Vauxhall is seeking a productivity increase of 6 7% annually in its UK factories as part of a drive to improve profitability, chairman and managing director Nick Reilly said this week.
He also admitted that UK component suppliers had lost out on contracts because of Vauxhall’s parent General Motors’ move to a global purchasing strategy.
Vauxhall reported a preliminary £72.6m pre-tax profit for 1998 on a £4.04bn turnover, a return on sales of 1.8%. Reilly said a figure of at least 3% was needed to be ‘anywhere near respectable’.
Part of the strategy to achieve this would be to cut costs per car through productivity gains, and to increase the use of common platforms to make investment more efficient.
Tony Woodley, TGWU chief negotiator for the car industry, said the 6 7% figure ‘was about the norm for the industry’.
On the issue of UK suppliers losing out, Reilly said: ‘Suppliers are no longer protected by past relationships or location. They’re truly open to global competition. The result is that we’ve not bought as much as I would have liked from UK firms.’
He added: ‘The flipside is a chance for truly competitive supppliers to benefit. Some UK suppliers have won business from GM in the US.’
The future of Vauxhall’s Luton and Ellesmere Port plants will be secure if they stay competitive with sister plants in Europe, Reilly said.
The UK plants have a good record of productivity improvements in recent years, he added. He believes that all but 10% of the productivity gains possible at greenfield plants could also be achieved at Vauxhall’s older plants.