The UK government has been challenged to maintain its support of the domestic motor industry amid expected spending cuts.
The call came from Society of Motor Manufacturers and Traders president, Gareth Jones, speaking at the SMMT’s annual dinner in London on Tuesday. Chancellor George Osborne will unveil his autumn spending review on Wednesday which is expected to include large cuts to many government departments.
Though the UK motor industry is growing as a whole, the supply chain faces particular challenges. According to the SMMT, local supply chain companies, many of which are small and medium enterprises, are vulnerable to exchange rate changes, higher energy and business costs and rely on government-supported funding initiatives.
“So much has already been invested successfully and to pull the rug away now would be a devastating waste,” said Jones. “It’s a stark reminder that while our industry is a net exporter, the export deficit for parts sits at almost £8 billion.
“However,” he added, “with the right support, re-shoring to the UK is possible – and with £4 billion of potential growth, the benefits are worth it.”
According to the SMMT, the motor industry’s annual contribution to the UK economy stands at £15.5 billion in 2015, a record high. Additionally, the number of vehicles manufactured has increased, driven by exports; employment within the industry is at its highest level since 2008; and the domestic new car market is now the second largest in Europe.
Jones said: “While the UK’s productivity is falling behind that of global competitors, in automotive we excel. We have the best record in Europe and our productivity has increased four times faster than the UK average. How? Sheer hard graft, hard won investment and a culture that demands continuous improvement and innovation.”
A continuing skills shortage and the upcoming referendum on whether the UK will leave the EU, the UK’s primary trading partner, are also cited as major challenges facing the motor industry. Jones challenged the government to continuing working with the industry and implement policies that attract investment and encourage innovation.
He said: “We have shown Britain has what it takes to be a manufacturing powerhouse again. But we can’t do it alone. So we say to government: ‘Create the conditions that allow us to develop the quality products for which we are world-renowned. Back us to create the jobs, economic growth and prosperity that Britain needs. We have shown we can deliver; work with us to make sure that success continues.'”
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By Only Motors