The Status Of The UK Car Industry

In his interview with the BBC on Sunday, General Motors Europe CEO Nick Reilly stated that the automaker’s largest issue was lack of UK suppliers. He indicated that this problem was so large that the future of the auto industry in the UK is uncertain.

Left without a supply chain based in Britain, automakers in the UK are importing substantial volumes of components, decreasing their competitiveness.

Mr. Reilly reported that his company gave up a substantial amount of business from the 1970s to 1990s. It is difficult for the automaker to remain competitive when the local supplier network is sparse. He said it is not enough that Vauxhall, Toyota, and Nissan are manufacturing the products.

The company still cannot compete with other countries that have suppliers located near the auto plants.

During the past two years, the number of people working in the components sector has decreased by more than 25 percent. Should the UK supplier base dry up, assembly is likely to shift overseas. This could signal the end of automobile manufacturing within the UK, something extremely detrimental to the regional economy.

The decline of supply sector workers has taken place over the long-term and is due to strategies employed by large automakers. First-tier suppliers and assemblers shifted their sourcing overseas during the past 25 years.

Their desire to reduce costs and deal with a smaller number of suppliers put a serious dent in the UK auto supply chain. Now that economic conditions are different, they want to buy locally but are finding few suppliers.

In order for the vehicle industry in the UK to survive, assemblers must commit to obtaining components locally over the long-term. This will require coordinated effort from the government, suppliers, and assemblers.

Bank financing must become more readily available for manufacturers or the economy may not rebalance, making it more expensive for UK car buyers to secure car loans.