Car makers’ recovery leaves rest of manufacturing in the dust

british motor manufacturing at risk

Official data from the Office for National Statistics (ONS) showed that the auto industry recovered at an average rate of 3.1pc per quarter after the crash, and accelerated past its previous peak in the final three months of 2013.

This contrasts with the manufacturing sector as a whole, which averaged anaemic growth of just 0.3 per cent and remains below the heights it hit before the economic meltdown.

According to The Telegraph, car makers also punched above their weight in their contribution to the economy in terms of gross value added (GVA), which measures output minus the input used in production, with an annual economic contribution of £12bn. This puts it behind only food production and metal parts manufacturing.

This came despite the sector accounting for only 6 per cent of the all people employed in manufacturing, with 141,500 people working in the sector, and an annual turnover of £60.6bn, representing 12 per cent of manufacturing’s total.

Advanced manufacturing systems in the car industry could be driving the higher levels of productivity, according to manufacturing industry trade body EEF.

“The sector is highly automated and investment-intensive. Essentially, car makers are ahead of the curve – automation is likely to become increasingly mainstream as UK manufacturing heads into the fourth industrial revolution,” said Zach Witton, EEF deputy chief economist, referring to the predicted “Industry 4.0” when parts of the supply and manufacturing chain digitally link up to improve efficiency and cut costs. “Industry 4.0 will see innovative firms take the lead and help position the UK as a global manufacturing and technology hub.”

The ONS data also highlighted how R&D spending in the auto sector has almost doubled over the past decade to more than £2bn a year, outpacing the increases in the wider manufacturing sector.

The research was also more adventurous than other sectors, with 82p in every £1 spend going on “experimental development”, compared with around 50p in the machinery and equipment and pharmaceuticals sectors, and just 30p in aerospace.

However, the funding of the auto industry’s research was almost entirely foreign, perhaps reflecting Jaguar Land Rover’s dominance in the UK car sector. The prestige car maker was bought by Indian conglomerate Tata in 2008, and has put £11bn into new facilities and products over the past five years.

According to the ONS, just 9 per cent of R&D spend on motor vehicles and parts was from UK-owned businesses.

Jaguar Land Rover’s importance to the UK auto industry is also highlighted by the regional breakdown of turnover, which is dominated by the West Midlands, where the company is based.

A spokesman for car industry trade body the Society of Motor Manufacturers and Traders, said: “The ONS statistics support our figures that show the UK automotive sector is delivering growth in production volumes, turnover and employment.

“Continuing to expand in a fiercely competitive global market is a major challenge and will depend on a supportive economic and regulatory environment which promotes investment to foster innovation and continuing productivity improvements.”