British component suppliers suffered another blow this week with Rover’s admission that it will be forced to buy more components from abroad if sterling remains at its current level.
Rover spends £3.5bn annually with UK suppliers. This buys 85% of the parts for its current range, but British content in the forthcoming R40 executive car will fall to 75%.
Two weeks ago, consultant KPMG said up to a third of West Midlands’ suppliers could be dropped by car makers because of uncompetitive prices and quality.
John Gildea, Vauxhall’s director of supply, said productivity gains have come to a virtual standstill at many UK components firms. Some may lose contracts to continental rivals when the replacement Vectra model starts production, he added.
Roger Cockcroft, consultant at KPMG’s European Automotive Practice, said the high pound was having long-term effects on suppliers’ competitiveness. UK car makers dealing abroad are demanding cuts in piece prices, backed by the threat of re-sourcing elsewhere.
‘This is draining suppliers of cash which they could invest in improvements to quality and productivity,’ he said.