Lord Bhattacharyya demands Government action on JLR
How long is it going to take before the government comes to the aid of the UK car industry, Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, has asked the House of Lords.
As frustration over continued delay spilled over, he called for action not words.
Speaking in the House of Lords in a debate on the car sector, he urged a three-way pact between the government, manufacturers and suppliers.
But, he insisted, a vibrant future was still possible only if companies like Jaguar Land Rover were able to sustain their investment in new products and new technology. And he pointed the finger at the troubled financial sector for the mess in which industry has been landed.
Lord Bhattacharyya said: “We must act so progress in our car industry is not endangered by failed speculation in the financial sector.
“British-based manufacturers should be offered loan guarantees so they can secure finance to fund innovation and research. They must then invest here to develop new products with British suppliers.
“The government is saying the right things about easing the credit situation. It is using the right language about the need for a vibrant manufacturing sector. The government says help is coming.
“What I think we all want to know is how long, how long?”
Lord Bhattacharyya, Professor of Manufacturing at Warwick University, said much had been heard about the current state of the car industry.
The issues had been debated thoroughly both in Parliament and the press.
He charged: “We have fantastic inward investment companies producing cars in Britain. Toyota, Honda and Nissan are efficient companies who produce superb cars which were designed and developed in their home markets.
“We are lucky to have their manufacturing facilities here and should support them. For these companies the problem is one of consumer credit. If they can’t access credit they can’t offer loans to consumers. If the consumers can’t get car loans, they won’t buy cars. If consumers don’t buy cars, factories close or go on short time.
“We can and should break this log-jam.”
But, he stressed, that was not enough. “We must go further.”
He went on: “For the last twenty years, we have heard about the importance of the service sector, the knowledge economy and sunrise industries.
“Less has been said about the need for a vibrant manufacturing industry. Much of this is the fault of manufacturing itself. The 70s and 80s were not a good advertisement for British manufacturing. Due to lack of investment, poor management and a weak skill-base the British car industry was virtually wiped out by competition from Japan.
“ France and Germany faced the same foreign competition, but were more successful in their response. They restructured their industries with state support and developed new products that appealed to consumers.
“We find the same success at home. The aerospace industry received government support through launch aid and other channels. They used the opportunity to develop better products and became a very successful exporter.
“The car industry is facing huge challenges over the next decade. From emissions to safety regulations a new generation of hi-tech but low carbon cars will be required.
“The companies that best meet these global needs will grow as the world emerges from recession.”
And he promised: “We have a unique tactical opportunity. As our products are high quality, we exported over a million cars in 2007, up over seven per cent. In fact, we exported £170billion worth of manufactured goods, over half of total British exports.
“With sterling at current levels, we have the chance to see our exports and European market share grow in the short term.
“But for growth to continue beyond the narrow horizons of currency traders, short term advantage must be supported by long term investment
“Investing for the future requires access to capital today.
“ Jaguar Land Rover is the only major car company with an extensive R&D base in Britain.
“They plan to invest £800million on a new product and low carbon technology programme.
“But Jaguar Land Rover may not be able to sustain this investment if their access to capital is choked off by the banking crisis.”
Lord Bhattacharyya has repeatedly urged the government to commit to loan guarantees – he fears more and more jobs will be lost if something does not happen fast. The first to highlight the crisis, he originally called for a £1billion package to back JLR and has highlighted how the rest of the major car making world, the United States, France, Germany, Sweden and indeed China have moved to preserve their auto industry base, pumping in billions of pounds.