Driving Innovation - Lloyds Banking Group

1
LLOYDS BANK RESEARCH SERIES
– AUTOMOTIVE
DRIVING INNOVATION
2015
2
OUR CONTRIBUTORS
David Atkinson
Head of Manufacturing,
SME, Lloyds Bank
Commercial Banking
James Walton
Director, Manufacturing,
Mid-Markets, Lloyds Bank
Commercial Banking
Clive Hickman
Chief Executive,
Manufacturing
Technology Centre
Mike Hawes
Chief Executive, Society of
Motor Manufacturers and
Traders (SMMT)
WHAT’S IN THIS REPORT
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4
6
10
12
14
17
FOREWORD
EXECUTIVE SUMMARY
GROWTH
EMPLOYMENT
INTERNATIONAL OPPORTUNITIES
DRIVERLESS AND ELECTRIC VEHICLES
A POSITIVE OUTLOOK
CLIVE HICKMAN
18
INNOVATIVE EXCELLENCE
MIKE HAWES
19
HELPING BUSINESSES TO GROW,
METHODOLOGY AND REFERENCES
3
FOREWORD
FOREWORD
David Atkinson
Head of Manufacturing,
SME, Lloyds Bank
Commercial Banking
James Walton
Director, Manufacturing,
Mid-Markets, Lloyds Bank
Commercial Banking
Welcome to Lloyds Bank’s second annual
survey of the UK automotive manufacturing
industry, part of a series of reports that
analyse the role of key manufacturing sectors
in Britain’s economy, examining the core
issues, from employment and innovation
to policy and productivity.
We’d like to thank the business owners,
directors and senior managers who have
taken part in the research and helped us shine
a light on one of the UK’s biggest and most
economically important manufacturing sectors.
The UK is home to a diverse range of car
manufacturers, from Nissan and Honda to
Rolls-Royce and Jaguar Land Rover, and
the industry as a whole employs almost
800,000 people.
We love to drive UK-made cars (the Nissan
Qashqai and Vauxhall Astra are among the
country’s top 10 best sellers) and so do drivers
around the world: 78 per cent of all the vehicles
made in the UK last year were exported.
And this report feels particularly pertinent.
Seldom has an industry dominated the global
news agenda like the automotive sector has
in 2015.
While futuristic innovations in the field
of driverless cars have fired the public’s
imagination, trust was threatened when one
of the world’s most respected manufacturers
admitted manipulating emissions tests.
At the same time, the motor industry in
the UK has continued its renaissance, having
bounced back with vigour since the dark days
of the late noughties economic downturn.
Production collapsed in 2009, dropping
more than 30 per cent and falling below one
million cars a year for the first time since 1984.1
But fast forward just five years to 2014 and
UK car production hit a seven-year high, topping
pre-recession levels with more than 1.5 million
rolling off production lines1, and it is on course
to comfortably exceed that in 2015.
UK car production hit this high in the
first half of the year, with 793,642 cars built
between January and June, up 0.3 per cent on
the same period in 2014. The industry is also
outperforming the wider manufacturing sector.
According to the Office for National Statistics,
the auto industry has grown at an average rate
of 3.1 per cent every quarter since the crash.2
Of course there are issues that could put the
brakes on growth, but Britain’s car industry is
thriving, and a shift towards producing highervalue vehicles for the world’s growing middle
classes has paid off.
This is one of the most dynamic, innovative
and exciting industries in the world, with British
firms at its forefront, we are committed to
supporting its success.
We’ve laid that out in our Helping Britain
Prosper plan, which states our determination
to help UK businesses start up, scale up, and
trade internationally to support the long-term
strength of the economy.
The British automotive industry is a source
of great pride and we are proud to support
our customers across the supply chain as
they pursue growth in the UK and overseas.
We hope you find this report as compelling
as we do.
SMMT, Motor Industry Facts 2015, May, 2015
ONS, The economic performance of the UK’s motor
vehicle manufacturing industry, September, 2015
1
2
See David Atkinson and James Walton
give their insight into the future of the
UK automotive industry.
Watch the video now at
http://resources.lloydsbank.com/insight/
automotive-report/
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Manufacturers tell us they
are planning significant
investment in their
businesses and in research
and development. They
are forecasting healthy
growth and want to
expand across the globe.
