Comment Let’s give firms our full support
The multimillion-pound investment will give Steel and Alloy much needed extra capacity and allow it to process new forms of high strength steels for its sister firm Gestamp.
It will also allow the firm to convert existing equipment to process aluminium.
That’s important as the auto industry is changing and changing much more quickly than many people realise.
Cars increasingly involve a number of different materials such as high strength steel, aluminium and composites in an effort to get weight and emissions down.
So Steel and Alloy is positioning itself well for the future.
Going forward, we are going to see nothing less than a revolution in the auto industry, away from the international combustion engine towards autonomous, connected and electrified (ACE) cars, as I’ve noted here at the Post many times.
Stricter emission regulations, lower battery costs, better range and a more widely available charging infrastructure, plus increasing consumer acceptance, will combine to create a big push for more use of electric vehicles (EV) over the next two decades.
I can see the market share of EVs being as high as 15 per cent by 2025 rising to 50 per cent by 2030.
Some analysts even see the European car market potentially being fully electric as early as 2035.
And driverless cars really are on their way as well.
Demonstrator driverless ‘pods’ made in the region by firms like RDM and Westfield are already being tested on our roads – for example at Heathrow, and in Milton Keynes and next in Coventry.
Having sat in one of those driverless pods, I’d be the first to admit they look a bit odd but don’t let that understate the radical shift such cars could well bring in the future.
Driverless cars may not be here until the mid to late 2020s but, when they do arrive, they really could revolutionise urban transport.
More broadly, we are seeing what’s termed the ‘Fourth industrial revolution’ as new technologies combine to take us into a new era.
Think of additive manufacturing, automation, the internet, nanotechnology, bioscience, electronics, photonics, advanced materials and renewable energies.
That’s important as, after years of off-shoring and decline, smart manufacturing may enable the upgrading and anchoring of manufacturing activities in the UK.
Indeed, we found one in six Midlands manufacturers are bringing some manufacturing home (reshoring), partly because of rising costs overseas and quality issues but also because of the use of more automation and to be nearer to markets so as to have a quicker turnaround time.
I think we could see the rebirth of small scale local manufacturing – even in the car industry as scale becomes less important.
Against these profound changes, car firms and suppliers – like Steel and Alloy – are having to make big investments in new technologies at a time when uncertainty is high.
Brexit in particular is posing a big challenge for the auto industry.
As I have stressed repeatedly, the uncertainty on trade with the EU needs to be nailed down as soon as possible so investors can retain confidence they can assemble in the UK and export to Europe without tariff or non-tariff barriers.
Furthermore, I’d argue the Government has to do more than just strike a new agreement with Europe.
For example, Britain will need to do much more to create its own skills.
This means developing better education, better skills training and better re-training programmes as part of a wider industrial policy (we could look to Scandinavia and Singapore for examples).
And it’s a great shame that industrial policy measures like the Advanced Manufacturing Supply Chain Initiative and Manufacturing Advisory Service were scrapped by a previous government.
These decisions need to be revisited as quickly as possible.
Given the recent depreciation in sterling, there is potentially a new opportunity here for reshoring manufacturing further.
That isn’t going to happen automatically, though, given the barriers to reshoring we have identified in our own work (for example on energy costs).
The key point is that, given both opportunities and risks facing the UK manufacturing, a better funded and more active industrial policy is needed to boost competitiveness in manufacturing, for example through better capital investment allowances.
In this sense, the Government’s recent industrial strategy, while well intentioned, was only a start.
We need real devolution over skills, industrial policy, infrastructure, innovation and business support so as to better make better decisions locally.
That way, we can better support and encourage great companies like Steel and Alloy and encourage them to invest further in capacity, technology and skills.
We want to see more manufacturing investment if we really want to get the Midlands Engine really revved up and to rebalance the economy.
In short, we need to encourage more Steel and Alloys. Professor David Bailey, Aston
Business School