|
A report produced by
Ricardo UK Ltd & Skills4Auto Ltd
With help from the UK Industry
The UK Automotive Industry for 2020
(plain text only content - a copy of the report can be requested through the website enquiry form)
 Click Here to download the full version of the report (Word Document 2.7Mb)
Contents
Executive Summary
Introduction to the research and key findings
The UK automotive industry cannot cost cut its way to be
internationally competitive
Growth through innovation and technology is the only viable
route to a healthy and sustainable automotive industry
The skills required to deliver this strategy are badly lacking at
all levels
There is a unique opportunity for the UK to build its position as
the centre of innovation and technology for the automotive
industry
Government and academia have a crucial role to play but the
UK’s current policies and strategies are an impediment to success
The economic argument is compelling and the price of not acting
is high
Conclusions and Recommendations
Acknowledgments
Executive Summary
To secure a sustainable future for the UK Automotive Industry going forward, Government, Industry and Academia are going to need to work together to define a common strategy and ensure that the UK workforce is equipped with the necessary skills to drive the strategy forward.
In this context Skills4Auto Ltd, with the support of UK government and assisted by Ricardo Strategic Consulting, conducted a “2020 Vision Study”. The objective of the ‘2020 Vision’ study is to develop a deeper understanding of the future skills, technologies and competences required to provide the UK automotive supply chain with a sustainable competitive advantage in the global automotive industry and the role industry, academia and government must play over the next 10-15 years.
Currently there are in reality two distinct automotive businesses in the UK, Japanese and non-Japanese. The Japanese are focused on partnership relationships with their suppliers who are fully integrated into the engineering process, which drives significantly increased product quality across the automotive supply chain and allows suppliers to invest in a way which other suppliers in non-partnership relationships cannot.
The UK automotive supply chain is highly responsive to engineering change and has a good understanding of engineering and manufacturing best practice through its interaction with a range of vehicle manufacturer’s. However in the areas of strategy planning, leadership, programme management and customer care the performance of the supply chain was rated as poor. Long-term planning was seen at best to be several months rather than years, with over 30% of businesses with no business plan and fewer than 50% with business training plans.
Government and education do not deliver basic skills and newly qualified engineers have little interest in pursuing automotive engineering careers. Executives say they find it hard to employ sufficiently qualified staff and businesses do not see that their remit is to train their staff where education / academia has failed. Without addressing the failing standard of basic and business skills, how can the automotive industry have a future?
The UK automotive supply chain cannot and should not compete on price – it has to innovatively develop a distinct set of focused core competencies, of which responsiveness is key. Investment in product innovation and R&D is crucial. There are opportunities for the UK to be leaders and innovators in advanced power train (fuel cells, hybrids etc), control & electronics, lightweight materials and integrated Telematics / congestion charging technology, but to achieve this requires help from Government, Industry and Academia alike.
Between them a clear strategy needs to be defined. Government needs to provide the incentives for ‘value add’ investment by the overseas vehicle manufacturers and
also to support local businesses to grow. Industry needs to train employees with the necessary business skills to be able to implement continuous improvement and lean processes, whilst academia needs to ensure that the future generations are equipped with the right skill set to succeed.
Only by working together can a sustainable future for the UK automotive industry be achieved.
Introduction
The UK automotive industry employs around 780,000 people in the design and manufacture of vehicles and components and the supply and distribution chains. Of this number, approximately 250,000 are employed in design and manufacture of vehicles and approximately 530,000 people in the automotive supply and distribution chains.
The industry delivered £8.5 Billion of added value to the UK economy in 2004 with automotive output accounting for 9.5% of total UK exports and 1.1% of UK gross domestic product(1). On a regional basis the industry is even more important to the regional economies in which it operates, for example in the West Midlands it accounts for 31.8% of UK automotive employment and is worth £3.3 billion of value add to the regional economy(2). These figures although significant have declined as a result of changes to the global economy, the UK industrial policy and structural changes to the automotive industry over the past 10 years.
