A speedy response from the West Midlands Taskforce helps the region's industry through recession
Oct 28 2009 Agenda, Birmingham Post
Simon Griffiths looks at how public and private sector activity has helped a Midlands automotive sector in crisis.
Following the fortunes of the West Midlands’ automotive sector in the media has not, in recent times, made pleasant reading.
The international recession has hit the world-wide automotive market hard – with consumers in the United Kingdom alone expected to buy 500,000 fewer new cars this year than in 2007.
As a region where the automotive industry continues to have such a major economic role to play, it is inevitable that this slump would hit hard here, as well.
From the ongoing challenges facing Jaguar-Land Rover to the demise of LDV, it would seem that nothing but bad news has surrounded a sector which is of such fundamental importance to the economy of the West Midlands.
Of course, while the tier one manufacturers are suffering, there is a much deeper and broader picture in the shape of the region’s automotive supply chain.
The automotive cluster in the West Midlands represents some 1,500 companies with a total turnover of around £13 billion per year and employing 115,000 people.
Perhaps equally important, the West Midlands boasts unique automotive expertise in universities and industry research companies with expertise in body manufacture, especially use of lightweight materials, and emerging capability in other new higher-value-added technologies.
With this in mind, as the full extent of the downturn became apparent earlier in the year, it was clear that decisive intervention was necessary to preserve the region’s automotive suppliers.
Eventually, the car market would pick up and it was essential that the manufacturing base in the West Midlands survived in order to pick up along with it, especially as ongoing legislative and environmental demands present even greater opportunities for the region.
After all, a great many of these companies are world-class, added-value operations manufacturers providing work for highly-skilled people, suffering from a global problem beyond their control.
In July, the West Midlands Taskforce – the body of public and private sector leaders set up to co-ordinate activity to support the economy during the recession – announced a £4.5 m investment aimed specifically at helping the region’s automotive manufacturers.
The taskforce listened to the industry and responded with a tailored programme of support known as the Automotive Recovery Programme (ARP). The investment – provided by Advantage West Midlands and the European Regional Development Fund – was delivered by the Manufacturing Advisory Service – West Midlands and Accelerate, the region’s specialist automotive supply chain support programme.
I am delighted to report that the programme has been a tremendous success, preserving jobs and helping companies to win new business.
On average, there have been 15 companies each week successfully securing funding of up to £50,000 of specialist strategic consultancy to help with business consolidation, refinancing, product introduction and restructuring.
At the time of writing, £3.9m of the £4.5m has been committed, helping 158 struggling companies across the West Midlands. With applications still in the pipelines, the remaining £600,000 will soon be earmarked to support even more businesses.
One of the major successes of ARP has been Zincast Foundry in Willenhall, one of the last remaining die-casters in the region. Dating back to the 1930s, Zincast specialises in aluminium and zinc alloy pressure and gravity die casting, employing nearly 40 people and serving customers in the auto, white goods and construction sectors.
Zincast applied for and won a £17,000 grant to test out new materials and processes in order to reduce their costs and seek ways to diversify their business by exploring the possibility of magnesium casting.
ARP funding has certainly speeded up the feasibility study and this has paid immediate dividends, with an £800,000 contract being brought back from Czech Republic to supply belt sander parts and safety covers for international power tool manufacturer Makita, which is based in Telford.
The increase in work has created six new positions at Zincast and there are also plans to maximise sales growth as a result of the weakness of the pound by bringing more international business back to the UK.
Very often, the public sector is criticised by private industry for being too slow in responding and failing to ensure that available investment reaches them in time.
The Automotive Response Programme, however, is a classic example of fast, efficient, direct action taken to support companies, not only through the recession but beyond.
I believe this is a very important point – anybody with the right levels of investment can prop up companies in the short term but ARP is about far more than this.
While swift intervention was necessary, the solution needs to have a sustainable long-term focus if it is to succeed and I am confident that when the upturn comes, the 100-plus companies helped through this initiative will be able to prosper.
Using the established networks and expertise available at MAS-WM and Accelerate, we have collectively been able to make ARP not only a success, but deliver a project that demonstrates to others just how effective, fast support for businesses in times of crisis can be delivered.
* Simon Griffiths is Chief Executive of the Manufacturing Advisory Service – West Midlands.
