Support funds from the European Union and national governments such as the UK do appear to be reaching the automotive supply chain, including logistics, provided the projects are targeting low-carbon vehicles and transport, revealed speakers at a conference in Birmingham last week organised by the European Automotive Strategy Network (EASN). But there are concerns that the government might be too focused on supporting technologies and supply chains around electric vehicles, for example, while neglecting fragile, traditional supply chains for the internal combustion engine that are likely to remain in place for generations.
Jon King, director of Corus Automotive, as well as part of the UK government run Automotive Council’s New Automotive Innovation and Growth Team (NAIGT), said there was some encouraging signs that the government was being more forward-looking and active in the manufacturing sector. He pointed to a project, Test Bed UK, in which carmakers, infrastructure providers, regulators and consumers are partnering to help the UK supply chain invest in the development of low carbon technology, while the government is committing more than £400m ($640m) over the next four years.
King stressed that the UK automotive sector’s primary weakness was “the hollowing out of the supply chain” over the past decade, where most suppliers with operations in the country were receiving material from abroad and shipping modules just-in-time and just-in-sequence to carmakers. It has meant that carmakers assembling cars in Britain are less responsive and flexible in production and had poorer supply chain efficiency. “We can’t do changes properly, as there is a long lead time and we are not terribly responsive to quick changes,” he said.
He said that among the objectives of the supply chain group within NAIGT and the Automotive Council would be one to market and promote the work of Test Bed UK to global tier suppliers and “encourage the value of local value chains” through local development and production in the UK.
Martyn Mangan, who leads the Automotive Cluster from Advantage West Midlands, a publicly funded regional development agency, also highlighted the EU grant money that has been making its way into the automotive supply chain from the Automotive Response Programme. Among the programmes the money has been aimed at have been those for “green supply chains”, including ways to reduce carbon emissions during manufacturing and logistics.
Among the most useful areas targeted for funding has been that covering the production of premium cars, such as for Jaguar Land Rover, since “premium carmakers need to focus more on manufacturing emissions as their vehicles will almost always have higher emissions,” Mangan said.
But there was concern that support was in general too focused on projects such as electric vehicles, which may not reach levels of mass production for many years. Josef Frank, the director of aftermarket for CLEPA, the European Association of Automotive Suppliers, said that, regarding electric vehicles, “the people in Brussels say ‘please tomorrow’, while the auto industry says ‘20 years’.”
Meanwhile, Frank pointed out, this year suppliers across Europe are financially even more fragile and weak than last year.
King echoed this concern, and warned that it was difficult to get governments to support conventional supply chains, much of which is unlikely to change anytime soon. “The [UK] government is focused on low-carbon technology and assumes everything else will move forward,” he said.
Mangan stressed that the government needed to support both new supply chains and the traditional. “You have to speak simply to governments, and remind them that the internal combustion engine will still be here for 20 years, so you need to support and improve this technology as well as invest in a new supply chain,” he said.