Figure 1: Gross Value add of automotive manufacturing to the UK(3)
Over the next 10-15 years the automotive industry globally will under go even greater changes driven by:
An acceleration of the application of new technologies to vehicles
and the processes related to sales, service and traffic
management
Increasing competition as new entrants from emerging markets
look to technology to leap frog established competitors who are
locked into capital bases and working practices based upon more
traditional facilities and patterns of employment
A shift in demand as technology provides more functionality at
lower cost and customer buying criteria becomes increasingly
sophisticated
Increasing legislation that drives adoption of new technologies at
an increasing rate
The UK is not insulated from these changes as many of the companies heavily impacted by these dynamics have manufacturing bases in the UK. Whilst the lack of UK owned and head office domiciled companies increases the risk of overseas manufacturers moving their production to lower cost centres, Japanese vehicle and component manufacturers ’s who have taken up residence in the UK have improved productivity of the UK automotive industry and its supply base whilst driving down costs.
But as fast as costs are reduced new entrants in Eastern Europe, India, China and other countries are setting new and lower cost hurdles which mean that today’s low cost countries are always under pressure by tomorrows’ new emerging market. In this context the UK cannot solely cost cut its way to maintain international competitiveness in the global automotive industry going forward.
So how does the UK remain competitive in the global Automotive Market? In this context Skills4Auto Ltd, with the support of UK government and assisted by Ricardo Strategic Consulting, conducted a “2020 Vision Study” which will be used as a foundation stone for skills development and training in the UK automotive sector and as a contribution to the UK Government’s Treasury (Leitch Review) of Skills for the Future.
The objective of the ‘2020 Vision’ study is to develop a deeper understanding of the future skills, technologies and competences required to provide the UK automotive supply chain with a sustainable competitive advantage in the global automotive industry and the role industry, academia and government must play over the next 10-15 years.
The study was broken down into four main areas of analysis (Figure 2), incorporating inputs from Vehicle Manufacturer’s, Tier 1 Suppliers, Motorsport Sector and Academics as well as using best practice examples gleaned from the contributors experience in the automotive industry.
Figure 2: Approach to the “Vision 2020” Study
The results of this study show that the UK cannot cost cut its way to be internationally competitive, but there is a unique opportunity to build a position as the centre of innovation and technology for the automotive industry. Growth through innovation and technology is the only viable route to a healthy and sustainable automotive future. However the skills to deliver this strategy are badly lacking at all levels, in which the Government and Academia have a crucial role to play. The UK’s current policies and strategy are an impediment to success and the price of not acting to resolve these is very high.
The UK automotive industry cannot cost cut its way to be internationally competitive
The structure of the UK automotive supply chain is in reality split into Japanese and non-Japanese. The suppliers to the Japanese vehicle manufacturers have strong partner based relationships and are integrated into the engineering process so they can ensure parts can be designed and produced most economically, whilst the suppliers to non-Japanese business are left to struggle alone.
To maintain their relationships with Japanese partners, suppliers have focused more on productivity by effective use of capital and labour to continuously deliver value and combat price competition. Suppliers to Japanese Vehicle manufacturers with “partner” based relationships generally find it easier to invest in facilities and people as the supply relationships provide a degree of stability. Quality demands of the Japanese vehicle manufacturers have improved the quality of UK manufacturing and many suppliers have shown that they have an ability to learn and sometimes excel in these techniques. However, the fragmented nature of the UK supply industry means that there still remains a long tail of suppliers who only apply “lean” techniques spasmodically and do not yet have it embedded in their total business and operational culture. As a result performance in many suppliers is still poor and overall, the UK has a very long tail of weak performers in the sector.
Figure 3: UK Supply Chain Performance
Employment flexibility remains an attraction for inward investors and existing manufacturers providing some advantage over our European competitors. The flexible and mobile nature of the workforce and the diversity of the UK component engineering and manufacturing landscape mean that UK engineers have a good understanding of best practice in engineering processes through their interaction with a wide range of vehicle manufacturers and their procedures and practices. The UK supply base is characterised by many foreign owned vehicle manufacturers as being responsive with a “can do” attitude. However, that can also be a weakness as people flexibility and mobility alongside limited disciplined documented process and operational controls means that many businesses do not retain the employees to be able to embed these processes, and a culture of continuous learning and process improvement is difficult, if not impossible to implement.
The growth of automotive manufacturing in the UK has not seen a parallel in growth of automotive research and development being brought on shore by the inward investors. The disadvantage for the suppliers to overseas-owned automotive companies is that many of the design and engineering centres are outside the UK, providing limited opportunity to be part of the research and early development process. This limits innovation and UK plc involvement in the development and exploitation of emerging automotive technologies, thus building a problem for the future, which is increasing over time.
