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UK car manufacturing has 'mixed prospects'

The UK's car manufacturing future has ‘mixed prospects’ according to the House of Commons Trade and Industry Select Committee.

The Committee published its fourth report of session 2006-07, on the success and failure in the UK car manufacturing industry today.

The report identifies particular reasons why Longbridge and Ryton closed and for the loss of the third shift at Ellesmere Port. However, it says: “Though the combination of problems experienced by these plants may have been especially acute, we heard nothing to make us believe that they were unique to these plants or their parent companies. It is therefore all the more important that both the industry and Government put extra effort into improving skill sets throughout the sector, increasing the commitment to R&D, adopting lean manufacturing techniques and strengthening the local supply chain."

While the Committee does not believe that a shift in production from western Europe to the cheaper Asian economies is imminent, it believes that the closure of car plants in western Europe and the opening of up-to-date facilities in eastern Europe, using cheaper labour, will continue.

Addressing the closure of Ryton and the competition between Ellesmere Port and other GM plants in Europe, the Committee said: “It is clear that the logistical models adopted by GM and PSA have contributed to the cost disadvantages faced by Ellesmere Port and Ryton. However, other car companies are also importing significant proportions of their components and exporting most of their finished products, while still managing to manufacture profitably in the UK."

The Committee also expressed surprise that PSA considered labour costs higher in the UK than in France, and recommended that the Government study this potentially significant claim to see whether there is such an incentive to cut manufacturing jobs in the UK.

The Committee recently started an inquiry into the impact on UK business of the recent expansion of the EU to eastern and central Europe, and intend to consider, amongst other things, the synergies that UK companies could achieve through working better with their equivalents in eastern Europe.

Comment

The SMMT welcomed the report but said it was disappointed in the 'lack of strength and sense of urgency with regard to automotive manufacturing'. "The conclusions of this report are not new and industry continues to highlight the competitive pressures on industry and the skills shortage," said SMMT chief executive Christopher Macgowan.

"Industry executives and SMMT have consistently warned government about these concerns through regular dialogue and the SMMT annual issues surveys," he added.

Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA) a part of the Retail Motor Industry Federation (RMIF), said the report has failed to acknowledge the important part that the retail motor sector plays in the life of the motor industry. "Although the inquiry was tasked to look at car manufacture in the UK, it all-but ignores the distribution and sales aspect of the industry. This weakens the overall effectiveness of the report," said Robinson.

  • The Committee's report can be downloaded by clicking here.
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