05 Corus Easn 003b


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Jon King's presentation from the EASN Conference, Friday 29th January 2010 at the Eaton Hotel, Birmingham

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05 Corus Easn 003b

  1. 1. UK Automotive Supply Chains EASN Conference Professor Jon King Director, Corus Automotive Engineering 29 January 2010
  2. 2. NAIGT <ul><li>New Automotive Innovation and Growth Team (NAIGT) </li></ul><ul><ul><li>NAIGT formed April 2008, chaired by Richard Parry-Jones </li></ul></ul><ul><ul><li>Industry-led project facilitated by DBIS Automotive Unit to take an holistic, long term view </li></ul></ul><ul><ul><li>Tasked with looking at: </li></ul></ul><ul><ul><ul><li>Opportunities for automotive sector in the UK </li></ul></ul></ul><ul><ul><ul><li>Barriers and obstacles for realising these opportunities </li></ul></ul></ul><ul><ul><ul><li>Strategy and mechanisms for accelerating progress </li></ul></ul></ul><ul><ul><li>Reported to Government 06 May 2009 </li></ul></ul><ul><li>NAIGT vision </li></ul><ul><ul><li>“ A competitive, growing and dynamic industry making a large and increasing contribution to employment and prosperity in the UK, and playing a decisive global role in developing exciting, low carbon vehicle transportation solutions” </li></ul></ul>
  3. 3. UK Automotive Council <ul><li>Agreement to set up an Automotive Council to </li></ul><ul><ul><li>Create a transformed business environment in the UK to provide a more compelling investment proposition for the related industries </li></ul></ul><ul><ul><li>Develop further the technology roadmaps for low carbon vehicles and fuels and exploit opportunities to promote the UK as a strong candidate to develop these and other technologies </li></ul></ul><ul><ul><li>Develop a stronger and more competitive supply chain </li></ul></ul><ul><ul><li>Provide a stronger public voice for the industry to support the value of the industry to the UK and to global partners </li></ul></ul><ul><ul><li>Ensure a strategic, continuous conversation between Government and the automotive industry </li></ul></ul><ul><li>Subsidiary Technology and Supply Chain Groups have been established to address key areas of the remit </li></ul>
  4. 4. Background data <ul><li>Sector adds £9.5bn to the economy </li></ul><ul><ul><li>0.8% of UK economy </li></ul></ul><ul><ul><li>0.6% of UK employment </li></ul></ul><ul><ul><li>13% of manufactured exports </li></ul></ul><ul><li>Direct UK employment </li></ul><ul><ul><li>Job multiplier of 8.5 </li></ul></ul><ul><ul><li>384,000 direct employment, of which 330,000 could be offshored </li></ul></ul><ul><li>Shift from volume cars to premium vehicles and engines </li></ul><ul><li>UK is competitive in terms of labour cost and productivity </li></ul>
  5. 5. The UK car industry today Competitive but fragile <ul><li>An industry that has transformed itself in the last decade and is now competitive with global peers </li></ul><ul><ul><li>Outstanding quality and reliability </li></ul></ul><ul><ul><li>Excellent labour relations and labour flexibility </li></ul></ul><ul><ul><li>World class productivity </li></ul></ul><ul><ul><li>Diverse manufacturer representation </li></ul></ul><ul><li>Critical issues </li></ul><ul><ul><li>Loss of scale drives “hollowing out” of the component supply chain </li></ul></ul><ul><ul><li>Some structural issues have remained over decades </li></ul></ul><ul><ul><ul><li>Government ambivalence </li></ul></ul></ul><ul><ul><ul><li>UK supplier base </li></ul></ul></ul><ul><ul><ul><li>Availability of skilled workforce </li></ul></ul></ul><ul><li>UK is competing as an assembly location </li></ul>
  6. 6. Weaknesses and opportunities <ul><li>No global major headquartered in UK </li></ul><ul><li>Sub-critical scale for car production and R&D </li></ul><ul><li>Tier 1 suppliers only assemble – no R&D or core component manufacturing </li></ul><ul><li>Limited R&D by global majors – Ford the exception </li></ul><ul><li>But….. </li></ul><ul><li>Pro-active collaboration between industry and Government </li></ul><ul><li>More active promotion and communication </li></ul><ul><li>Take advantage of the low carbon revolution </li></ul><ul><ul><li>Encourage OEMs and Global Tier 1 suppliers to increase R&D in the UK </li></ul></ul><ul><ul><li>Halt the ‘hollowing-out’ process in the supply chain </li></ul></ul>