The overall view of the participants to this report is that the UK supply chain cannot compete on price alone so it must innovatively develop distinct core competences to gain and sustain a position as a supply base to the increasingly global automotive industry. Achieving this in the increasingly technologically complex industry will require a collective industry strategy focused upon sustainable competitive advantage through technology development and deployment. A key enabler to this is building a skills base that is able to support and sustain this change.
Figure 4: Comparison of Chinese manufacturing rates against other countries
Any future strategy needs to build upon the advantages the industry has already developed, for example, being agile, flexible and adaptive to change with a can do attitude, and exploit the best practice knowledge of our automotive engineering community. To do this will require an integrated approach from government, the industry, academia trainers and skills providers alike if we are to position ourselves to be successful over the next 10-15 years.
Growth through innovation and technology is the only viable route to a healthy and sustainable automotive industry
The UK needs to consider how to position itself as the industry changes in terms of increased global competition, and customer and legislative drives for new technologies. Should UK industry try to supply the full range of technologies, processes and products or should it focus its investment in research, technology, people and facilities? Whatever selection the industry makes it must recognise the reality that it will not be fed by a largely foreign owned industry and therefore must continue to develop and retain key competences. Vehicle manufacturers in the USA, Germany, Japan and the emerging countries have no commitment to supporting businesses in the UK. Logistics may provide some incentive for 1st Tier suppliers to design and assemble here in order to supply local car assembly plants, but actually source the components from emerging economies. This does and will mean a major reduction in the 1000’s of manufacturing SMEs in the UK. The resultant reduction of the sub -suppliers Tier 2 and 3 businesses would be a major political and economic problem in the UK and particularly on the West Midlands. The industry needs a thread to hold it together and maintain and develop the UK’s position in the industry over the next 10 years.
With this hypothesis in mind the Skills4Auto research focused upon the technologies and processes that would be in the ascendancy over the next 10 years. Our assumption is that skill sets over the next 15 years will be driven by product technology and process requirements. The research combined the input from industry respondents published research and Ricardo’s own approach to mapping and evaluating new technologies.
Figure 5: Technology Road Map for Hybrid Vehicles
The result is to identify 8 areas of technology that will be the key to positioning the UK supply industry over the next 15 years providing a platform for profitable growth.
The key technology areas are:
1. Communication/Congestion /Navigation /Telematics/Traffic
management
2. Safety and passenger/pedestrian protection
3. Fuel cells/Powertrain/electric vehicles
4. Material, composites and alternative materials
technology/weight reduction
5. Environment/emissions/sound and vibration technologies and
reduction
6. Vehicle, Engine management and product monitoring
technology/ telemetry
7. Control & electronics and the associated software
8. Rapid prototyping and manufacturing process improvement
For UK Automotive plc to be a leader in these technologies we need to put in place a vision and strategy that encourages investment in value enhancing technologies, skills and processes in order to bring the right technologies to market on time. The key questions are, which technologies and in which time frame? Figures 6a and 6b highlight some of the developing future technologies identified in the study.
Figure 6a: Key Technologies
Figure 6b: Key Technologies
Which technologies is a question that all automotive companies and many investors would like to be able to answer, but there is a process to manage the selection and the risk. The challenge for UK plc is to align the skills development to the winning technologies, giving a vision and direction to industry, government and academia so that they can support them.
Figure 7: Technology Selection and Deployment process
Given the diversity of technology paths going forward and the resources required to take these technologies to market, UK plc, government and academia will certainly need to work more closely together if we are to compete effectively in the automotive supply chain of the future. It may be necessary to take a dispassionate, specific gamble on a limited number of key technologies or innovations. Whatever direction and focus is decided upon a primary enabler will be the skills required to innovate, develop and deliver technology to market. The advantages to the UK supply chain of flexible labour, adaptability, responsiveness/fast reaction, need, in the next structural change of the automotive industry, to be underpinned by a vision, direction and above all an integrated approach to the development of skills which will create and sustain our competitive advantage going forward. Without this we will waste time, money and above all the creative energies of the people in this important UK industry.