The automotive industry has played a
leading role in the UK’s economic success
for generations.
Marques like Rolls-Royce, Jaguar Land
Rover and Bentley are status symbols that
are desired around the world and the sector
makes a significant contribution to UK
productivity, employment and innovation.
So by compiling the views of our automotive
firms, from supply chain SMEs to multinational
corporations, mid-sized businesses and global
corporates, this report aims to support the
industry with a comprehensive overview of
the issues it is facing, the opportunities open
to it, as well as its outlook for the months and
years to come.
Manufacturers tell us they are planning
significant investment in their businesses
and in research and development. They are
forecasting healthy growth and want to
expand across the globe.
But they are also planning for fundamental
changes to the industry, which are primarily
being driven by advances in innovation that
are making cars cleaner, safer and more
fuel efficient.
Inevitably, given the international markets
they operate in, global instability and
uncertainty threaten to act as a drag on industry
confidence. When asked what they felt were
the biggest challenges for the automotive
industry in the next two years, the top concern
remained the global economy for the second
year running, mentioned by 43 per cent of
respondents in both 2014 and 2015.
China, in particular, has been a hugely
successful and profitable market for premium
UK marques. The slowdown in that economy
has the potential to permanently impact
margins, and the devaluation of the Chinese
Yuan has already made imports more expensive,
squeezing profits for UK firms selling their
products there. Of course, this is a trend that is
not unique to this sector and is likely to impact
the output and exports of UK manufacturers
across the board.
One positive impact of the instability has
been the move to reshore manufacturing that
had previously been taken overseas, primarily
to take advantage of cheaper labour costs. The
savings generated are no longer as significant
as they once were, and manufacturers are
reshoring for a wide range of reasons, from an
altruistic desire to see UK PLC succeed, to better
control over quality. Looking even further into
the future, the falling cost of intelligent robots
has the potential to accelerate the repatriation
of more car manufacturing away from low-cost
locations like China, back to hi-tech factories in
the UK.
Who knows what kind of cars we will be
driving in 20 years’ time, and how they will
be manufactured?
Whatever the future holds, we can be
confident that the UK will remain a driving
force in the industry.
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KEY FINDINGS
KEY FINDINGS
GROWTH
14%
19%
the average growth in turnover
forecast by businesses over the
next two years
the percentage of current turnover
that will be inwardly invested during
the next two years
58%
plan to achieve growth by
developing new products
EMPLOYMENT
33
58%
60%
the number of new jobs the average
automotive manufacturer plans to
create over the next two years
plan to reshore manufacturing
back to the UK
highlight inflexible labour markets
as a threat to supply security
INTERNATIONAL
74%
27%
56%
investing in or planning to engage new
international customers
targeting Far East/Asia, down from
41% a year ago
say lack of knowledge of international
markets is a barrier to their export plans
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GROWTH
GROWTH
19%
the percentage of current
turnover the average business
is planning to inwardly invest
over the next two years
Our research surveyed managers, directors,
owners and department heads at 100 English
and Welsh automotive firms from throughout
the supply chain.
And while they expect to continue growing,
growth forecasts have fallen slightly since last
year’s survey, from 18 per cent in 2014 to
14 per cent in 2015.
Plans to develop new products, enter new
markets and develop existing products were
also all marginally down year-on-year, while
intentions to invest in infrastructure and pursue
mergers and acquisitions have moved up the
agenda. Indeed, the proportion of firms looking
at consolidation as a route to growth grew
substantially from 20 per cent in 2014 to
35 per cent this year. This move to consolidate
may reflect a desire to build more robust
businesses that are better placed to succeed
in a world where economic instability seems
to be increasing.
There was also an interesting shift in how
firms plan to fund their growth. While cash
reserves is still the most popular source of
While the most prevalent
source of funding is still
cash reserves, its popularity
has reduced slightly and
alternative sources of
finance have grown in
popularity.
funding, cited by 53 per cent of firms, it has
reduced slightly from 57 per cent last year.
And alternative sources of finance have grown
in popularity, particularly cash flow finance, up
from 38 per cent to 42 per cent, asset finance,
up from 26 per cent to 37 per cent, and trade
finance, up from 18 per cent to 27 per cent.
