Five ways to help the Midlands automotive industry prosper
Midlands. A word we hear more and more often is ‘disruption’.
Technology innovation, evolving customer behaviour, regulatory changes and a turbulent global landscape are just some of the factors contributing to this disruption.
Yet, according to KPMG’s Rethink Manufacturing report, fewer than 50 per cent of manufacturing businesses have a coherent strategy for Industry 4.0. In the words of Rahm Emanuel, Mayor of Chicago: “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”
I think now is a good time to evaluate supply chains and re-evaluate local supply.
It’s well documented that an estimated 56 per cent of components that go into UK-built vehicles come from overseas.
What’s not so well documented is what happens in the lower supply chain tiers.
Having said that, we know there are some commodities where we struggle to find the capacity and capability in the UK.
But there are others such as castings, pressings, precision parts and so on which are. Our research amongst buyers indicated an interest and willingness to source more in the UK and this is a good opportunity to develop local suppliers. We’ve probably all heard stories about tools from the Far East which never run out of the box.
I went to the GTMA’s excellent Meet the Toolmaker event at the MTC at Ansty Park in November which showcased Midlands toolmakers’ capabilities.
It’s too easy just to look at the piece price rather than the total acquisition cost.
There is a lot of good practice cascaded from the original equipment manufacturers to the tier one suppliers but the message can be lost in translation when it’s passed on to the lower tiers.
It is surprising, though, just how much help and support there is for supply chain development.
The support landscape can take some navigation. There are some great things going on that position the Midlands as a world-class location for the development and testing of connected and autonomous vehicles.
This will bring new skill sets to the sector as established paradigms are overturned.
Hand in hand with driverless vehicles are electric vehicles.
We’ve seen the announcement of the UK Battery Industrialisation Centre to be built in Coventry which will position the Midlands as a world-class location for energy storage development.
I think the hybrid will be with us for a while yet as a transitional (that word again) stage while the infrastructure catches up.
But the change away to electric propulsion will happen and provide opportunities for the supply chain.
The battery tends to get the most visibility but there will be significant opportunities for other components such as pressings for motor laminations, reducing structural weight, cooling systems and so on.
Considering how to adapt to the new technologies, especially in the ramp-up stages, would be time well spent.
Again, there is support available both in terms of practical support and financial support with things like R&D tax credits. Many companies are exporting to many countries.
My advice would be to look to increase trade to countries outside the EU, particularly India which has huge growth potential as an automotive market and North America which.
I would also follow the lead of other companies by looking to establish a stronger footprint in Europe, probably Eastern Europe, which could range from direct sales through joint venture to acquisition.
Those are things I know I wouldn’t regret. David Shepherd is founder of Drive Midlands, a support programme for the automotive industry led by Business Birmingham