The skills required to deliver this strategy are badly lacking at all levels
Recruitment of effective engineers is very difficult for vehicle manufacturers and becomes increasingly difficult for suppliers as you go further down the supply chain. Our emerging competitors particularly in India and China are training to an increasingly higher level engineers and technicians who see a future in their rapidly expanding technology and industrial bases. Newly qualified engineers of which there are less and less(22,000 in 1995 20,490(1) in 2001) have a less dynamic sector to inspire them to develop a career in automotive engineering or management in the UK, where research and development and manufacturing industries are declining.
Moreover, many of the contributors to this report cited the transient management and organisational culture they see as more in evidence in the UK component Industry than in many of our international competitors as being a major issue. The UK advantage of being “flexible” and highly responsive to engineering demands by the vehicle manufacturers has a tendency to breed engineers who are first class in a crisis but less adept when it comes to business process improvement, medium and long-term business and engineering planning and strategy.
At a more detailed level our research identified ten key skills to make the sector competitive going forward.
1. Leadership and management are considered to be weak in the UK with significant gaps as you go further down the supply chain to smaller suppliers as the infrastructure becomes leaner. This is manifest by the overwhelming view that medium to long term strategic planning is weak in the UK supply base. Over 30% of businesses have no business plan and 50% no documented and integrated business training plan.
2. Programme management is poor compared to Japan with UK suppliers perceived as overestimating their competences and underestimating the task. A new approach to this is needed in the detailed disciplines of UK business particularly the skills of project as well as programme management.
3. Production and process engineering - The ability to develop and improve processes and to maintain a tight discipline on the quality of the manufacturing processes and products. Concern was expressed that not only does UK manufacturing suffer from weak engineering skills but there are few excellent and effective engineering tutors /teachers to assist in the need for industrial engineers who are fully skilled in the breadth of their businesses processes and products.
4. Continuous Improvement / Lean / Kaizen – Both the technical skills and process consistency to suitably execute and embed improvements outside a narrow base of effective companies is lacking. This could, if handled well, be a driving opportunity for this country. It has shown it can learn. It now needs that learning and skills be entrenched across the breadth of functions in each business. We appear to be flexible and willing to accept step change but lack the commitment to disciplined continuous improvement.
5. Supply performance and logistics skills - The ability to deliver new technologies, prototypes, products and services consistently day in day out to meet exact customer requirements is an ongoing UK issue which was highlighted also by the suppliers themselves in the Skills4Auto research. There is an opportunity for UK suppliers to develop stronger skills of managing the whole logistics chain for their customers.
6. New product innovation - Skills to evaluate and determine new products and processes are crucial for the UK’s manufacturing future. The decline in UK domiciled supply companies and their R&D centres has had a significant impact on the level of innovation and new technologies, whether in design or manufacturing.
7. Technical skills for emerging/winning technologies, products and processes, which will require industry, government and academia to identify, encourage, train and develop the best people to feed the demand.
8. Multi disciplined working with new integrated competences, as technology becomes more complicated and knowledge based automotive systems become more common (Traffic management, infotainment, integrated safety etc). This will require different management skills from research to production, distribution, sales and service.
9. Customer service skills - The Vehicle manufacturers and the 1st Tier component suppliers as customers rate the Industry’s skills on customer service as just above poor. Therefore training and development of employees irrespective of their function is needed to transform this perception.
10. Basic skills / Skills for life - Government does not deliver initial basic skills and UK business does not consider it should remedy Education / Government failures. Therefore UK manufacturers suffer in comparison to emerging countries. We do not have comprehensive literacy, numeracy and IT skills in the workplace.
In short the critical element is making engineering and manufacturing an interesting and sought after career built around the demands of the new technologies and the new competitive dynamics of the global industry. The UK already has one of the strongest and most vibrant MotorSport sectors in the world so the trickled down effect needs to be accelerated to the automotive sector in the UK as we move into a new and more dynamic era of competition.
There is a unique opportunity for the UK to build its position as the centre of innovation and technology for the automotive industry
The view of many of the industry executives and academics interviewed as part of this study confirmed the trend that UK based 1st Tier suppliers will continue to expand their component sourcing to cheaper economies and they will become the assembler /full service supplier. This trend will have a profound effect on the UK based sub suppliers at Tier 2 and 3 companies who will lose out.
It will need a more strategic approach by suppliers at all levels to be more proactive at developing and implementing their strategy to position themselves as integrated suppliers of complete high value add vehicle systems, for example, and manage the risk associated with the transition.
