Jaguar Land Rover’s Castle Bromwich plant in the UK Midlands was this year’s venue for the Automotive Logistics UK summit. Originally the site made fighter planes and bombers, a fitting location for an industry doing battle with economic and trade uncertainty, and a carmaker used to facing adversity with innovation

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Jaguar Land Rover’s plant in Castle Bromwich in the UK Midlands is the last plant exclusively making Jaguar vehicles (though this is about to change). It faced closure in 2008 during the last economic downturn and halved its manufacturing footprint. Now, however, it is looking to expand again and triple production with the addition of new models, including an SUV and an electric vehicle, bringing production to seven models. That means having to overhaul manufacturing at the plant and the supporting supply chain, which brings with it production and logistics complexity. Delegates at last week’s Automotive Logistics UK summit, which was held at the Castle Bromwich plant, learned more about the radical changes underway there in the context of the many challenges facing the UK market.

JLR’s transformation of Castle Bromwich comes at a time when investment in the UK automotive sector is at an all-time low. Three and a half years of Brexit uncertainty and a slowing global economy has hit consumer confidence and made the banks a lot more cautious on lending. Car sales for the year-to-date are down 2.7% to 2.2m, according to SMMT figures. Investment in the UK car industry is at an all-time low.

The need for that investment also comes at a time when the car industry is going through an unprecedented upheaval in its DNA. Mobility as a service, the prospects of autonomous vehicles and the major shift to electrification are all factors that are having a seismic effect on the automotive industry around the world. Regulations, fines and incentives are in part driving the shift to electrification but without an adequate charging infrastructure and continued uncertainty by both the consumer and the tier suppliers on how the alternative propulsion market will develop, there is a disconnection between the cars being developed and the take up.

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Jamie Whitehead, operations director at JLR, told delegates that ’Dieselgate’ destabilisd the whole industry and was painful for the Castle Bromwich plant

Artificial growth 
Andrew Burn, partner at analyst firm KPMG, had some more depressing figures to share. He said the manufacturing increases recorded in March this year, which were down to stockpiling ahead of the initial Brexit date, were unlikely to be repeated, and were already down again in October, when the second Brexit date turned out to be another false alarm.

According to KPMG analysis business, stockpiling artificially inflated growth at the start of the year but will have the opposite effect later on as inventories are drawn down and there is destocking in the second and third quarters.

“There is a question mark over whether people will spend a lot of time stockpiling next year when we have a third attempt at leaving,” said Burn. It was certainly not going to happen at JLR, according to Curtis Hilton, plant MP&L manager for the carmaker at Castle Bromwich.

“We have gone through a cyclical process to increase material to prepare for it and then reduced when it didn’t happen,” he noted. “After the last time we haven’t reduced it because we are using it as a cushion for the end of January or beyond, depending on what happens. That is cash, which isn’t ideal, but it is a cushion.

Castle Bromwich car plant

1938  Site built to produce Spitfire Mk II and Lancaster Bombers

1946  Fisher Ludlow take over making car bodies and washing machines

1966  Owned by Pressed Steel Fisher (PSF) making bodies for Rover, Austin, Morris and

          Jaguar vehicles

1980  PSF becomes part of Jaguar Cars and builds bodies for Browns Lane

1981  Jaguar takes over the plant making and painting bodies

1989  Jaguar purchased by Ford

1998  Started car production of the S-Type

2008  JLR purchased by Tata Motors

2015  G Block new D7a Body in White 2017 Capacity Uplift – H & K Block, MSCP

 

Currently making XF, XF S/B, XE, F-Type, F-Type CV (XJ discontinued July 2019)

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Burn pointed to the increase in the level of insolvencies in the UK in the first nine months of 2019, which stood at 1,225, already more than the entire number of business insolvencies seen in 2017, the first full year following the UK referendum. Last year the increase went up 11% to finish at 1,206. According to Burn the figures are point to more of a permanent situation for the economy.

“There are constant calls coming in to restructuring firms,” he said. “What is very clear is that people are getting nervous. There is uncertainty around Brexit and in the political environment, and as consumer confidence drops, it is having a significant impact.”

Destabilised by Dieselgate
Brexit uncertainty has compounded the blow to business JLR was dealt by the diesel emissions crisis that began when VW Group was found to be cheating on emissions testing in 2017.

