"Thank you for inviting me back, I was here a couple of years ago just after the Coalition was formed. Those were difficult times as well. The automotive industry in the UK was coming out of recession after a very tough few years during which time UK based companies and workers had shown flexibility in responding to the fall in demand during the downturn.
That flexibility and toughness has paid off because two years later we are seeing sustained and strong growth which is all the more striking because of what’s happening in the rest of the economy. What’s happening today is a very positive story and I think it’s worth recapping.
Production was up over 5% last year, producing 1.4 million vehicles, of which, over 80% exported and industry is on track to produce 2 million by 2015. Engine production was also up by nearly 5% to 2.5 million units. That good news has continued into this year, according to SMMT figures. UK car manufacturing rose by 9.3% in April, and was up 11.8% over the first four months of the year. Exports up 10% in the year to date and in the first quarter of 2012 we have seen the value of vehicle exports exceed the value of vehicle imports for the first time since 1976.
I’ve seen a lot of this first hand. Only last week I was in Southampton opening the new deck in the port where there was a constant stream of Jaguars and BMWs rolling off the production line going off to Europe into containers. In the last couple of years I’ve made a point of going round almost all of the volume car factories and specialist motor sport producers. It is a very good story and the industry needs a massive pat on the back.
Just to put it into a bigger context and what essentially the industry now adds up to, we have more than 40 companies manufacturing vehicles in the UK. As well as global volume car makers there are van, truck and bus builders through to specialist, niche marques. The best plants in the UK are amongst the most productive in Europe. Added to that there’s the quality of design and the quality of management. In all, over 3,000 companies, directly employing 135,000 people, are active in the sector, generating over £10 billion for the UK economy annually – while the related retail and service sector brings in a further £22 billion each year. On top of that, the UK’s motorsport industry brings another £6 billion to the UK economy annually. We’re talking about a massive contribution to the UK economy. And you get a sense of real momentum, we’re getting a lot of new investment, certainly over the last 18 months, two years, £5.5bn of new investment by the industry.
The headline cases such as Jaguar Land Rover’s announcement on 11 May that it is spending a further £1 billion with UK suppliers (that’s on top of £2 billion awarded in March 2011) is an indication of the strength of the UK auto sector and the commitment to the UK of major producers and exporters.
Nissan has recently confirmed production of two new models for Sunderland which they estimate together represent over £250 million of investment and will create around 3,000 new jobs at the plant and UK supply chain. Other announcements recently from BMW, Ford, Bentley, Toyota and others.
Some of these projects are being supported by successful bids to the Regional Growth Fund. Round 3 closes tomorrow and I understand that there will be further bids from automotive companies.
I think it’s worth mentioning that a lot of this activity is happening without government. This is private enterprise, private investment. We did facilitate a bit but we don’t have money to hand out but we try to use what we have carefully. The Regional Growth Fund has proved to be successful.
I think an example of British motor vehicle industry at its best was the decision of General Motors to build their next generation Astra at Ellesmere Port on a strictly commercial basis. The really significant factors were the flexible labour agreement and what they regarded as the fact that the UK has a very good business environment. I went to the States to talk to Mr Akerson and Mr Girsky and to try and persuade them this was the place to be. I think the arguments that really cut through to them was this idea of Great Britain Limited, that we had a very co-operative, very flexible work force, and that the government was very much four square behind the industry. That was a persuasive case. As a result it was a real boost to morale, not just in their own plant but also the supply chain coming in off the back of it".
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(Article taken from www.bis.gov.uk/news/speeches)