  7. 7. The competitive supply chain challenge <ul><li>Vital to retaining OEMs – our competition is Mainland / Eastern Europe </li></ul><ul><li>Challenge of total supply chain efficiency (partnership) </li></ul><ul><li>Poor ‘matchmaking’ reduces UK value add </li></ul><ul><li>Internationalisation challenge for UK suppliers </li></ul><ul><ul><li>Access to new international markets </li></ul></ul><ul><ul><li>Access to best cost production potential </li></ul></ul><ul><li>SMEs find it difficult to access (the right) support </li></ul><ul><li>‘ Market failure’ interventions are not forward-looking </li></ul><ul><li>Poor image of UK manufacturing – nobody cares </li></ul>
  8. 8. The competence and capability challenge <ul><li>More “hollowed out” than elsewhere in Western Europe </li></ul><ul><ul><li>Low value added production/development at Tier 2 / 3 level </li></ul></ul><ul><ul><li>Tier 1s tending towards jis/jit final assembly </li></ul></ul><ul><li>Manufacturing technology/automation below world class </li></ul><ul><li>Structural gaps – machine tools, metal/plastic processing </li></ul><ul><li>Unattractive environment (skills, investment incentives, stability, infrastructure) to compete for new business </li></ul><ul><li>But… </li></ul><ul><ul><li>Opportunities in the total cost/value equation </li></ul></ul><ul><ul><li>Opportunities in niche vehicle sector </li></ul></ul><ul><ul><li>Opportunities in Low Carbon technologies </li></ul></ul>
  9. 9. The research and innovation challenge <ul><li>Current systems of support are complex / not transparent / tactical in terms of interfaces, funding, etc. </li></ul><ul><ul><li>Categorised by £5m 3-year ‘band-aids’ </li></ul></ul><ul><ul><li>Where is the strategy? </li></ul></ul><ul><li>Research Council funding is overly focused on academic review – need to balance with wealth creation for UK plc </li></ul><ul><li>Need to spread best practice in industry collaboration, eg JLR/WMG PARD programme </li></ul><ul><li>UK – ‘great ideas but no volume business’ </li></ul><ul><ul><li>Insufficient focus on productionisation of process </li></ul></ul><ul><ul><li>Can we learn from the MIT/Frauenhofer models? </li></ul></ul>
  10. 10. The inward investment challenge <ul><li>How can we get VMs/key suppliers to see the UK as their ‘second home’ for development of new automotive technologies? </li></ul><ul><li>Something special required </li></ul><ul><ul><li>Large scale strategic intervention, not multiple projects </li></ul></ul><ul><ul><li>Bringing together industry and academic support </li></ul></ul><ul><ul><li>Providing prototype/testing/demonstration facilities </li></ul></ul><ul><li>Opportunities </li></ul><ul><ul><li>Manufacturing and production technology development to ensure UK benefits from production stage </li></ul></ul><ul><ul><li>Incubator for ‘leapfrog’ technologies, products and processes </li></ul></ul><ul><ul><li>Tier1’s as bridge between a good idea and volume supply for the mass market </li></ul></ul>
  11. 11. Electrification of transport Test Bed UK <ul><li>A partnership between automotive manufacturers, infrastructure providers, regulators and consumers </li></ul><ul><li>Leading the development of new customer / user behaviours to get best out of new technologies </li></ul><ul><li>Giving UK plc a voice in advanced technology development e.g. standards, regulations </li></ul><ul><li>Attracting global players to the UK </li></ul><ul><li>Demonstrating Government commitment – OLEV and £400m+ over four years </li></ul><ul><li>A catalyst for change </li></ul>
  12. 12. Supply Chain Group tasks <ul><li>Leverage and market the pilot Test Bed UK to global Tier1 suppliers as a reason for investing in the UK </li></ul><ul><ul><li>Foster links with innovative/niche technology companies to generate upscaling partnership opportunities </li></ul></ul><ul><li>Develop a Sourcing Roadmap to identify value adding opportunities to reverse the current ‘hollowing out’ trend </li></ul><ul><ul><li>Promote the value of local value chains </li></ul></ul><ul><ul><li>Promote the UK supply chain internationally to identify insourcing and export opportunities </li></ul></ul><ul><li>Address the internationalisation potential for UK Tier 2/3s </li></ul><ul><li>Engage with those responsible for existing training and support budgets to seek to reflect these priorities </li></ul>