Dawn of new Discovery as Land Rover invests £2.5bn

Land Rover’s Solihull plant will operate 24 hours a day following a major cash injection by the car maker, but experts predict more components will be sourced from outside the UK.

Land Rover’s Solihull plant will operate 24 hours a day following a major cash injection by the car maker, but experts predict more components will be sourced from outside the UK.

The company announced this week it will invest £2.5bn over the next five years, mainly in the UK, designing and developing new vehicles and improving manufacturing processes.

The Solihull plant will also build the new Discovery, due to enter production in 2004, after Land Rover rejected factories in Europe and the US.

But industry experts have warned that the uncompetitive exchange rate will mean the Discovery is likely to have a lower UK component content than previous vehicles.Marin Burela, Land Rover’s director of manufacturing, said work to improve the flow of cars through the plant’s paintshop will allow it to reach a capacity of 300,000 units per year. ‘We would then run a three-shift operating pattern, across a five-day week – a full 24-hour operation,’ he said.

Around £500m will be spent improving manufacturing processes and equipment.The car maker is also looking at ways of bringing its supplier base closer to the plant to produce the new vehicle, to improve efficiency and quality. The company already has 30 major suppliers on site working on the new Range Rover, which has a ‘good mix’ of components sourced from the UK and mainland Europe, he said.

Strategy still unclear

But sourcing decisions for the new Discovery have yet to be made and, with an evaluation due to be completed in around three months, Burela could not rule out buying more components from Europe. ‘Each case needs to be evaluated on its own merits. Every business in the UK continues to face the exchange rate challenge, so we need an open mind.’

The Solihull plant was chosen to produce the new Discovery as it has made big improvements in efficiency, quality and safety since Land Rover was bought by Ford 18 months ago.

But assembly line jobs at Land Rover could be secured at the expense of job losses in the wider supply chain, warned Professor Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff Business School. ‘The UK is still a very good place to manufacture, but the supply business is up for grabs. Ford has said existing suppliers are not necessarily the same ones it will use in the future. It is certain some of the UK content will be reduced.

‘There is a danger that the components in all vehicles produced in the UK will drift overseas. There has been a disturbing trend for every new vehicle introduced in the UK to have a lower UK content than before.’

Honda has said it is reducing the UK content of its cars from 70%-50%, while the new Vauxhall Vectra will have a UK content of barely 50%, compared to over 60% for the existing model. West Midlands suppliers may be in danger, claimed Rhys.

Knock-on effects

A report by consultants Deloitte & Touche predicts the West Midlands automotive industry will be affected by new ‘super suppliers’, who can produce complete bodies or interiors for car makers.

Commissioned by the Accelerate Partnership (which includes MG Rover, Jaguar, Peugeot, component suppliers and the Society of Motor Manufacturers and Traders), it says that if UK suppliers are to survive, they must work together to develop advanced techniques and a strategy for dealing with the euro.

Editor’s note: Component maker Wagon has secured contracts worth £400m from two European car manufacturers. The firm will design and build car body structures for two new models, one of which will involve new lightweight engineering techniques.

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