The automotive sector is truly international, with sometimes long and complex supply chains providing a flow of parts and modules for final assembly. However, an array of factors, such as the need to control manufacturing quality, being close to R&D centres and avoiding long delivery times, is driving a trend towards the increase of manufacturing in the UK.
With the looming factor of the UK’s impending departure from the European Union, a recent report in The Economist highlighted the fact that many players in the UK automotive industry are actively looking to source closer to home.
In a survey by the Chartered Institute of Procurement and Supply (CIPS), one-third of UK companies said they are looking to replace their existing offshore suppliers with British equivalents.
According to The Economist report, many UK-based carmakers want to buy locally. This is partly for currency reasons, partly due to Brexit, but also to help them comply with potential free-trade deals, which will apply ‘rules of origin’ to products. Sunderland-based Nissan is blazing a trail, opening a centre near its factory to house local suppliers. This will help the company to double (up to 80%) the proportion of parts it sources from the UK.
The article cites other automotive examples: Liberty House, for instance, recently bought the UK’s last aluminium smelter – in Scotland – and will build a wheel pressing plant nearby. Liberty will eventually have the capacity to make a quarter of the UK’s annual demand of eight million wheels, says The Economist. At the same time, Liberty expects to double production of safety bars at its tube-processing plant in Birmingham.
Big reversal
The manufacturing sector’s contribution to UK GDP halved to 11% between 1990 and 2009, as many companies moved manufacturing offshore in the quest for lower-cost production. Now, that tide is beginning to turn back – albeit slowly.
There are many benefits to manufacturing in the UK and these include:
The current rise in UK-based manufacturing of copper-based components is a good example – from power semiconductors and solenoids to components for electric vehicles. Economics is the overriding reason, but there are several factors at work here.
At Dawson Shanahan, as we celebrate our 75th year anniversary in precision engineering, we have seen a rising demand for cold formed copper components. The main reason is that rising demand for electric vehicles – which use four times more copper than a traditional car – will push up the cost of the material.
One way to offset this will be to process copper more efficiently, using a technique like cold forming, which has around 80% lower scrap rates than other machining processes. Cold forming can be used to make many components – such as connectors – so could become a key local technology in this industry in future.
Automotive focus
Warwick Manufacturing Group (WMG) recently surveyed more than 250 UK-based manufacturing organisations comparing results for the sector against the overall picture. The WMG report includes a special focus on the automotive industry, comparing results for the sector against the overall picture. This was based on the 35 (out of a total of 262) automotive sector respondents to the survey. The UK automotive industry has placed a greater focus on being closer to R&D centres as well as reducing costs and avoiding capacity bottlenecks.
In the overall survey, this was cited in 56 cases – around 20%. For the automotive sector alone, this was given as a reason in 18 cases – a prevalence of just over 50%.
This could indicate that R&D is a strong driver in the sector – and that rooting R&D in the UK can lead to manufacturing opportunity – a strategy being supported by the Government’s automotive industrial strategy, said the report.
This strategy clearly lays out how the Government is planning on supporting the automotive sector including:
Advanced Propulsion Centre
Dawson Shanahan www.dawson-shanahan.co.uk