UK could lose 90,000 jobs if it loses race for ‘gigafactories’
CARMAKERS have warned that 90,000 jobs could be lost if the UK fails to build enough car battery ‘gigafactories’.
The Society of Motor Manufacturers and Traders, the body representing carmakers including Jaguar Land Rover, said job losses would be “concentrated outside of London and the South East, further increasing regional inequality”.
It follows similar warnings from industry experts, and comes as West Midlands Mayor Andy Street and the region’s Combined Authority proceed with plans to build a giant gigafactory on the site of Coventry Airport.
The Coventry project is only likely to succeed if an application for Government subsidy is approved.
However, experts warn that the £400 million the Government has set aside to subsidise gigafactories across the country is not enough, and point out that other European countries have provided up to £750 million per factory.
A gigafactory is used to build the batteries used in electric vehicles.
These are bulky and heavy items, very different to the traditional car batteries found in petrol cars, and carmakers are expected in the future to build new models close to battery suppliers. It means that if the UK lags behind other countries in building gigafactories, vehicle production is likely to shift overseas.
In a new report, the SMMT looked at what could happen if the UK fails to manufacture batteries at home.
Considering the likely effects if only one gigafactory is created, the report said: “As a result, around 90,000 jobs are lost, with the majority of these concentrated outside of London and the South East, further increasing regional inequality.”
However, a more optimistic model has the UK building three or four gigafactories.
If this happens – and the UK signs “an ambitious programme of trade deals” – the report said the automotive sector could gain an additional 40,000 jobs.
The SMMT called on the Government
You can see that the global race for gigafactories is well and truly on Ed Miliband
to provide more support for carmakers, saying: “To save the industry we want to preserve and build on the automotive sector’s current economic contribution, significantly more government support will be needed to accelerate change.”
The Government is currently offering a total of £1 billion to help the automotive sector make the switch to electric vehicles, through what it calls the Automotive Transformation Fund.
It comes in advance of the ban on the sale of new petrol and diesel cars, coming into force in 2030.
And as we’re seeing in Birmingham with the introduction of the Clean Air Zone, measures are already
being taken to encourage owners of high-pollution petrol or diesel vehicles to make the switch to cleaner models.
But the SMMT suggested an additional £10 billion was needed.
Borrowing Boris Johnson’s “build back better” catchphrase, the SMMT called on the Government to create “a new Build Back Better Fund to support advanced manufacturing jobs for the future. This would help fund automotive production line transformation, skills retraining, and energy costs relief, ensuring that the UK remains competitive for investment.”
The SMMT said: “If this fund was of a similar order of magnitude to the funds recently proposed by the US
and EU, it would be over £10 billion in size.”
And it urged the Government to ensure at least 2.3 million public charging points are in place by 2030, making it easier for owners of electric cars to charge their vehicles.
As part of its pitch for support, the SMMT highlighted the huge contribution of carmaking to the UK economy – and particularly to the economy of the West Midlands.
It said 180,000 people are directly employed in auto manufacturing with 680,000 workers in the wide automotive sector.
Unlike other leading UK industries, the value created by the automotive industry is overwhelmingly located outside the South East of England.
While around 61% of the IT or financial industries are located within London and the South East, for the automotive industry, it’s just 12%. Instead, the automotive industry has concentrations across the country, with the sector generating 6.8% of the local economy in the West Midlands and 3.5% in the North East, the report said.
The median wage in the automotive industry is around £35,000 a year, or 35% higher than the UK average.
If you look at the regions where the industry is strongest, the disparity is even stronger.
In the North East, average wages in the motor industry are 62% higher than average regional wages, and in the West Midlands 59% higher, the SMMT pointed out.
Labour is promising more support for the industry.
In a speech to the SMMT this week, Shadow Business Secretary Ed Milliband said: “I look at what governments in Germany, France, China and the US are doing and you can see that the global race for gigafactories is well and truly on.
“And it is particularly pressing for us in the UK because of the rules of origin that will be in place by 2027.
“We welcome the government’s Automotive Transformation Fund. But in my view we should be willing to go further.
“The £400m to support battery manufacturing is a start, but not enough.
“That’s why we have said that the government should commit to helping to finance the creation of three new, additional gigafactories and their associated supply chain by 2025 with an investment of up to £1.5bn.”