This seems to reflect a growing awareness of
alternative forms of finance and an increasing
willingness to explore more creative funding
solutions. It has also been well documented that
many firms exercised great caution during
the economic downturn and subsequently
many built up considerable cash reserves,
which they have used to invest in growth
during the recovery. That capital may now
have been depleted, forcing firms to seek
other ways to fund their plans.
But it seems those cash reserves have
been well spent by firms which have invested
in infrastructure to ensure they are best
placed to take advantage of new business
opportunities, as and when they appear.
While last year 53 per cent of firms said they
7
GROWTH
had the capacity to increase production quickly
should an opportunity arise to expand into a
new market, this year that figure had grown
to 73 per cent.
Reshoring also appears to be an ongoing
trend in the UK automotive industry, which
may also have helped grow capacity. Half of
respondents reported that they have brought
some of their manufacturing functions back
to the UK after previously offshoring them,
up from 45 per cent last year. On average
they had reshored a significant proportion,
22 per cent of their manufacturing.
As a percentage, what is your expected business growth forecast for the next two years?
Over 50%
36-50%
No growth is forecast 0%
26-35%
Less than 5%
4% 1%
9%
13%
16-25%
The proportion
of firms looking at
consolidation as a
route to growth grew
substantially from
20 per cent in 2014
to 35 per cent this year.
15%
31%
24%
5-10%
11-15%
How do you plan to achieve that business growth in the next two years?
Year
New product development
62%
58%
2014
2015
Entering new markets
68%
48%
Investment in infrastructure
39%
43%
Existing product investment
50%
39%
Mergers and acquisitions
20%
35%
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GROWTH
58%
plan to develop new
products to achieve
business growth in the
next two years
48%
plan to enter new
markets to achieve
business growth in the
next two years
Anecdotal evidence of their motivation for this
shift revealed a spread of reasons, from wanting
to support the UK economy and create jobs,
to seeking better control over the means of
production. Manufacturers also stated that the
economic benefits of manufacturing overseas
had diminished as labour market costs had
increased abroad.
How are you planning to fund your business’ growth over the next two years?
Year
Cash reserves
57%
53%
Cash flow finance
38%
42%
Asset finance
26%
37%
Equity
28%
33%
Joint venture
24%
27%
Trade finance
18%
27%
Debt
30%
25%
Partnership
22%
24%
IPO
12%
11%
Not planning funded growth
1%
4%
2014
2015
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GROWTH
58%
said they planned to bring part of their
manufacturing back to the UK within the
next two years
26%
the average proportion of manufacturing
they planned to reshore to the UK
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EMPLOYMENT
EMPLOYMENT
86%
of respondents are planning
to create new jobs in the next
two years
Almost 800,000 people are employed across
the UK auto industry, including 158,000
directly employed in manufacturing and
78,000 in the supply chain3.
The industry is also a key provider of
apprenticeships and contributes significantly to
upskilling the UK workforce. Jaguar Land Rover
alone will recruit more than 200 apprentices in
20164, for example.
That’s an issue at the top of Lloyds’
agenda too. We have committed £1 million
a year to the Advanced Manufacturing
Technology Centre in Coventry, which is backed
by the UK government and will develop more
than 1,000 manufacturing apprentices aged
16-19 during the partnership. We are sure that
a good proportion of these will be recruited into
the automotive sector.
So far, 2015 has seen some very significant
investments in job creation from within the
industry. Jaguar Land Rover announced plans
to create 1,300 new UK jobs as part of its
£1.5bn investment in developing lightweight
aluminium vehicles at its Solihull plant.5
The London Taxi Company announced a
£250 million new state-of-the-art research,
assembly and development facility for its
next generation of ultra-low emission taxis
in Coventry. It will create up to 1,000 new
jobs as part of a plan to ramp up production
to 36,000 vehicles a year by 2018, a ten-fold
increase on current capacity.6
And Infiniti, the luxury vehicle division of
Japanese automaker Nissan, announced more
than 300 new jobs in Sunderland following a
£250 million investment in the production of
its new model, the Q30.7
And this investment in job creation looks
set to continue apace, with 86 per cent of
respondents planning to create new jobs in the
next two years. When we asked manufacturers
how many new roles they plan to create in this
time, the average was 33, up from 27 when we
conducted the survey this time last year.
