UK automotive accelerates thanks to £130m investment

The UK automotive sector has seen £130m of foreign direct investment over the past month, creating four new plants across the country and nearly 500 new jobs.

The Society of Motor Manufacturers and Traders (SMMT) set out its priorities to assure the UK automotive industry’s future success - image courtesy of Depositphotos.
According to DIT, UK automotive exported £32bn of products, including 1,340,000 vehicles, in 2017 to more than 160 international markets – image courtesy of Depositphotos.

The announcement from the Department for International Trade (DIT) coincides with a report from EY which found the UK remains the number one destination for FDI in Europe in 2017/18.

Four separate companies from across the globe have all chosen to invest in the UK and open new automotive-related plants this month, including:

Magna International Inc – a new aluminium-casting factory in Telford will support Jaguar Land Rover, the £77.6m investment from the Canadian company which is expected to create 295 jobs when operating at full capacity.

Polytec Ltd – a new facility, also in Telford, will manufacture bumpers and accessories for car manufacturers, including. Austria-based Polytec has invested £18m in the project, which is expected to create 100 Jaguar Land Rover jobs.

Steel & Alloy Ltd – a £26m investment by S&A’s Spanish parent company, Gonvarri to build a steel processing plant in Oldbury, which is expected 60 jobs. Customers include Ford, Jaguar Land Rover and BMW

Constellium – the Dutch company has invested £8m to build a new R&D aluminium extrusion facility at Brunel University in Uxbridge, which is expected 30 jobs

According to DIT, the UK automotive sector exported £32bn of products, including 1,340,000 vehicles, in 2017 (up 2.7% on 2016) to more than 160 international markets.

This includes lucrative emerging non-EU markets such as China, to whom the UK exported £4.2bn of automotive products last year – growth of 16.7% on 2016.

Importance of UK automotive to the economy

UK automotive turned over a record £82bn in 2017, contributing some £20.2bn to the economy – the eighth consecutive year of growth. Although a recent study by the Society of Motor Manufacturers and Traders (SMMT) showed that its impact on adjacent sectors could be significantly larger – around £202bn or 10% of UK GDP.

Jobs in the UK automotive sector also rose by 2.8% to 186,000 in 2017. During the same period, the industry improved its environmental impact with waste to landfill falling to a new low of 0.7% and sizeable reductions in water and energy use.

SMMT UK Automotive Contribution to UK Economy - Infographic

This positive growth is largely due to significant investment in the sector over the past decade, according to SMMT.

Potential trading headwinds

Despite this positive performance last year, the first six months of 2018 have been less encouraging, SMMT has warned.

Production output has fallen alongside slowing demand in the new vehicle markets; job cuts have been announced and investment has stalled, with just £347.3m earmarked for new models, equipment and facilities in the UK – almost half the sum announced in the same period last year.

Speaking at a recent industry Summit, SMMT chief executive, Mike Hawes, commented: “There is growing frustration in global boardrooms at the slow pace of [Brexit] negotiations. The current position, with conflicting messages and red lines goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership.

“There is no credible ‘plan B’ for frictionless customs arrangements, nor is it realistic to expect that new trade deals can be agreed with the rest of the world that will replicate the immense value of trade with the EU. Government must rethink its position on the customs union.”

There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment. Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it.”