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KPMG’s Andrew Burn said stockpiling artificially inflated growth at the start of the year but will have the opposite effect later on as inventories are drawn down 

“The impact of VW emissions scandal has really destabilised the entire industry,” said Jamie Whitehead, operations director at JLR and someone with a long history at the company. “It has destabilised the industry because it has affected volumes and created uncertainty.”

The scandal led to the establishment of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), the hasty introduction of which caused enough of a headache for the carmakers and their logistics providers last year.

Whitehead explained that ‘Dieselgate’ led to a huge bidding war in terms of production cost and hit the company at exactly the wrong time as it strove to retain volumes while reducing the price of the high-end diesel cars it was producing.

“For us at Castle Bromwich it was very painful,” admitted Whitehead. “Painful as well because we are a growing company.”

JLR is a global business with installed annual production capacity in low-cost countries such as Slovakia and China for 300,000 units in each case. That compares to JLR in the UK, which has some of the highest paid assembly workers in the country, never mind globally.

“The viability of the company continuing to want to produce in this country is something that has been put in question here,” said Whitehead. 

Opportunity in adversity 
All that said, these are just the latest challenges facing a resilient operation at Castle Bromwich. Whitehead reminded delegates that Castle Bromwich was set up to be best car plant in the UK, adding that it continued to achieve results in the face of adversity. That included reducing costs of £600 on the Jaguar XE this year and reinvesting it in the quality detailing of the car. Strong logistics and supply chain planning underpinned the delivery of the 300hp F-Type to plan as it did the early delivery of the XF Sportbrake.

Whitehead explained that the Castle Bromwich team had been pushing ideas of what the plant could do to its commercial colleagues based on the team’s propensity to adapt complex processes to new products. What the company benefits from is that many of its production experts are also advanced logistics professionals. Those professionals are based at the design centres, the engineering centres, and are influencing design of the parts the company uses to maximise the cube of the packaging and trailer, and the flow of materials in the plant.

“We have a very complex and complicated logistics management system,” said Whitehead. “As soon as you want to do something alongside that you have to know what you are doing in the system to be able to use it to make different things. Otherwise it would be too difficult to do for a company of our size.”

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Curtis Hilton, plant MP&L manager at JLR said Castle Bromwich will be launching a new car every six months

The plant certainly has plans to make different things, with at least seven vehicles on the cards in the long term. Three of those vehicles will be introduced on the same line over a 12-month period, including its a first duel brand production at the plant. That growth will give the plant the volume and scale it needs to drive efficiency. Hilton picked up on Whitehead’s point about complexity at Castle Bromwich:

“Every six months we will be launching a new car,” he said. “There are model facelifts on top of that and we are also talking about a fourth car on top of the three new cars. Think about seven or eight cars on a 650,000 sq.m plant and only about a tenth of that is for the logistics activity,” he continued.

That is leading to a level of production complexity that “blows the footprint of the facility”, according to Hilton.

To cope the carmaker is looking to increase the level of sequenced kitting it does. “Part of our activity is making sure we are kitting as much as we can at onsite and offsite facilities, within the perimeter of the plant,” said Hilton. “We are sequencing, kitting and making the trolleys ourselves.”

DHL is providing full inbound and in-plant logistics services, including for the handling of the lithium batteries the plant will soon be handling for EV production. Those batteries are 800kg and will be fed directly to the plant from an adjacent battery making facility.

“We have come up with an automated solution using conveyorized vehicles coming straight to the plant, to the fit point, so they are not touched,” explained Hilton.

Lifting the drains 
On the outbound side of the business, JLR is looking at better stock profiling, something influenced by the trend toward SUVs and larger vehicles over the sedan market, which Castle Bromwich serves. 

“It hasn’t been good for this plant and that is well documented so we started to challenge this and look at what we could do differently,” said Hilton. “The analogy we used was ‘lifting the drains’.”

JLR has been driving greater transparency into marketplace, using data on product output from the plants and comparing it to global stock. From there the company was able to drill down by model for each of the retailers.

“In this industry we don’t want lots of redundant stock in the marketplace that is idle,” said Whitehead, explaining that Jaguar’s material planning and logistics (MP&L) department had come up with tools to see stock down to the dealer level.

“We can tell you exactly which dealer has got what car anywhere in the world,” added Whitehead.

Hilton explained that that in some cases those dealers had ageing stock so it was a case of finding out why and ironing out the flaws in the ordering process. 

