Since the recession, the UK’s automotive industry has been the subject of worried speculation. Because automobiles and automobile parts constitute 11% of British exports—making them the country’s top export sector, reaching over 100 foreign markets—these concerns have relevance to the nationwide economy.
The good news is that, based on a January conversation among experts in the automobile industry in Birmingham, there is reason to be optimistic again about the state of the automotive industry. KPMG’s Mark Orton declared that “the UK is in a very strong position” with regards to growth. Currently one of the biggest remaining concerns is the state of the market in Europe. Though British manufacturers have advocated efforts to raise domestic demand, Orton said that a rebound by the European economy would greatly contribute to continued manufacturing growth. John Leech, also of KPMG, echoed Orton’s optimism over production. Output is expected to grow by 25% over the next three years.
Bob Woods of Applied Component Technology predicts that the European market will grow only gradually over the next ten years, pointing to just how bad the situation has gotten in some countries on the continent (in Greece, new car sales have dropped by 50%). Still, the consensus among the speakers is that the British automotive industry is bound for a period of growth.
The changing state of the industry is reflected by new attitudes towards financing, and what those attitudes mean for SMEs. “Attitudes to lending have thawed somewhat,” Guy Walsh of ABN AMRO Commercial Finance explained, “but the problems for the smaller suppliers is access to investment.” Walsh expressed concern over people’s inability to find the funding needed to support the innovation that will fuel continued growth.
Orton blamed funders’ traditional aversion to the industry for the relative lack of financial support, despite the fact that it can be considered a relatively safe sector for investment. Peter Brooks, Lecturer in Journalism at Stafford University, emphasized the importance of public perception. “We need to give people the perception that Birmingham is a sexy place,” Brooks said. Leech, meanwhile, acknowledged that there have been difficulties establishing mutual understanding. Woods echoed this sentiment: “There are no rules as such.” Similarly, some panellists pointed to a lack of communication between the industry and government.
The difficulty of matching funders with funding opportunities was a recurring theme throughout the discussion. Communication, cooperation and access to information were seen as keys to improving the situation. Orton suggested that funders employ people who understand the automobile sector in order to have accurate information about it. Leech brought up the fact that financiers need to understand a business from all sides, so expecting them to fund a contract without that understanding is not always fair.
In conclusion, the roundtable panel was optimistic about the growth potential of British automobile makers over the next few years, but hoped that this trend would be accompanied by newer, more open approaches to financing to build understanding between manufacturers and financiers.