These investments will have huge
implications for the UK supply chain, where they
will no doubt create more jobs and investment.
At the moment, however, job creation appears
to be being led by the larger firms.
The number of firms planning to create
between one and 50 new jobs has actually
fallen by nine per cent, though the number
of businesses planning to create 51 or more
new jobs is up by seven per cent. We can hope
levels of job creation in smaller firms will be
boosted in the longer term as they benefit
from a ‘trickle down’ effect over time.
Though job creation currently appears
skewed towards larger manufacturers, if
the average job creation intention of 33 new
roles is replicated across the UK’s estimated
2,994 automotive manufacturing firms, that
would generate 84,975 new jobs over the next
two years.
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4
5
6
7
SMMT, Motor Industry Facts 2015, May, 2015
Jaguar Land Rover launches 2016 apprentice
recruitment drive, October, 2015
Jaguar Land Rover announces 1,300 new UK jobs, January, 2015
Geely to invest £250m in new London Taxi site, March, 2015
Infiniti production heralds over 300 new jobs, June, 2015
How many jobs do you plan to create in the next two years?
2014
27
2015
XX%
33
11
EMPLOYMENT
Don’t know
1-10
None – We plan to stay the same
2%
250+
12%
101-249
27%
2%
How many
jobs do you plan
to create in the
next two years?
8%
25%
16%
22%
11%
51-100
11-15
26-50
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INTERNATIONAL OPPORTUNITIES
INTERNATIONAL OPPORTUNITIES
41%
of firms were planning to
engage new customers in
the Far East/Asia in 2014
27%
of firms are planning to engage
new customers in the
Far East/Asia in 2015
The slight fall in UK automotive firms’
growth forecasts looks likely to be a reaction
to continuing global economic instability,
particularly from China, where growth hit
a six-year low in the first quarter of 2015.8
That is backed up by a significant drop in
firms expecting to achieve business growth
by entering new markets, which fell from
68 per cent last year to 48 per cent this year.
In the three decades to 2010, the
powerhouse Chinese economy grew at an
average of 10 per cent every year, but it has
since slowed markedly, achieving 7.4 per cent
in 2014.9 Looking forward, the International
Monetary Fund has forecast a further fall to
6.8 per cent growth for 2015, declining to
6.3 per cent in 2016.10 That has the potential
to be a significant headwind for UK car
manufacturers, as China was the biggest
market for British cars outside of the EU
in 2014.11
Last year 137,410 UK-made cars were exported
to China, or 11.5 per cent of total production.12
Only the Brits buy more British cars than the
Chinese, so any slowdown in that market will
be keenly felt by our car makers and the firms
in their supply chain.
Despite the falling expectation of achieving
growth, firms remain determined to engage
with new international customers in the next
two years. When asked ‘are you investing
in or planning to engage new international
customers in the next two years’ 74 per cent
answered yes, exactly the same result as
12 months earlier.
But when they were questioned on which
markets they were considering targeting,
there was a big drop in those looking east.
In 2014, 41 per cent of UK automotive firms
In which markets are you considering investing in or planning ahead to engage new
international customers?
Year
Western Europe
57%
61%
2015
North America
47%
46%
The Far East/Asia
41%
27%
Middle East
27%
26%
South America
20% 26%
26%
Russia
22%
20%
Africa
2014
14%
19%
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INTERNATIONAL OPPORTUNITIES
told us they were planning to invest and
engage with new customers in Asia and
the Far East. By 2015, that had dropped
to 27 per cent, falling by more than a third.
That is striking when compared with the
rest of the world, where intentions to invest
and engage in new markets have remained
broadly stable. Western Europe remains the
most attractive market to UK automotive firms,
with almost two thirds planning to pursue
opportunities there, despite the fact that the
potential for a Brexit – a British exit from the
EU – was flagged by 30 per cent of respondents
and rated as the fourth biggest challenge facing
the industry over the next two years.
Europe was followed by North America,
the Middle East and South America, Russia
and finally Africa, but it was Africa that saw
the biggest uplift in interest, with 19 per cent
of firms considering opportunities there.
