High productivity and strong exports are putting automotive at the forefront of UK economic recovery but worries over access to finance are still a concern and regulation looms
Leaders from the UK automotive industry met in London yesterday for the SMMT annual summit.
The atmosphere at the conference was optimistic with robust figure on UK automotive success being freely bandied about.
Ian Henry, director of AutoAnalysis, a firm recently commissioned by SMMT to clarify the opportunities available in the auto sector and suggest reasons for lack of finance, show cased some impressive statistics. AutoAnalysis measures UK automotive turnover at circa £50 billion, with £25bn accounted for by exports. This export business represents around 11% of total UK exports.
Furthermore, despite an oft perceived chasm between the industrial capabilities of the UK in comparison to better supported European competitions AutoAnalysis has found that the growth rate of British automotive manufacturing (40%) is significantly higher than that in either France (25%) or Germany (14%), a trend which bodes well for the future.
Minister for Business and Enterprise, Mark Prisk, who delivered the closing keynote at yesterday’s event, congratulated automotive leaders on their success and thanked them for the advice and engagement they have given to government in the past year, helping government adjust policy in order to be more supportive.
Mr Prisk was keen to show that he was on good terms with industry, name dropping freely throughout his speech. His spoke of his time driving the new Nissan Leaf with “Trevor” (Trevor Mann), and of frequent chats with “Juergen” (Juergen Maier) and “Joe” (Joe Greenwell). Prisk also spoke of his recent visit to the Paris Air Show where he said that conversations with Aerospace leaders had shown they were “getting jealous” of UK automotive success.
However, Mr Prisk was not all deference and flattery. As he spoke of the need to maintain and develop international confidence in the UK as a location for automotive investment, Prisk made it clear that it is industry leaders who are responsible for persuading investors.
This requirement for strong management and leadership echoed opinions expressed earlier in the day. In a session focussing on access to finance, representatives from venture capitalist firm Ipso Ventures and from Royal Bank of Scotland stated frankly that the single most important quality in a potential funding recipient was strong management. Nick Rogers of Ipso Ventures said: “VC’s invest in management, not in products or technology.”
Advising companies on how to make themselves attractive to investors he commented: “Find strong management. If you are not it, move aside. Find someone with reputation and experience. Preferably someone who has made money in the past.” Though Rogers suggested the latter quality might be difficult to find within the automotive fraternity and inferred that non-sector specific management skills might be more attractive.
On one particular point Roger was forthright – having a technical director of academic as CEO of a company is a death knell to investment hopes.
Rogers comments seemed to imply that many manufacturers, particualrly at the start-up stage, do not understand how to approach access to finance and that difficulties encountered in accessing it could easily be solved by putting together stornger busiess cases. A representative from RBS concurred.
Other topics discussed at the SMMT summit 2011 ranged from ways to exploit new media and the internet in innovative marketing and sales methods, to opportunities for entering new markets overseas. During conversation on the final point a pertinent warning was given by Nick Cunningham, a partner at law firm Wragge & Co, for leaders to look out for the implementation of the Bribery Act this Friday.
This new Act will make the payment of ‘grease payments’, which are common practice in many companies for the facilitation of tenders and contracts, extremely dangerous, both to individuals and companies. Director can face up to 10 years in prison for infringements.