Supply chain plans to ‘buy British’

A survey of more than 100 companies found that there is a planned £225m investment by SMMT supply chain members over the next three years.

In an effort to boost the British content of vehicles built in the UK, 94% of respondents said they plan to invest in their businesses over the next three years – at a total of £224,485,000.

Of those, 79% intend to invest in plant, machinery or tooling, 73% in skills and apprentices, and 66% in new product development. Further, 68% said they plan to expand their workforce. However, potential investment depends on continued political and economic stability and the long-term growth of the UK automotive sector.

The British supply chain consists of more than 2,000 companies contributing an annual £4.3bn to the UK economy. The sector suffered significant setbacks in past decades but is now undergoing a renaissance – 41% of the components in the average British-built car are now sourced locally, up from 36% in 2011.

But while these findings paint a positive picture, respondents cited various challenges with the skills shortage a key issue of concern. Two in five (41%) companies said the availability of skilled workers, apprentices and graduates could impede their company’s growth in the next three years, while other possible barriers to growth include exchange rate inconsistencies, competition from overseas, a lack of visibility among purchasers, fluctuations in the price of materials, energy costs, and difficulty securing funding or finance.

Mike Hawes, SMMT chief executive, said, ‘Britain’s car industry is booming, exporting more than ever, and it’s encouraging to see this opening up huge opportunities for the UK supply sector. A strong domestic supply chain is critical to a successful automotive sector and we are confident that, with the right political and economic conditions, significant supply chain investment can be secured, delivering more jobs and growth.

‘Many of the UK’s competitors have far larger and stronger supply sectors, however, so continued government collaboration through organisations such as the Automotive Council will be critical as we strive to re-shore more supply chain work.’

More than nine in 10 SMMT members (93%) told the survey that increasing the volume of business they do with UK-based vehicle manufacturers and major suppliers is important to their company’s future, while 77% of those that plan to invest said they will actively pursue new contracts with British-based customers over the next three years.

As well as winning new business at home, SMMT members are also keen to capitalise on opportunities to increase exports, with around two thirds (68%) of those polled currently sending 40% or less of their production overseas. This is likely to increase, with 46% of those planning to invest in their business looking to expand into export markets in the next three years.

The survey, carried out by ComRes in May, polled 112 of SMMT’s 220 Automotive Components Section members, ranging from companies with less than 10 staff to more than 250.