Leaders in the supply chain will need to put in place a vision and strategy to deal with the changes facing them over the next 10 years and to improve their management skills, particularly in planning and implementation, which are considered by their customers to be weaker in the UK than many of our competitors. This current weakness leads to few professional business plans and a lack of effective financial investment in both the short and long term.
The UK strategy needs to incorporate the full business wide blending of all functions in the same direction and to understand that it needs to ensure that quality, product design and development, process engineering and efficient manufacturing and supply are critical to success along with strong supporting aligned functions within Sales, Finance and HR.
Vehicle manufacturers, particularly the non-Japanese manufacturers in the UK, encouraged by the government, need to realise that they need to build genuine partnerships and relationships with their suppliers to allow their partner-supplier to plan and invest in a way that their non-UK suppliers are able to plan and invest.
This view of an industry working to its common good in a UK plc strategy, although difficult to apply, was a consistent suggestion including the sharing of intellectual property and mutual support for staff up-skilling.
The industry needs to establish a dynamic, responsive manufacturing culture that is focused on pro-actively managing customers’ needs. The emphasis means detailed customer awareness and speed of fulfilment of both the design and delivery of the product. This entails being process innovative, handling complexity simply and quickly and being able to manage significant engineering change in a totally competent manner.
All of this requires a dramatic change to the development and deployment of skills in the UK. The need to provide incentives for technical and process skills development across all key disciplines is of primary importance. The first challenge is to identify the challenge, vision and direction to get people to want to join the industry. Secondly the development of skills needs to be aligned with the new reality, new technologies and new competencies, in depth and at every level with a primary focus on the technical skills determined in the future UK technology specialist sectors as defined in the UK plc Strategy.
The role of government and academia in this process cannot be over stated.
Government and academia have a crucial role to play but the UK’s current policies and strategies are an impediment to success
For the UK to have a future successful automotive future the Government along with industry and academia need to work together to address how best to achieve a future strategy. One country which has been able to address changing markets over the past ~50 years is Singapore. Since the early 1960’s, the end of British colonial rule and the closure of British military bases, the Singapore economy has transformed from a regional port into an export-manufacturing platform with an integrated services hub and is now shifting towards a knowledge-based economy. The key elements allowing these changes are strong government policy intervention; reliance on a free trade and foreign direct investment; investment in physical infrastructure and human capital to ease supply constraints; stable macroeconomic environment and industrial relations; and liberal use of fiscal incentives to lower the tax burden on business(1). Using this as an example of successful change, the UK Government needs to consider how best it can support the change to the UK automotive industry.
The future of UK car production now rests with foreign manufacturers, whose demands for increased government support for the industry are likely to continue to grow along with production levels. For this to grow in the right direction the Government must develop strong relationships with key international players such as Toyota, Honda and Nissan as well as Ford, BMW, Peugeot and GM. For example Toyota is considering installing new technologies here - this should involve Government from the first steps. Providing post-investment services and keeping investors satisfied is likely to encourage them to stay, reinvest and expand.
Government, as part of its involvement in developing the UK industry strategy, needs to consider this - What makes the UK a good place to invest? It should ensure that what currently attracts continues to attract appropriate inward investment in the automotive industry, including assembly and manufacture. Currently the UK ranks 4th on the FDI (Foreign Direct Investment) confidence index(2), is the single largest country recipient in terms of number of projects in Europe(3) and viewed as the 9th most attractive global market by transport equipment providers(2).
Government needs to be more customer aware with regard to enacting its own and European legislation:
- Examples quoted included adopting laws without considering the competitive consequences, e.g. Climate change levy.
- The EU working hours directives, which limits working hours per week to 55hrs even for countries opting out of the standard 48 hrs week - the new restrictions are seen as taking away a key advantage that many foreign investors considered when installing operations in the UK.
- ‘Burden of legislation’ – An SMMT survey revealed that 95% of executives surveyed said that the burden of legislation has increased costs significantly over the past 5 years and 93% believe the situation will worsen over the next 5 years.
