Suppliers slate car industry aid package
Jan 29 2009 by Anna Blackaby, Birmingham Post
The government’s £2.3 billion automotive industry loans package is “too little too late” for suppliers engaged in the day-to-day battle to survive, according to firms in the sector.
The automotive supply chain, a major employer in the Midlands, has been hard hit by the slump in car production at giants like Jaguar Land Rover which supports 60,000 employees at suppliers and dealers.
Many have been forced to slash jobs and put staff on short weeks, with West Midlands-based engineering firm GKN yesterday announcing it was to cut 360 jobs.
Gerry Dunne is managing director of Birmingham-based pressings, tooling and machining firm Westley Engineering, a second-tier and third-tier supplier to Jaguar Land Rover.
He was sceptical that the support package announced by Lord Mandelson on Tuesday, which ties loans to car companies to the development of low carbon technology, would cascade down to automotive supply firms like Westley.
He said: “Unfortunately for people lower down the chain it may be too little too late. It may be six to 12 months before it filters down the line to those working in the supplier base and by that time it will potentially be too late. The biggest problem now is that second, third and fourth tier suppliers do not get any benefit until several months or even years later.
“There is also the wider problem facing everybody that Jo Bloggs on the street is only going to consider buying a car if he has confidence that he’s not going to get laid off.”
Mr Dunne added the government’s long-term focus on developing low carbon technology would not be of any comfort for stricken suppliers who are being squeezed hard by the downturn.
“I think that potentially they are offering a gesture in line with their objectives on greenhouse gases further down the road. But it’s not going to have any impact at all on manufacturing today, this week, this month or the month after.”
John Pendleton, managing director of Textile Assemblies, a second-tier supplier which manufactures interior trim parts for Jaguar Land Rover, broadly welcomed the package but pointed to the immediate need to improve cashflow among supply firms.
“It is a very good thing the government recognises there is a need to support the automotive industry,” he said. “I can understand why they want to try to make the future of the automotive industry tied to green issues. However there is a need to support UK manufacturers during this period while volumes are down.
“Even the most efficient companies in the SME range will find it difficult if they haven’t got the sales. We do need to make sure that some of this money becomes available to help support those UK companies through these difficult times.”
Russell Luckock, chairman of Birmingham-based manufacturer AE Harris, also felt let down. “The announcement by Lord Mandelson of the aid package for the motor industry came as a great disappointment to many companies in the automobile world,” he said. Yesterday’s job cuts at GKN, which supplies components to car factories across the UK, add to a string of previous job cuts across the automotive supply chain. Staffordshire automotive component supplier Stafford Rubber Co went into administration yesterday with the loss of 60 jobs.
Last week European parts giant Continental Automotive announced it was closing its fuel components facility in Witton to move production to Germany and the Czech Republic. Earlier this month 137 positions disappeared in the region as Stokes Group, a supplier of components including power train, chassis, suspension, axle and door parts, shut its Walsall factory.
