CEO Update

Time to accelerate industry’s restart

01 May 2020 #CEO Update

This week, SMMT released UK automotive production figures for March which highlight the extreme test the sector is facing. Amid coronavirus-led UK plant shutdowns, car manufacturing fell by -36.7% in March, with just 78,767 vehicles being produced, with similar declines for commercial vehicle and engine output.

These figures are of great concern and while government’s emergency measures are helping, liquidity remains a major worry and will become even more stretched as the industry begins to restart operations. Independent analysis for SMMT, also released this week, points to a potential industry cost of £8.2 billion if UK plants stay closed until mid-May. However, if subsequent demand is weak and the speed at which production lines are able to ramp up is constrained, this hit could be even worse, so industry needs government support and coordination to implement a clear restart plan for all, including the re-opening of retailers in the first phase of easing the lockdown.

This was a point made in a letter SMMT delivered to the Chancellor and the Secretary of State for Business, Environment and Industrial Strategy, last week, outlining the need for collaboration and a clear and concise restart plan. This proposes four pillars: ramping up safe and sustainable production, securing and supporting resilient supply chains, re-opening automotive retail and stimulating demand, and ensuring a supportive regulatory framework is in place.

The importance of a restart package was underscored this week in a newly published cross-industry survey that found two thirds of the workforce currently furloughed, with revenues severely hit. Our package approach will help unlock the full potential of the UK automotive production system – from retail, through supply chains to vehicle engineering and manufacture – and support an industry that provides more than 820,000 jobs across the UK.

SMMT also welcomes news from government that anyone who needs to travel to their workplace, but is displaying symptoms of coronavirus, will now be eligible for testing; a move which should give comfort to workers and help speed up the restart of the industry. Manufacturing workers are included within this testing expansion. Additional guidance such as government endorsement of safe-working protocols for automotive manufacturing and retail – both of which SMMT is developing – and more flexible funding to support short-time working would also be needed and SMMT continues to raise these issues with ministers.

Our next coronavirus webinar will take place on Tuesday 5 May at 15:00 – 16:00, and will explore how the industry can get back to business. Alongside representatives from SMMT, Squire Patton Boggs will be on hand to offer practical advice to the automotive sector. You can register, and also find all of the latest government support, business advice and guidance, by visiting our online COVID-19 hub.

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