That’s up more than a third from 14 per cent
in 2014, suggesting an increasing confidence
in the economic outlook for the continent.
This is likely to be in reaction to the
continent’s growing middle class, as the
British industry has shifted towards higher-value
vehicles in recent years. Indeed, the value of the
average car exported has doubled from £10,200
in 2004 to £21,900 today.13
The African Development Bank is
forecasting GDP growth of five per cent
for 201614, stronger than the World Bank’s
global forecast of 3.3 per cent15, though it
is acknowledged that the region remains
particularly vulnerable to uncertain global
conditions and fluctuations
in oil prices.
8
9
10
11
12
13
14
15
IMF downgrades global growth forecast, January, 2015
IMF downgrades global growth forecast, January, 2015
IMF downgrades global growth forecast, January, 2015
SMMT, Motor Industry Facts 2015, May, 2015
SMMT, Motor Industry Facts 2015, May, 2015
SMMT, Motor Industry Facts 2015, May, 2015
African Economic Outlook Report 2015
Global Economic Prospects 2015
What factors are stopping you from considering investing in or planning ahead to engage new
international customers?
Lack of knowledge of international markets
56%
Cash flow or available funding
44%
Focus on domestic market
38%
Complexity of logistics
31%
Finding a suitable retail partner or distributor
13%
Lack of time/resources
6%
What do you feel are the biggest challenges for the automotive industry in the next two years?
Global economy
Volatility in the price of materials
30%
A potential exit from the EU
The proportion of firms
investing in or planning to
engage new international
customers remains steady
at 74 per cent.
43%
30%
42%
41%
Sustainability
Overseas competition
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DRIVERLESS AND ELECTRIC VEHICLES
DRIVERLESS AND
ELECTRIC VEHICLES
36%
of those asked plan
to develop driverless
vehicle technology
52%
plan to develop
low-carbon or electric
vehicle technology
UK manufacturers used the survey to
demonstrate the ongoing commitment
to innovation that has kept them at the
forefront of the global industry. They
told us they planned to invest an average
17 per cent of their firm’s current turnover
in R&D over the next two years, though
this is down slightly on the 21 per cent
reported last year.
When asked how they plan to achieve
growth, the biggest proportion, 58 per cent,
told us that they plan to develop new
products, though this was down slightly from
62 per cent last year. This again demonstrates
some level of caution in reaction to uncertain
global prospects, despite innovation being a
tried-and-tested route for UK car makers and
one where they continue to lead the world.
For example, in September Jaguar Land
Rover unveiled new low and zero emission
engines that it developed in house, which
are capable of producing twice the power
of any electric-motorgenerator in production
anywhere in the world.16 The company is
also taking a lead in the development of
ever lighter and more fuel-efficient vehicles,
as mentioned earlier.
Electric cars and driverless cars represent
the other great race to innovate, with a number
of technology companies looking to steal a
march on automotive firms in this field.
Search engine giant Google has already
made headlines after unveiling prototypes
of its self-driving car17 and taxi service Uber is
also said to be developing its own version of
the technology.18 Apple is reportedly planning
to launch its own electric car as soon as 2019.19
But UK manufacturers are taking a different
tack, incrementally introducing autonomous
features, some of which are already on
the roads.
And the UK’s legislative landscape means
we have a significant advantage over our
European neighbours.
Testing is already underway in many parts
of the country, which is only possible because
Electric cars and driverless
cars represent the other
great race to innovate, with
a number of technology
companies looking to steal
a march on automotive firms
in this field.
15
DRIVERLESS AND ELECTRIC VEHICLES
the UK never ratified the Vienna Convention on
Road Traffic, which means autonomous vehicles
can be tested on public roads here without the
need for any new legislation.20
This type of technology is still very much in
the testing phase and fully autonomous cars
are unlikely to be seen on the roads for at least
a decade, which might help explain why smaller
manufacturers don’t appear to be approaching
the issue with a great deal of urgency.
We asked firms whether they are planning
to upskill their workforce or change their
business model to develop driverless vehicle
technology for the first time this year and, while
36 per cent said yes, 19 per cent were unsure
and 45 per cent said no. Of those that did see
opportunities, only a fifth plan to make changes
within a year but the majority plan to do so
within the next three years.
