The Uk motor industry has been a success story in recent years. Tata’s launch of the new Range Rover has underlined its move to strong growth at home and abroad, with attractive 4 wheel drive products that the world market wants. BMW’s Mini remains a popular vehicle, whilst the leading Japanese companies make high quality cars in the UK and export around Europe from this base. The Uk has become a specialist centre for engine manufacture for groups like Ford and BMW. Cutting edge engineering for Formula One cars remains a central feature of the UK’s exposure to this important sector.
The decision by Ford to close its Transit assembly in Southampton was part of a wide range of closures and retrenchments around Europe. The industry is now being badly hit by the collapse in demand for autos in the stressed southern countries of Euroland, and by the slowdown in France and Germany. Much of the Euro area is in or is moving into recession. Motor manufacturers have high levels of operational gearing. When final demand falls away stock levels need to fall, so demand for new product from the factory falls by considerably more than the decline in final customer demand.
The way through for the UK industry is to sell more into the growing markets of China, India and the rest of the emerging world, and to design and produce such good products that they will gain market share even in declining markets. The issues today for motor manufacturing relate to energy and logistics costs more than to labour costs. Modern factories are highly automated and very energy dependent. Bought in materials and components are crucial to cost and manufacturing efficiency. The Uk government has to have in place an energy and transport policy which is friendly to mass production of engineered products. It also needs to make sure there is a plentiful supply of skilled engineers and managers capable of organising sophisticated modern output.
The figures for much of the rest of the EU make depressing reading. In September Greek purchases of cars were down by 48% on September 2011. In Spain the fall was 36.8%, Italy down by a quarter, France almost by a fifth and Germany itself down by 11%. The huge falls in the southern states shows how intense the austerity squeeze now is. The collapse in car sales will help mend balance of payments deficits, at the cost of hitting output across the Eurozone. UK car sales are up so far this year, though even here there was a drop in September. The Euro crisis is now having a big impact on living standards and jobs.