Engineering news
Automotive supply chain companies plan to invest £225 million over the next three years, as efforts continue to boost the British content of vehicles built in the UK, according to a new survey.
The survey by the Society of Motor Manufacturers and Traders (SMMT) found that 94% of companies plan to invest in their businesses over the next three years – at a total of £224,485,000.
Of those, 79% intend to invest in plant, machinery or tooling; 73% in skills and apprentices; and 66% in new product development.
It found that 78,000 people are currently employed in the UK automotive supply sector, and 68% of companies plan to expand their workforce over the next three years. However, potential investment depends on continued political and economic stability and the long term growth of the UK automotive sector.
While the findings paint a positive picture of the health and confidence of British-based suppliers, respondents cited various challenges to success. The skills shortage is a key issue of concern, with 41% of companies saying the availability of skilled workers, apprentices and graduates could impede their company’s growth in the next three years. Other possible barriers to growth include exchange rate inconsistencies – identified by 62% of respondents – competition from overseas (58%) and a lack of visibility among purchasers (31%). Fluctuations in the price of materials (33%); energy costs (25%); and difficulty securing funding or finance (21%) were also concerns.
Mike Hawes, SMMT chief executive, said: “Britain’s car industry is booming, exporting more than ever, and it’s encouraging to see this opening up huge opportunities for the UK supply sector. A strong domestic supply chain is critical to a successful automotive sector and we are confident that, with the right political and economic conditions, significant supply chain investment can be secured, delivering more jobs and growth. Many of the UK’s competitors have far larger and stronger supply sectors, however, so continued government collaboration through organisations such as the Automotive Council will be critical as we strive to re-shore more supply chain work.”
The survey found that 93% of respondents believe that increasing the volume of business they do with UK-based vehicle manufacturers and major suppliers is important to their company’s future, while 77% of those that plan to invest said they will actively pursue new contracts with British-based customers over the next three years.
As well as winning new business at home, respondents were also keen to capitalise on opportunities to increase exports, with about 68% of those polled currently sending 40% or less of their production overseas. This is likely to increase, with 46% of those planning to invest in their business looking to expand into export markets in the next three years.
The survey revealed that 51% of those surveyed feel the state of the sector has improved over the past three years, with only 6% reporting that conditions have worsened. More than three quarters (78%) said they feel positive about their business’ prospects for the coming three years.