The number of firms that say they are
planning to upskill their workforce or change
their business model to develop low carbon
or electric vehicle technology fell slightly
year-on-year from 63 per cent to 52 per cent.
And, of those firms which do harbour these
plans, they appear to feel less pressure to
activate them than they did a year ago.
Are you planning to upskill or change your processes or business model to develop driverless
vehicle technology?
Not sure
19%
Yes
36%
45%
No
When will you beign to upskill or change your processes or business model to develop driverless
vehicle technology?
Over the next 12 months
17%
Over the next 1-2 years
56%
Over the next 2-3 years
22%
Over the next 3-5 years
6%
More than five years’ time
0%
16
DRIVERLESS AND ELECTRIC VEHICLES
63%
were planning to upskill or
change processes or business
model to develop low-carbon or
electric vehicle technology in 2014
52%
are planning to upskill or
change processes or business
model to develop low-carbon or
electric vehicle technology in 2015
Fewer firms are planning to upskill their
workforce or change their processes or
business model to develop low carbon or
electric vehicle technology within the next
year than in last year’s survey, while growing
numbers of manufacturers aren’t planning
to start this activity until one to three years
have passed.
This is likely to be a reflection of the size
of investment needed to develop driverless
systems, which has meant this innovative
activity is the preserve of a small number
of wealthy multinational corporations.
However, once this technology starts to
become more widely adopted, there looks
set to be huge benefits for the supply chain.
A recent KPMG report forecast that
connected and autonomous vehicles
could create an additional 320,000 jobs
in the UK by 2030, 25,000 of which would
be in automotive manufacturing.21
16
17
18
19
20
21
Jaguar Land Rover Reveals Pioneering Low And Zero
Emissions Powertrain Research, September, 2015
Google self-driving car project, Google, May, 2015
Here’s your first look at Uber’s test car, May, 2015
Apple targets electric-car shipping date for 2019, September, 2015
KPMG, Connected and Autonomous Vehicles – The UK Economic
Opportunity, March, 2015
KPMG, Connected and Autonomous Vehicles – The UK Economic
Opportunity, March, 2015
When do you plan to upskill/change your processes/business model to develop low carbon or
electric vehicle technology?
Over the next 12 months
27%
Over the next 1-2 years
48%
Over the next 2-3 years
23%
Over the next 3-5 years
2%
48%
17
A POSITIVE OUTLOOK
A POSITIVE OUTLOOK
Clive Hickman
Chief Executive,
Manufacturing
Technology Centre
The UK automotive industry sits at a key point
in its development and I believe there are three
issues that the sector needs to have at the
forefront of its strategy.
Firstly, reshoring is a significant opportunity.
Central to this will be the ability to reengineer
the manufacturing processes so different
vehicles or engines can be produced on the
same lines. This kind of manufacturing system
will mean adopting intelligent automation with
robots that can operate independently, as well
as adaptive fixtures and tools. The flexibility
this creates will cut costs, reduce the size
of factories, boost production volumes and
generate massive logistics savings, slashing
energy consumption and emissions.
Secondly, lightweighting and vehicle
emissions. A big opportunity to reduce vehicle
weight and therefore emissions is through
the adoption of additive and net-shape
manufacturing processes. Formula 1 teams are
already manufacturing exhaust manifolds by 3D
printing metallic components as the technique
enables complex geometries that would not be
possible with conventional technologies.
If we don’t train apprentices
and graduates to use these
advanced manufacturing
processes now, we will
still have a skills gap in
five years’ time.
That helps cut emissions and weight and these
principles can be adopted for many other
automotive components, offering a fantastic
opportunity for UK vehicle manufacturers.
Lastly, skills. The adoption of these new
technologies will mean we need more
highly-skilled technicians, competent in
robotic technology, adaptive fixturing, lasers,
optics and electron-beam applications. To some
extent this will be a chicken-and-egg scenario: if
we don’t train in these technologies, they won’t
gain widespread adoption in the UK, and if we
don’t adopt the technologies, there will be no
need for the training.
What we can be sure of is that if we don’t
do this in the UK, others around the world will
and we will lose the initiative.
MTC, in collaboration with Lloyds Bank and
the UK government, is taking the lead on this
issue by creating the Lloyds Bank Advanced
Manufacturing Training Centre.