Suppliers need to have a clear channel of access to a one-stop shop that can give impartial advice on the variety of business support and access to business processes such as benchmarking, business improvement and skills development. With the current diverse number of organisations it is difficult to know where the best place to go to for support is. This could be arranged by common supplier interest groups. Supply chain support through DTI / Business Link etc should be re-considered so that it is one of the specific support services from this integrated one stop shop service. There are some successful initiatives where their best practice and success can be fed into the UK strategy. For example in the last year the DTI Manufacturing Advisory Service (MAS) has delivered more than £90m of added value to UK manufacturing and boosted productivity by an average of 20%(1). The Automotive Academy and Industry Forum are critical players who can be used to focus on the wider Industry support mechanisms and be really effective in encouraging radical sustainable changes enabling the key international players to look after themselves.
Whilst business taxes in the UK are one of the lowest at 30%, they should be both lowered and simplified to encourage enterprise. The tax regime should be used to encourage greater efficiency, R&D /capital investment in UK plc drivers and people development. Although the R&D tax credit works by allowing companies to deduct 150% (under the SME scheme) or 125% (under the large company scheme) of qualifying expenditure on R&D activities when calculating their profit for tax purposes, this can be quite confusing including the understanding of the range of other grants and funding streams that are available. By simplifying and focusing the funding process as well as providing fiscal incentives to lower tax burdens, Government can ensure that funding is delivered to the widest range of UK businesses and particularly that foreign investors can easily understand the benefits available of investing in the UK.
Government should positively encourage a UK engineering infrastructure with Universities and Business to increase the number of engineering graduates into industry. This should include ensuring graduates build up their experience across the functions of industry and develop a stronger international business and people awareness. From a recent SMMT survey 43% of executives said it was hard to recruit appropriately skilled employees(2). For example Toyota are planning to invest £10 million in a training facility in Nottingham, along with the establishment of an Academy specialising in educating local students pursuing a career in the automotive industry(3). The Government should positively discriminate where there are skills gaps and take positive action to drive this agenda through education and business.
Government should understand the problems caused by the poor transport infrastructure in this country. Over three quarters of executives surveyed in a recent SMMT survey said that the transport infrastructure of the UK makes it increasingly difficult for UK companies to remain competitive(2). The initial competitive benefit of being able to supply hourly / twice daily etc in order to minimise component stock holdings within the vehicle manufacturers as “just in time” are disappearing as trucks are continually delayed by poor road and highways, and inadequate /out of date communication systems. This transport issue will enable foreign countries to be just as responsive from external supply locations. In addition the cost of doing business here through communications and transport inefficiencies is a noticeable adverse factor for UK suppliers and foreign investors.
The economic argument is compelling and the price of not acting is high
There are constantly new entrants to the automotive supply industry and whilst initially these new entrants pose little threat due to quality and supply issues, given time, these new entrants aggressively improve manufacturing processes to be able to produce quality components at low cost, to which the UK amongst others will eventually lose out as they are unable to compete solely on price. Whilst the UK 1st Tier suppliers can source components from these low cost sources and become assembled system suppliers, the 2nd and 3rd tier sub and smaller suppliers are at a much greater risk of folding unless some initiative is introduced to benefit sourcing from local UK suppliers.
It is not just manufacturing that is moving to low cost countries, so are R&D centres. India is a prime example where R&D centres are being relocated. Here there is the advantage of English speaking, highly talented, well-qualified engineers where labour rates are approx. 5 times lower than in the west. Moving R&D centres to these locations allows 1st Tier suppliers to be more aggressive on price and reduces their overheads. These countries are keen to encourage foreign investment, for example in India the Government promotes R&D by providing suitable fiscal and financial incentives, e.g. 150% of R&D expenditure can be claimed back from taxable profits(1). In addition, vehicle manufacturers will also be considered for a rebate on the applicable excise duty for every 1% of the gross turnover of the company expended during the year on R&D.
Unless the UK can offer something, either in terms of levels of innovation or attractive investment opportunities, which is not available elsewhere, it will continue to lose out to the lower cost centres. The UK has the advantage of being in the right time zone to be able to work with Asian and North American customers in the business day. It also has the reputation as being innovative and having engineers with high levels of capability. It is these qualities that should attract overseas investors. Here a company can set up an R&D centre with engineers who are experienced in this area and can be up and running in a very short time. To set up such a similar centre in a country such as India will take many years, as although the engineers are highly trained, they lack the experience of working in these technologies, products and processes.
