Legislation costs are continuing to blight competitiveness for the car industry, according to the Society of Motor Manufacturers and Traders’s third annual survey, ‘Automotive Manufacturing 2005’.

While productivity is improving and initiatives to address the skills gap are starting to bear fruit, the industry has called for action to limit the legislative cost burden.

The sector remains critical about transport infrastructure and has called for more support from the Government for international trade.

SMMT president Roger Putnam said: “Our survey shows the strength of feeling about the cost burden of new and sometimes conflicting legislation. This central concern is one reflected across Europe but my hope is that it may subside in years to come.”

Key report findings reveal:

Growth is expected by most companies in the next five years. 84% of those surveyed say that prospects are good compared to 81% last year and 75% in 2003.

95% of those surveyed say that the burden of legislation has significantly increased costs in the last five years; 93% believe the situation will worsen in the next five.

Respondents are pessimistic about improvements in the UK business environment. While 53% feel it will improve over five years compared to mainland Europe, this figure falls to 30% when compared with the US and just 4% in relation to companies operating in the Asia-Pacific region.

The UK transport infrastructure makes it difficult for UK companies to remain competitive according to 78% of those surveyed, with 87% believing it will not improve in the next five years.

Just 9% of respondents feel that government support for international business development has improved over the last year.

On skills, 48% of those surveyed say that it is hard to recruit appropriately skilled employees. However, this is an improvement from 65% last year.

Level three skills remain the greatest headache for employers. Nevertheless, in three years, the proportion of respondents citing it as the most difficult area to recruit has fallen from 46 to 29%.

Two-thirds of companies are aware of the work of the Automotive Academy, compared to just one third last year, with 89% saying it is key to addressing the skills gap in automotive manufacturing.

Automotive Manufacturing 2005 – the Industry Perspective was published at SMMT's annual dinner yesterday. Copies are available to download here