If we don’t train apprentices and graduates
to use these advanced manufacturing
processes now, we will still have a skills
gap in five years’ time.
18
INNOVATIVE EXCELLENCE
INNOVATIVE EXCELLENCE
Mike Hawes
Chief Executive, Society of
Motor Manufacturers and
Traders (SMMT)
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.
A strong domestic supply chain is crucial to
the success of this industry – and to attracting
inward investment. SMMT analysis forecasts
UK vehicle manufacturing will hit an all-time
high of two million units by 2020, giving British
suppliers a tremendous market opportunity. To
support this growth, up to 28,000 additional jobs
will be needed in the supply chain – in addition
to those that could be created by an existing
£6 billion a year re-shoring opportunity to deliver
on contracts currently sourced overseas.
Looking further afield to a key global
market referenced in this report, despite China’s
economic slowdown there are still multiple
opportunities for UK companies, in particular
the consumer-friendly tax breaks helping to
stimulate sales of alternatively-fuelled and
small-engined cars. British businesses are also
broadening their horizons by entering new
territories such as Nigeria and Iran, just two
emerging markets to which SMMT is planning
trade missions in 2016.
A strong domestic supply
chain is crucial to the
success of this industry
– and to attracting
inward investment.
The UK is seen internationally as a centre of
innovation: 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. A recent KPMG report for SMMT
put this opportunity at more than £51 billion
per annum. The UK has strong regulatory
advantages, with on-road driverless car pilots
needing only insurance – and this, together
with a £100 million government-industry
matched fund that is already in place, makes
the case for the UK compelling.
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.
19
HELPING BUSINESSES TO GROW, METHODOLOGY AND REFERENCES
HELPING BUSINESSES TO GROW
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to help make your growth, investment and export plans a
reality. We’re proud to work closely with some of the leading
automotive businesses in England and Wales, and can tailor
a range of solutions for your business too, including:
•
•
•
•
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For more information, get in touch with us.
DAVID ATKINSON
HEAD OF MANUFACTURING, SME, LLOYDS BANK
COMMERCIAL BANKING
07764 625666
[email protected]
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DIRECTOR, MANUFACTURING, MID-MARKETS,
LLOYDS BANK COMMERCIAL BANKING
07500 920861
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STUART APPERLEY
RELATIONSHIP DIRECTOR, GLOBAL CORPORATES,
LLOYDS BANK COMMERCIAL BANKING
020 7158 2929
[email protected]
METHODOLOGY AND REFERENCES
Methodology
Field research for this report was undertaken in September 2015
by Coleman Parkes Research. To gather representative data from
this diverse industry, a broad cross-section of 100 automotive
manufacturers in England and Wales was interviewed from companies
ranging in size, from less than £25m, £25m to £750m, and more than
£750m annual turnover. Product
type was limited to automotive producers and manufacturers.
Business owners, managers, senior managers, directors and
department heads took part in the survey, with a higher proportion
of respondents from small and medium enterprises and mid-market
firms. Our survey questions focused on growth and export plans,
job creation, investment, international markets, electric vehicle
manufacturing and challenges and opportunities.
References:
• SMMT, Motor Industry Facts 2015, May, 2015
• ONS, The economic performance of the UK’s motor
vehicle manufacturing industry, September, 2015
• Jaguar Land Rover launches 2016 apprentice recruitment
drive, October, 2015
• Jaguar Land Rover announces 1,300 new UK jobs, January, 2015
• Geely to invest £250m in new London taxi site, March, 2015
• Infiniti production heralds over 300 new jobs, June, 2015
• IMF downgrades global growth forecast, January, 2015
• African Economic Outlook Report 2015
• Global Economic Prospects 2015
• Jaguar Land Rover reveals pioneering low and zero
emissions powertrain research, September, 2015
• Google self-driving car project, Google, May, 2015
• Here’s your first look at Uber’s test car, May, 2015
• Apple targets electric-car shipping date for 2019, September, 2015
• KPMG, Connected and Autonomous Vehicles – The UK Economic
Opportunity, March, 2015
Information is correct at time of printing: November 2015.
19
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Issue date: December 2015
Lloyds report: 2015LBGAUTO