British Engineering has been at the forefront of many innovations and as such has a high level of advanced technical know-how. This is currently exploited in the area of motorsport but little elsewhere. For FDI (Foreign Direct Investment) this is one of the key advantages and should be used to encourage those investing in the automotive industry to further their investment with R&D centres.
Industry, Government and Academia do not seem to be serious about engineering and we are losing our historical advantage. Without a clear strategy going forward nothing will change and current problems will get compounded. Failure to support and develop a sustainable automotive industry will jeopardise the £8.5 billion of value add that the industry contributes to the economy and also the jobs of over 250,000 people.
Conclusions and Recommendations
The future of the UK Automotive supply chain is set to change. Currently there is very little original development and engineering in the UK as the majority of the key vehicle manufacturers and 1st Tier component suppliers are foreign owned and subsequently have their R&D facilities distributed globally. This causes there to be major gaps in emerging technologies where the UK does not have the technology, capacity or capability to compete. Other emerging competitive countries in, for example Eastern Europe or China, have a strong or rapidly developing engineering base. For the UK 1st Tier suppliers, being competitive will mean sourcing components from lower cost countries, the UK will not be able to cost cut its way to be competitive. This will have a knock on effect to the 2nd and 3rd Tier sub suppliers who are likely to fold.
For automotive industry to remain in the UK, the UK plc needs to define a combined strategy, which is beneficial to businesses in the UK Automotive supply chain and ensure that the required skill set is available.
It is currently viewed by many in the industry that this skill set does not exist. UK engineers generally have a good understanding of engineering and manufacturing best practice through their interaction with a range of vehicle manufacturer’s, but there is an inadequacy in leadership, vision and strategy. Programme and project management is poor with competences often overestimated and the size of the task underestimated. UK based automotive suppliers do not apply business improvement on a consistent and continuous basis across the complete organisation, managers don’t have the soft skills necessary for effective and pro-active people leadership and management and the basic skills in literacy and numeracy are declining. Newly qualified engineers have little interest in pursuing automotive engineering careers, as there is no obvious career path or inspirational role models.
The UK automotive industry along with support from the Government needs to stimulate significantly increased levels of R&D and innovation. This can be through attracting research and development facilities from foreign vehicle and component manufacturers, which can be used to stimulate world-class innovation, inward investment from large multinational 1st Tier or investment in UK R&D businesses. The Government needs to enact legislation, which is to the benefit of the UK Automotive Industry.
By investing in R&D and component manufacture on a ‘value added’ basis, a dynamic responsive culture can be created, which has a focused set of core competencies and is focused on pro-actively managing customer needs. Improvements to the poor transport infrastructure will aid the support of Just -in Time concepts, enabling the implementation of better manufacturing processes.
The excitement of Formula 1 and the UK’s leading position in this automotive sector should be used to stimulate automotive skills development especially in engineering. It has already been determined that the necessary skills for a successful automotive future are sadly lacking and it is up to the Government and Academia together to highlight the needs for reform in the education system, and the need for businesses not only to train their staff in the necessary skills to be able to implement lean practices but to have a clearly defined and communicated vision and plan for the future.
Industry in partnership with academia and the Government need to agree, focus and drive through the skills development and investment required to secure an automotive future in the UK for the benefit not just of this particular sector but for the long term benefit of UK plc and its people.
Acknowledgements
Skills4Auto and Ricardo Strategic Consulting would like to thank the following organisations for their contributions to this report. The report however has been completed by Skills4Auto and Ricardo Strategic Consulting who take full responsibility for the final views and recommendations. Skills4Auto would like to acknowledge the major contribution made by Ricardo UK.
Ford Motor Company, Toyota Manufacturing UK, Caterpillar UK
Pilkington Automotive, Stadco Plc, McLaren Racing
Ricardo Technology Group, Cardiff University Business School
Lean Enterprise, BMW, CMA Moldform, Concentric Pumps
Dana Spicer Axles, Denso Manufacturing, Federal Mogul
GKN Driveline, GKN Sinter Metals, Goodyear Dunlop Tyres
Hutchinson UK, Johnson Controls, IM Kelly Automotive
INA Bearings, Mahle Filter Systems, Mann and Hummel
Perkins Engines, Prodrive, PSM International, Remploy Automotive
Rencol, Valeo, ZF Lemforder
Click Here to download the full version of the report (Word Document 2.7Mb)
Go Back |
