Report identifies £2bn opportunity for automotive suppliers

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A new report from the Automotive Council has identified a £2bn growth opportunity for British component suppliers due to the continuing success of UK car manufacturing.

The report, released at the Society of Motor Manufacturers and Traders’ (SMMT) Open Forum event at Cranmore Park, Solihull, assesses the capacity for the UK to increase local supply of components and raw materials that are currently imported.

According to the Automotive Council, the £2bn figure comes on top of £3bn identified in 2013 for supply direct to vehicle manufacturers.

Currently around one third of the components in a UK-built vehicle are sourced in the UK. The report identifies a realistic aim to increase this local content to around 60 per cent, a figure similar to other European countries including France, Germany, Italy and Spain.

Another key finding to emerge from the report is that UK automotive suppliers are generally confident about their future prospects. Of the companies surveyed, 80 per cent expect their business to grow in the near-term.

In a statement, Dave Allen, purchasing director, Jaguar Land Rover and Chair of the Automotive Council Supply Chain Group, said, ‘The current success of the UK automotive sector presents a renewed opportunity for automotive suppliers to invest in the UK and to increase local sourcing of the high value components that the UK’s world-class vehicle makers require.

‘With this report we now have good visibility of the depth and value of the opportunity throughout the supply chain, together with deliverable actions to turn this opportunity into reality.’

One of the report’s authors, Matthias Holweg, professor of operations management at Oxford University’s Saïd Business School, had previously identified the £3bn per annum opportunity to re-shore Tier-1 supply chain contracts to the UK, which has led to investment, job creation, and a closing of the gap between buyers and suitable suppliers.

He said: ‘Effective policies need to be based on evidence. For the first time ever we now have the complete picture of the UK automotive industry – from vehicle manufacturer to small SME in the upper tiers of the supply chain.

‘Using this evidence to date, we have been able to increase local sourcing and investment in the UK to achieve over £457m worth of investment and safeguard over 5,600 UK jobs to develop a globally competitive manufacturing base in this country.’

UK suppliers looking to expand their sourcing activities are being encouraged to attend the joint SMMT and UKTI Meet the Buyer event on 12 May 2015, which brings together automotive companies with specific sourcing requirements with UK-based suppliers who can match those demands. More details are available from: nhuggett@smmt.co.uk.