Member Article

North East and Yorkshire automotive manufacturers plan to create 800 new jobs

A new research report, released today by Lloyds Bank Commercial Banking, has revealed that North East and Yorkshire-based automotive firms have plans to create hundreds of new jobs over the next two years.

The ‘Driving Innovation’ report, which explored opportunities within the English and Welsh automotive manufacturing sector, gathered a range of views from the supply chain across the regions.

Despite the challenge of the global economic slowdown, 60% of respondents plan to create new jobs over the next two years. If their plans are fulfilled, they would generate almost 800 new jobs in the north east.

These job creation plans are underpinned by manufacturers’ reshoring activity. While a fifth (20 per cent) plan to bring some part of their manufacturing operations back to the UK in the next two years, 40 per cent have already done so.

Anecdotal evidence of their motivation for this shift included wanting to support the UK economy and create jobs, seeking better control over production, and rising labour costs overseas.

Given that 78 per cent of all vehicles made in the UK last year were exported, the results have heightened fears that global instability will affect the future performance of an industry that has substantially outperformed the broader manufacturing sector since the recession.

Local firms believe a potential exit from the EU is the prevailing challenge to the industry, with 40 per cent of respondents citing it as their top worry, along with material price volatility.

They are responding to these challenges by planning to enter new markets (40 per cent), develop new products (40 per cent) and invest in their existing products (40 per cent).

Despite the fears of a ‘Brexit’, 50 per cent are still planning to win new customers in Western Europe, with 50 per cent targeting new business in Russia.

Manufacturers have marginally lower growth forecasts than the broader UK industry, forecasting 13 per cent growth, as opposed to 14 per cent across England and Wales.

North East & Yorkshire manufacturers’ commitment to innovation remains strong with the region’s firms planning to invest an average of 18 per cent of current turnover into research and development over the next two years, as opposed to 17 per cent across the UK as a whole.

Survey feedback suggests that many businesses are waiting for breakthroughs in the fields of lightweight, electric and driverless vehicles by bigger players with greater resources, before committing further spend to these areas. However, once this technology starts to become more widespread, the supply chain looks set to benefit.

North east firms are keeping a close eye on technological developments in the sector. More than a third (40 per cent) are planning to upskill their workforce or change their business model to develop low carbon or electric vehicle technology.

Report co-author, James Walton, manufacturing director, mid-markets, Lloyds Bank, said: “While the automotive industry is forecasting healthy growth, it’s clear that global instability and uncertainty threatens manufacturers’ confidence. In particular, a potential exit from the EU is a concern given that it is the biggest market for British-made cars.

“However the sector is resilient and one of the most dynamic, innovative and exciting industries in the world, with British firms at its forefront. Reshoring activity to the north east is creating more jobs and Lloyds Bank is committed to supporting its growth and success.”

Mike Hawes, chief executive, Society of Motor Manufacturers and Traders, said: “Lloyds Bank’s second survey of the UK automotive manufacturing industry highlights some of the significant opportunities ahead – not only in terms of economic prosperity, technological innovation and employment potential in Britain, but the prospect for growth across the globe.

“The UK is seen internationally as a centre of innovation. It is home to 13 R&D centres, seven of the world’s 10 Formula One teams and 16 of the top 20 global automotive suppliers. We also have a unique opportunity to lead the development of connected and autonomous vehicles.

“To maintain this position of innovative excellence, industry must grasp the opportunities presented by these breakthrough technologies and secure the benefits for the UK economy and society.”

Figures too conservative?

Paul Butler, chief executive of the North East Automotive Alliance, said: “I think these figures are conservative at best and don’t take into account any potential new investment coming into the region.

“We have a very strong automotive sector, and growth across the sector remains strong. In addition the Automotive Investment Organisation has highlighted a £4bn supply chain opportunity in the reshoring of products.

“The North East is well positioned to take advantage of this growth. We have a very strong automotive sector and supply chain, excellent transport infrastructure in which to serve the North East, UK and EU markets and a supportive network centred around the Automotive Alliance which is delivering growth to its members. On the immediate horizon we also have the international advanced manufacturing park which is to be developed north of Nissan, which will create over 5,000 jobs.”