Report highlights new £2bn potential for UK auto parts supply

A new Automotive Council report has highlighted a fresh £2 billion growth opportunity for UK component suppliers as UK carmakers enjoy an unprecedented period of success.

The report, released at the Society of Motor Manufacturers and Traders’ (SMMT) Open Forum event recently assesses the ‘reshoring’ potential for ‘upstream’ automotive suppliers – in other words, the capacity for the UK to increase local supply of components and raw materials that are currently imported.

This is something that Luke Hampton, Supply Chain Development Manager at the Society of Motor Manufacturers and Traders (SMMT), discussed during his presentation at Interplas 2014 recently, where he outlined the opportunities for the plastics industry to capitalise on developments in automotive.

“Some of the biggest automotive companies see the UK industry as ‘the place’ to manufacture,” Hampton said. “There is massive opportunity coming for suppliers up and down the supply chain.

The £2bn figure comes on top of £3bn identified last year for supply direct to vehicle manufacturers, on which progress is being made. Industry experts point to the accelerating growth potential in the automotive sector as well as local-sourcing benefits of lower logistics costs, greater flexibility and faster response times.

Currently around one third of the components in a UK-built vehicle are sourced in the UK. The report identifies a realistic aim to increase this local content to around 60 percent – similar to other European countries such as France, Germany, Italy and Spain.

“The automotive sector is thriving and our supply chain firms are helping to create jobs and generate growth, but there is more to be done. That is why last month we announced £10 million of government money to address skills shortages in the auto supply chain to help UK companies win more contracts,” said Business Minister, Matthew Hancock.

“This news that there is an extra £2bn of sourcing opportunities for UK automotive suppliers – taking the total to £5bn – is great news for the UK economy.”

Another key finding to emerge from the report is that UK automotive suppliers are – in the main – confident about their future prospects. Of the companies surveyed, 80 percent expect their business to grow in the near-term.

Dave Allen, Purchasing Director, Jaguar Land Rover and Chair of the Automotive Council Supply Chain Group, said:  “The current success of the UK automotive sector presents a renewed opportunity for automotive suppliers to invest in the UK and to increase local sourcing of the high value components that the UK’s world-class vehicle makers require.

“With this report we now have good visibility of the depth and value of the opportunity throughout the supply chain, together with deliverable actions to turn this opportunity into reality.”