“We started to challenge [the retailers] on the on getting rid of the older stock,” said Hilton. “In some cases the new product we were making had a variable profit. With the marketplace crowded with our old stock we were not quite getting traction. But now that age profile has started to come down.”

Hilton also said that orders were found to be lagging but once identified the company started fast tracking them, which reduced the lead time and satisfied the customer. Customer satisfaction was also improved through an enriched product offering that was pushed to the dealer. Getting the right stock meant better sales penetration.

“Our view was we should have four cars per dealership on a launch,” he said: “One in the showroom, one as a demo, one on the forecourt and one in transit. We started to push the launch stock profile. We have started to order more stock. For the F-Type in 2021 we will be ordering more launch stock to the tune of about 30% against the market.”

‘Lifting the drain’ was about challenging the lead time, assessing how long it took to order a car, and assessing the age profile of the existing stock. Ordering the right cars in the first place was a good move for JLR and was driven by the cross-silo thinking between manufacturing and sales.

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RIchard Marlow, logistics programme manager at JLR, said EVs are raising a number of issues for outbound distribution

“Sales and marketing are approaching us about new product offerings,” said Hilton. “Now we can do a run of 200 for a specification on a particular product interior and exterior. We have circumnavigated some of our production processes for the final offering. It is a reciprocal relationship.”

Customers are now also able to check for their preferred specification across the franchise network, something they were unable to do previously. JLR has created an ordering environment where the customer can break through a pre-existing barrier to choice, and while it might be a competing franchise the customer can identify and select the car they want.

“It is simple little things like have improved the customer experience and have been constructive to outbound,” said Hilton.

Limited distribution
One other challenge on the outbound distribution side of the business is being felt by the industry as whole and that is to do with the fact that vehicles are getting bigger and heavier. That issue is compounded by growth in the number of EVs. Transport providers are compromised by the number of vehicles they can load, because of the weight, and compromised by the limitations on the charging infrastructure in place. That goes for both road and ocean transport.

“That is an area that we have had to address because on a [road-based] car carrier there are only certain places you can put an EV based on 2.8 tonnes weight,” explained Richard Marlow, logistics programme manager at JLR. 

He said that while previously the problem of loading weight and distribution on the equipment had only been dealt with when shipping Range Rovers, it was now going to become more common.

“We are going to be hitting that for a significant amount of our vehicles, so that is going to be bringing some challenges to the outbound side,” said Marlow. “It is also adding cost in that, if you cannot get a mix of models on there (we have some legacy cars at Castle Bromwich so we can mix the models) you have to ask what is that adding on to the outbound distribution costs?”

Hilton added that bigger and heavier cars, including EVs, raised additional issues about lashing on the vessels to remain secure, something of particular risk when it comes to vehicles driven by lithium batteries.

“Those are elements that affect the plant and outbound distribution,” he said. “We have had to make some changes and investment, and have had to do some clever thinking as to how we manage all that.”

Luckily Castle Bromwich has the right people for the job and the dedication is seen across generations from the local community. That dedication is backed up with regular training for both staff working directly for the carmaker and its main logistics provider DHL, especially in the handling of lithium-ion batteries.

“We have to recruit the right people with the right skill sets,” said Hilton, “and we will probably be doubling our headcount over the next 12-18 months.”

Automotive Logistics Think Tank sessions – racking brains, sharing ideas

This year’s Automotive Logistics UK summit doubled the brainstorming sessions in an effort to make the most of the problem-solving talent in attendance. Across two sessions there were 13 Think Tanks on a range of issues pertinent to the automotive logistics sector.

As was discussed in the main sessions, the lack of infrastructure for EV distribution is an issue that is hampering wider customer uptake. Glynne Lockwood, operations and logistics manager at KIA Motors UK summed up the discussion at his table by identifying that the necessary infrastructure is not in place yet, especially in terms of trucking capacity. He said the cost would increase for OEMs while the load factors are reduced.

“The problem we have in the UK is that there are not enough trucks as it is and if you reduce the truck load factors even more [because of weight restrictions] where does that put us for the future?” he asked.

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Aart Hille Ris Lambers, UK commercial director at DP World, discussed charging investment for ports with his think tank

The group also discussed how there need to be minimum standards established for vehicle charge of 25% prior to loading EVs on finished vehicle carrying equipment. Additionally, OEMs need to provide training to the finished vehicle transport companies for the handling of EVs, something that was lagging, though some of the OEMs in attendance admitted they were ready to do so.

