UK as a great place to invest, and positioned Jaguar Land Rover as a fine customer to the global supplier industry.

Longer term, we also need to look at our skills set.  We are now short of good local management in the UK supplier industry.

This can be rebuilt.  It is being rebuilt, but it needs to move faster, and be more joined-up.

We need to enthuse our youngsters again to the wonders of making things – of manufacturing.

It is currently perceived as being insufficiently interesting for many youngsters, who’d prefer a career in the arts or the City.  We must get our youngsters to want to invent, and to make things, again.  It was that very quality, more than any other, that first made Britain great.

Designing and making things really matters to a country, whether it’s buildings or bridges or railways or cars or computers.  Designing and engineering – they’re both part of manufacturing, a key ingredient of any successful economy.  Forgetting that was one of the reasons we got into such economic trouble five or six years ago.

The UK’s inherent automotive expertise is well illustrated by our dominance in Formula 1.  All the best teams, except for Ferrari, are headquartered here.  Including the F1 team run by Germany’s best-known premium car maker, currently leading the world championship.  Yes, Mercedes-Benz’s Formula 1 cars and engines are made, engineered and developed in Northampton, not in Stuttgart.  We as a nation should be very proud of that.

It’s further illustrated by our universities, the best in Europe according to most studies, and overall the second best in the world behind the US.

Jaguar Land Rover is very proud of our links to universities, especially with Warwick.  We are investing more than £100 million with the Warwick Manufacturing Group, at the University of Warwick, on advanced research and innovation, bringing academia and suppliers together with Jaguar Land Rover to create the latest innovations.  We are also investing £50 million in the National Automotive Innovation Campus – the NAIC – a joint venture between us, our owners Tata and the University of Warwick, with welcome extra funding from the government.

Jaguar Land Rover spends more on research and development than any other company in UK manufacturing – and I’m not just talking about the car industry.  Engineering innovation is the absolute lifeblood of our business, essential if we are to compete and win against German, Japanese and American premium car rivals.

The amount we spend annually on our engineering has risen by a factor of three over a six-year period, and we now employ more than 7000 engineers. That number is growing almost day-by-day.

Because manufacturing does matter so much to the future prosperity of the UK – and because manufacturing matters so much to us, as a car maker – we have fought hard to raise its profile, and are investing heavily.

We have a schools programme to encourage children to take up engineering careers.  Over 300,000 schoolchildren participated last year, and the number grows every year.

We’re doing this because without innovation, and forward thinking, we will not be able to continue to compete with our talented, big-investing manufacturing rivals in Germany, Japan, America, Korea and – coming up fast – China.

We do indeed see much-needed progress in UK manufacturing.  Credit here goes to the Automotive Council, whose mission includes improving the business environment, encouraging innovation, developing a stronger supply chain, and improving the partnership between government and industry.

These are all most welcome, and elevate initiatives began by the previous government, and expanded by our current government.

But we still think the UK produces about half the number of engineering graduates needed to rebalance our economy. The UK now ranks only 24th among OECD member countries for the proportion of engineering graduates. We rank only 32nd for tax support for research and development and capital investment.

And it’s not just engineering that we need to develop.  We need greater skills in Purchasing, in Logistics and in Manufacturing Engineering.

We need more global thinking. In the past 12 months we have welcomed German, French, Greek, Chinese, Indian, American, Italian and Spanish employees into my department.  They’ve come from all walks of business, from all corners of the globe.  They’ve helped us to think and to act more global.

The UK needs to be globally competitive in industrial innovation, for it to continue to be a prosperous knowledge-based economy.  Unless we do become globally competitive – and at the moment, we’re still not – business’ ability to innovate will be constrained, capping jobs, exports and growth.

Believe me, we CAN become great again.  But we need more joined-up thinking between industry, academia and the state, which is the foundation of Germany’s success.  A great example here is Aachen University, a role model that maintains close links to German industry – including the car industry – and prides itself on its collaborative research and technology.  It is the largest technical university in Germany and has the highest amount of third party – often industry – funding. And there are many other examples in Germany of industry, government and academia all uniting for the national good, and for the good of manufacturing, technology and engineering.

So there has been progress in the UK.  But much more needs to be done.

We at Jaguar Land Rover need this knowledge, this innovation, because the car industry has never moved faster, technologically.  It’s not just a continuation of the Industrial Revolution – which of course never stopped – it’s more a total technological transformation.

To cars that don’t run on oil.  That will not crash.  That can drive themselves.

I get a bit annoyed when I hear people talk about ‘high tech’ industries and they don’t include cars!  We as an industry make the most technically complex piece of equipment a consumer buys.

This is a high-technology industry, I can assure you!

And of course this advanced engineering moves hand-in-hand – or cog-in-wheel – with manufacturing.

So part of our mission has been to raise the profile of manufacturing and engineering at schools and universities.  We also engage government to ensure the UK is cost competitive on things such as energy.  We totally accept the importance of CO2 reduction and future sustainability – indeed if the UK does not achieve both, once again we will have no future.

But it is also essential that UK energy prices are not disproportionately higher than those in mainland Europe, China or the US. This, after all, is a global business, with tough competition at every level, in every area. We forget, too often, that UK companies don’t just compete with other UK companies. We at Jaguar Land Rover compete with Audi, BMW and Mercedes, with Lexus and Cadillac – not with other UK makers.

We make manufacturing decisions in which Britain as a nation competes, on cost and quality and skills, with Japan, China, Germany, France and America, as well as all other industrialised nations.

We must not think like Little Britain.  We must always think as Great Britain, a country that should always look outwards, not inwards.

There’s no doubt, to me, that the future of UK manufacturing relies on us being a world leader in sustainable, radical manufacturing. Part of the Automotive Council’s role is to ensure that happens. Progress is indeed being made.

Our new Engine Manufacturing Centre – which I mentioned earlier – will get 30 per cent of its total power from solar.  It has 21,000 solar panels on its roof, the biggest solar roof in the UK.  That is enough to power more than 1,600 homes! And before you ask, yes, we are assured there is sufficient sunlight in sunny Wolverhampton to power assembly.

The new Ingenium engines it will make are all highly efficient four-cylinder units – smaller, much lighter, much more fuel efficient, yet offer similar performance to the large capacity engines they partly replace.

So the future, for both the British motor industry, and for Jaguar Land Rover, is bright.  We have much to be confident about. There is much to be proud of.

But there is much work still to do.  There is no finishing line to business success. The challenges never get any easier.

And that’s one of the reasons I love this business.

Thank you.

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