Practical Advice

Automotive: Driving the UK Economy

About the Author

Mike Hawes

Chief Executive, Society of Motor Manufacturers and Traders (SMMT)

The United Kingdom is home to more than 100 automotive manufacturers, including seven global mainstream car brands and eight premium and sports car marques; this equates to a new car being built in Britain every 20 seconds.

More than 2,500 component suppliers are based in the UK, with 18 of the world’s top 20 automotive suppliers represented across the country. It is little wonder that UK suppliers generate around $8 billion of added value each year and why companies like Jaguar Land Rover source a high proportion of the components for their new products from the UK.

Furthermore, there are currently 13 automotive research and development centers and six design centers located across the country, while eight of the world’s eleven Formula One teams are located in the UK.

Last year, around 80 percent of the 1.5 million vehicles manufactured in the UK were exported to more than 100 countries worldwide. This figure is set to grow, too, with industry analysts anticipating an all-time car manufacturing record by 2017, surpassing the previous peak of 1.92 million units which dates back to 1972. Currently, the sector turns over around $100 billion annually; it makes up around 10 percent of the UK’s total goods export value and employs more than 700,000 people.

Global automotive manufacturers, suppliers and innovators have already seen the benefits of the UK as an automotive hub and are investing heavily. In 2013 alone, more than $4.3 billion worth of investment was announced across the industry with even more expected this year.

Companies are drawn to the UK for the expertise of our engineers, the competitive nature of our economy, a flexible workforce and the supportive business environment, all of which are promoted heavily by the government, which continues to champion the industry at home and abroad.

Nissan GB

Nissan GB

Since 2009 the Automotive Council, a collaborative group bringing together government and industry, has been working to make the UK a fertile environment for automotive businesses to invest. Openness to new ideas and technological developments has helped attract major investment from the world’s biggest automotive brands and top tier suppliers in recent years.

It also led government to launch the Automotive Sector Strategy in 2013, which should help secure the next wave of growth in the automotive sector and its long-term future in the UK. Supported by the Automotive Council, the strategy supports advanced manufacturing in the UK, backing manufacturers, incentivizing innovation and developing a comprehensive talent pipeline.

Jaguar Land Rover

Jaguar Land Rover

The UK already boasts the most competitive business tax regime of all major European economies and a flexible, skilled workforce that allows manufacturers and innovators to expand operations and develop products and processes quickly. In the Automotive Sector Strategy, there are clear and targeted plans to improve both of these areas still further.

In the Strategy, there is a stated ambition for increased support through the tax system for advanced manufacturing research and development and capital investment. The government has already doubled the Annual Investment Allowance from April 2014 to around $835,000 and setting corporation tax at 20 percent – the lowest rate in the G20. It has also put in place plans to reduce business energy costs, meaning energy-intensive businesses, such as automotive manufacturers, could save up to $10 million in 2018-19.

The Strategy also sets out plans to ensure that the UK’s workforce has the skills it needs to help its manufacturers develop at the necessary rate. This pipeline of highly qualified, skilled workers will be borne from a mix of apprentices, doing quality on-the-job training, as well as graduate and post.graduate students. It is projected that by 2020, the UK will be able to fill up to 820,000 jobs for professional scientists, engineers and technologists (SET) – 80 percent of which will be engineers – as well as 450,000 SET technician jobs. This means that the UK workforce will not just be highly flexible, it will be one of the most skilled and innovative in the world.

The Automotive Sector Strategy also heralded the launch of the Advanced Propulsion Centre (APC), which sees the UK government and industry invest $1.65 billion over the next 10 years. The center will help industry to develop, commercialize and manufacture new propulsion technologies in the UK, and will also see closer collaboration with the UK’s world-renowned academic institutes, which remain at the forefront of research and development.

The aim is not to have a ‘motor valley’ – that is, a single area that specializes in a particular system – but instead to create a wide-reaching, technology-rich propulsion nation which spans the UK. The center will invest in promising products, processes and people, enabling new advanced propulsion technologies to be ready for real-world applications within 10 years. The APC will also work within industry to develop the necessary infrastructure so that the UK will have the supply chain to bring these new high-value technologies to market.

The UK government has also set up the Automotive Investment Organization (AIO), led by former Ford of Britain Chairman, Joe Greenwell, which acts as a first contact point for potential investors. AIO works with prospective investors to help them understand the opportunities in the UK automotive sector as well as the government support available. The organization’s group of UK automotive experts help to tailor investment propositions for individual requirements, offering practical assistance and engaging with stakeholders in government and the industry.

With the future laid before us by the Automotive Council, the AIO, the Automotive Sector Strategy and the APC, the UK automotive industry is growing rapidly and is set to innovate even faster. There has never been a better time to join the raft of manufacturers, suppliers, pioneers and innovators doing automotive business in the UK.

auto_03

Further Information

The Society of Motor Manufacturers and Traders (SMMT) is one of the largest and most influential trade associations in the UK. It supports the interests of the UK automotive industry at home and abroad, promoting a united position to government, stakeholders and the media.

Website: www.smmt.co.uk

SMMT

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