At a factory on a Birmingham industrial estate, security tape marks the spot where a 1,000-tonne metal press is due to be installed – and just possibly the beginning of a carmaking revival in the West Midlands.
The equipment, bought second hand from Spain, will be one of the UK’s largest presses – machines that use tools and dyes to mould flat steel into car parts.
It is part of a £7m investment by Sertec, a West Midlands automotive components maker. The family-owned company is busy positioning itself to supply Jaguar Land Rover, the fast-growing UK carmaker, which last week announced it was hiring another 1,000 people at its Solihull assembly plant.
Thanks in large part to JLR and the rapid growth of its sales to China, the UK’s Midlands region is enjoying a sharp revival in automotive activity, and hundreds of small and medium-sized component makers, which comprise the so-called “supply chain”, are also looking to benefit.
Lord Kumar Bhattacharyya, the entrepreneur academic who acts as adviser to Ratan Tata, head of Tata Motors, which bought JLR from Ford in June 2008, tells the Financial Times: “In five to 10 years time you will see a lot of small specialist companies setting up because of the pull of JLR. This is the best news story in the West Midlands for years.”
The past three decades has seen capacity in the supply chain shrink, capital equipment scrapped or sold abroad, and huge job losses.
Professor David Bailey, an automotive expert at Coventry University, says: “In the 1970s, a third of all jobs in Birmingham were in auto. In the 1980s we lost 200,000 jobs. But what’s left is in pretty good shape.”
Grant Adams, Sertec’s managing director, says the company has only survived because it was ready to cut its wage bill and let workers go.
“We reacted very quickly and the bank appreciated that and we kept them up to speed. I let a third of the workforce go. It was tough times. It was like putting the brakes on a juggernaut, but we almost did an emergency stop.”
He estimates the Midlands has lost 40 per cent of its press shop capacity since 2009, with the number of companies reduced from 12 to five.
Car makers that survived had little choice but to buy from foreign component suppliers. “It varies from model to model,” says John Leech, automotive partner at KPMG, the professional services company. “But British content today can be as little as 20 per cent. This is a real opportunity to reverse that trend.”
However, industry experts worry that JLR’s own recruitment drive could make it difficult for smaller companies in the supply chain to retain skills just as they are looking to ramp up production.
Rachel Eade, of Manufacturing Advisory Service, a body funded by the Department of Business, Innovation and Skills that helps those in the supply chain, says several billion pounds of contracts have already been placed with West Midlands firms. But she fears there is “more demand than our supply chain can currently supply”.
Mr Adams, who started his career as an apprentice at British Leyland, concedes Sertec will not be able to match the wages JLR pays.
“Logic tells you that JLR will pay the better money and they will get the better people and that is no different to how it’s always been,” says the 50-year-old businessman. “The only problem now though is the pool of labour that we’re all looking at has condensed somewhat.”
But Denis Meagher, managing director of Premier Group, a Coventry-based company making prototype body parts for JLR and other companies, says it is not just a local problem. He has also lost key employees to rival companies in continental Europe. “Even on the shopfloor the industry is now seeing skilled sheet metal workers going self-employed so they can take work abroad,” he says.
For Sertec and Premier Group, the decision to stick with their apprentice programmes – even during the downturn – will provide some relief.
Sertec is also addressing the issue by acquisition. Its Tyseley factory – one of four facilities it runs in the region – was only acquired in August, a direct response to JLR’s own investment announcements.
“We’ve just blown our next two years of capital expenditure,” says Mr Adams. “But if we hadn’t done this deal and this capacity had gone outside the UK, we’d have all been kicking ourselves. We’ve retained the jobs and we’ve retained the business. That business didn’t go abroad, that equipment didn’t go abroad and importantly those jobs didn’t go outside the industry.”
Source: Financial Times
The equipment, bought second hand from Spain, will be one of the UK’s largest presses – machines that use tools and dyes to mould flat steel into car parts.
It is part of a £7m investment by Sertec, a West Midlands automotive components maker. The family-owned company is busy positioning itself to supply Jaguar Land Rover, the fast-growing UK carmaker, which last week announced it was hiring another 1,000 people at its Solihull assembly plant.
Thanks in large part to JLR and the rapid growth of its sales to China, the UK’s Midlands region is enjoying a sharp revival in automotive activity, and hundreds of small and medium-sized component makers, which comprise the so-called “supply chain”, are also looking to benefit.
Lord Kumar Bhattacharyya, the entrepreneur academic who acts as adviser to Ratan Tata, head of Tata Motors, which bought JLR from Ford in June 2008, tells the Financial Times: “In five to 10 years time you will see a lot of small specialist companies setting up because of the pull of JLR. This is the best news story in the West Midlands for years.”
The past three decades has seen capacity in the supply chain shrink, capital equipment scrapped or sold abroad, and huge job losses.
Professor David Bailey, an automotive expert at Coventry University, says: “In the 1970s, a third of all jobs in Birmingham were in auto. In the 1980s we lost 200,000 jobs. But what’s left is in pretty good shape.”
Grant Adams, Sertec’s managing director, says the company has only survived because it was ready to cut its wage bill and let workers go.
“We reacted very quickly and the bank appreciated that and we kept them up to speed. I let a third of the workforce go. It was tough times. It was like putting the brakes on a juggernaut, but we almost did an emergency stop.”
He estimates the Midlands has lost 40 per cent of its press shop capacity since 2009, with the number of companies reduced from 12 to five.
Car makers that survived had little choice but to buy from foreign component suppliers. “It varies from model to model,” says John Leech, automotive partner at KPMG, the professional services company. “But British content today can be as little as 20 per cent. This is a real opportunity to reverse that trend.”
However, industry experts worry that JLR’s own recruitment drive could make it difficult for smaller companies in the supply chain to retain skills just as they are looking to ramp up production.
Rachel Eade, of Manufacturing Advisory Service, a body funded by the Department of Business, Innovation and Skills that helps those in the supply chain, says several billion pounds of contracts have already been placed with West Midlands firms. But she fears there is “more demand than our supply chain can currently supply”.
Mr Adams, who started his career as an apprentice at British Leyland, concedes Sertec will not be able to match the wages JLR pays.
“Logic tells you that JLR will pay the better money and they will get the better people and that is no different to how it’s always been,” says the 50-year-old businessman. “The only problem now though is the pool of labour that we’re all looking at has condensed somewhat.”
But Denis Meagher, managing director of Premier Group, a Coventry-based company making prototype body parts for JLR and other companies, says it is not just a local problem. He has also lost key employees to rival companies in continental Europe. “Even on the shopfloor the industry is now seeing skilled sheet metal workers going self-employed so they can take work abroad,” he says.
For Sertec and Premier Group, the decision to stick with their apprentice programmes – even during the downturn – will provide some relief.
Sertec is also addressing the issue by acquisition. Its Tyseley factory – one of four facilities it runs in the region – was only acquired in August, a direct response to JLR’s own investment announcements.
“We’ve just blown our next two years of capital expenditure,” says Mr Adams. “But if we hadn’t done this deal and this capacity had gone outside the UK, we’d have all been kicking ourselves. We’ve retained the jobs and we’ve retained the business. That business didn’t go abroad, that equipment didn’t go abroad and importantly those jobs didn’t go outside the industry.”
Source: Financial Times
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