Standardisation of charge was also something OEMs needed to establish when it came to finished EV movements through the ports. Aart Hille Ris Lambers, UK commercial director at DP World, summed up discussions on his table.

“Some manufacturers say they charge the vehicles at the plant and that will last until it can be brought to the dealership, but others say they need to keep them charged on the journey, and as a port we need to deliver the infrastructure for that,” said Lambers. “That is a huge investment if we only do it for one manufacturer.”

Lambers said standardisation across the manufacturers would help tremendously and could also inspire carmakers to establish with the customer base what kind of power requirement would be needed for the vehicles.

In a separate discussion on the EV supply chain, overseen by Laura Rainey, senior project manager - electric vehicles, for the National Grid, a sustainable EV supply chain was an area of special interest as the market reached scale over the next three to five years. However, the number of different variables across the sector on a global and national level has made it difficult to understand exactly what the industry needs to be ready for, according to Rainey. New duty mechanisms required to reach scale, uneven take up regionally and reducing the cost of EVs were all issues.

“Ultimately [it comes] down to a chicken and egg situation between knowing a new service is going to be provided and trying to aggregate demand across the sector to make the investment needed to drive these new services,” said Rainey.

Standardising at source 
The take up of EVs and other alternative propulsion vehicles is also going to have an effect on packaging, with fewer parts required in the powertrain this could help drive standardisation in the packaging industry. As Rodney Salmon, vice president, Macro Plastics pointed out, all too often tier suppliers making the same part for six different carmakers are faced with having to use six different types of packaging to get that part to them. 

What the EV revolution could also mean for packaging is an end to expensive waste and loss, with the requirements for zero contamination of more high tech EV parts helping to support returnable packaging and services, based importantly on traceability and real-time analytics, and there were some important benchmarks on control, management and tracking systems to be found in the retail industry.

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Rodney Salmon, vice president, Macro Plastics pointed out that all too often tier suppliers making the same part for six different carmakers are faced with having to use six different types of packaging

Visibility like this is to be gained by making the most out ever-richer sources of data now available but there are gaps in the supply chain according to use. The industry needs to move from simply cutting cost to being in the position to add value, such as by redesigning the supply chain, finding new customer locations and improving service. However, as Christopher Ludwig, editor-in-chief at Automotive Logistics Group found out from his group, there are constraints around trust, whether in getting data from customers or suppliers, and how that data is being used when it is handed over.

The increasing integration of data in warehousing and the more parties using it raised concerns about cyber security for one thing.

Ludwig noted there were also regulatory questions around this use of data, such as GDPR and anti-trust law, all of which get in the way of moving to the next stage of making the most of the data, perhaps compounded by a lack of standards.

Securing real-time visibility continues to be something the industry is chasing and, according to Ruud Vossebeld, director of business development at Inform, who oversaw discussions on the subject, there are still European logistics managers out there dreaming of hourly real-time updates when they only get accurate KPIs every six weeks.

“To really address real-time visibility you need to think about the cost benefit and that has a lot to do with whether the technology has been proved or not,” said Vossebeld. He noted that 20 years ago many people thought RFID was the future of visibility but has now been written off by many companies, despite being used widely in the retail sector. Perhaps it is simply a case of trying harder with RFID, while also looking to GPS and radio-based technologies to make progress.

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Siobhan Aarons, global customs & trade counsel at Delphi, Technologies, said there was an endemic lack of knowledge in the industry when it came to customs procedures

Bumpy and expensive after Brexit 
One issue it has been hard to get any clear picture of for the last three years, regardless of the technology available, is what automotive trade will look like when the UK leaves the EU. Siobhan Aarons, global customs & trade counsel at Delphi, Technologies recapped the discussion on customs clearance post-Brexit and stressed that there was a lack of knowledge and understanding in parts of the industry that was fuelled by misinformation in the media, including from the government. Aarons said there would be a financial impact but there were ways to mitigate it, albeit with a cost attached. It was important to be organised and address the right questions, knowing the right classifications and tariff rate in relation to those them, as well as looking at duty mitigation and whether to hire expertise from a customs brokerage firm?

“It will be bumpy and expensive, hopefully in the short term, but trade will continue and there are opportunities,” said Aaron. “All of that expertise is out there and at the moment, what the government of the UK and Belgium and France are saying and doing, we do believe that they will be onside to ensure that trade does still happen and we will be able to continue making our vehicles.”