UK manufacturing industry calls for furlough scheme to be extended

Manufacturers have urged the UK Government to extend its Covid-19 furlough scheme, warning that the country risks being left in the “slow lane” behind major competitors in recovering from the pandemic.

Industry association Make UK wants to see the Coronavirus Job Retention Scheme continued beyond October for critical, strategic industrial sectors.

It highlighted the aerospace and automotive sectors as being particularly in need of an extension.

“These sectors are at the cutting edge of technologies which will be vital to growth sectors of the future employing many highly skilled, well paid people across the UK,” the organisation said.

“New analysis of official data by Make UK backs this up with the two sectors being the largest investors in research & development, accounting for more than two thirds of the total spend (36.4%). This is worth £5.9bn to the UK economy.”

Germany, Belgium, Australia and France have all extended or introduced new wage support schemes.

“The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running,” argued Stephen Phipson, chief executive of Make UK.

The industry group’s latest Manufacturing Monitor survey provides some signs of an improvement in business conditions.

Almost a fifth of the 226 companies surveyed between 24 August and 1 September are now at full operating levels (17.6%) while a further 28% are running at between three quarters and full capacity.

By the start of next year, over a quarter (27%) expect to be at full capacity and a further third (35.4%) expect to be between three quarters and full capacity.

CBI President warns Brexit could lead to ‘extinction’ of UK manufacturing

The President of the CBI has warned that sections of the UK car industry face ‘extinction’ unless the UK remains in an EU customs union, according to BBC News.

Paul Dreschler said a ‘tidal wave of ideology’ was behind the government’s Brexit approach and that there is ‘zero evidence’ that trade deals outside the EU could bring an economic benefit to the UK.

Dreschler, who is shortly to leave his position, said: “If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct. Be in no doubt, that is the reality.”

The car industry was picked out as a particular example of a sector likely to suffer unless ‘real frictionless trade’ is maintained following Brexit.

Dreschler said that trade tariffs would cause increased costs and delays which could impact not only companies directly involved with imports and exports, but many others within the national supply chain.

We already know tens of millions, in fact hundreds of millions have been invested by UK pharmaceutical and finance companies to create continuity post a worse-case Brexit scenario. Tens of millions. What could we have done with that money?” Mr Dreschler said.

A government spokesperson said it was “focused on delivering a Brexit that works for the whole of the UK”.

Markit survey reveals state of UK manufacturing

A Markit survey has revealed that UK factories experienced growth in May for the first time in six months, but there are serious underlying weaknesses in the sector, according to Reuters.

The Markit/CIPS UK Manufacturing Purchasing Managers’ Index indicated that the British economy has not fully bounced back from a slight downturn in early 2018. Manufacturing accounts for around one tenth of total national output.

The Bank of England is currently considering whether to raise interest rates for the second time in a decade. The flatlining economy between January and March 2018 may be a short term phenomenon caused by unseasonably cold weather, or it could be a more lasting situation related to Brexit concerns.

Rob Dobson, Markit director said: “At first glance, the mild acceleration in the rate of output growth and rise in the headline PMI would appear positive. However, scratch beneath the surface and the rebound in the PMI from April’s 17-month low is far from convincing.”

Incoming business has hit an 11-month low, while job creation is the lowest in 15 months. This is said to be due to a loss of spending power caused by growing inflation, in turn caused by the fall in the value of the pound following the Brexit referendum.


Jaguar Land Rover to shed 1,000 temp workers

Jaguar Land Rover has announced that the contracts of 1,000 temporary workers in the UK will not be renewed, according to BBC News.

The auto giant has cited ‘continuing headwinds’ impacting the car industry for the decision. The jobs will be lost from the Solihull and Castle Bromwich factory sites.

Jaguar Land Rover (JLR) said recruitment of apprentices and engineers in the UK would continue and that it remained committed to its UK plants. Earlier in 2018 JLR cut production at the Halewood, Merseyside plant, citing Brexit uncertainty and the dwindling market for diesel cars.

JLR employs 40,000 people in the UK, with 10,000 of the workforce based at Solihull. The firm’s Jaguar sales are down 26% so far in 2018 compared to 2017, while Land Rover sales have dropped 20%.

In the overall UK car market, diesel registrations have dropped by around one third in a year. JLR acknowledged that the current market is ‘tough.’

New Peugeot van to be built in Luton

Peugeot has unveiled plans to build its new van model at its British Vauxhall plant in Luton, according to Reuters.

Peugeot’s owner PSA’s announcement will be seen as a gesture of confidence in the UK economy pre-Brexit, and it increases pressure on the manufacturer’s sister brand Opel, based in Germany, to offer concessions in labour talks.

PSA purchased Peugeot/Vauxhall in 2016 from General Motors. The business will build new Peugeot and Citroen models in Luton as well as the next Vauxhall van, the Vivaro. Production is set to rise from 60,000 in 2017 to 100,000 vehicles.

French company PSA is currently in talks with Opel’s German workforce. The firm said the Luton investment was assisted by ‘responsible social dialogue with the Unite union guaranteeing production flexibility’ as well as support from the UK government.

The move will create around 350-400 jobs, adding around 100m Euros to the economy. Luton is currently the UK’s only van plant, employing around 1,400 people.

PSA head Carlos Tavares said: “I take on board the assurances that the UK government have provided us on seeking tariff-free and frictionless trade with the EU going forward. There is still work to do to ensure frictionless trade.”

The move adds to pressure on Germany’s IG Metall Union, as deals have now been struck with workers in the UK, Spain, Austria, Hungary and Poland. PSA has said van production had to be increased to meet growing demand but a decision about the future of the Ellesmere Port factory, where the Astra Sports model is made, will be put off until 2020 or beyond.


Toyota pledges to build next gen Auris in UK

Carmaker Toyota has announced it will build its new Auris hatchback at the Burnaston factory in Derbyshire, according to BBC News.

The Japanese automotive company said the next generation Auris would also have engines primarily sourced from its Deeside plant in North Wales. The news comes following a £240m investment plan for the Burnaston facility in 2017.

Toyota said the announcement would secure more than 3,000 jobs at Burnaston and Deeside. There had been concerns that Brexit could lead to carmarkers moving production abroad if trade barriers threatened their ability to compete internationally.

Car companies have warned that tariffs on exports could disrupt the international supply chain involved in car manufacture. The Society of Motor Manufacturers said that investment in the sector fell by one third in 2017 within the UK, due to Brexit uncertainty.

Despite this anxiety, several car makers have pledged to build more cars in the UK since the Brexit vote, including Nissan’s plans to build the next generation Qashqai and X-Trail SUV in Sunderland, and BMW deciding to assemble the new electric Mini in Oxford.

The UK government has pledged £20m in the Burnaston plant alongside Toyota’s commitment.

Dr John van Zyl, president of Toyota Europe, said: “As a company, we are doing what we can to secure the competitiveness of our UK operations as a leading manufacturing centre for our European business. With around 85% of our UK vehicle production exported to European markets, continued free and frictionless trade between the UK and Europe will be vital for future success.”

South Wales to get zero-emission black cab plant

Norwegian aluminium company Sapa has announced plans to invest £9.6m in an automotive plant in Caerphilly, Wales in order to produce a new generation of eco-friendly London black cabs.

The new plant will create more than 130 jobs in Bedwas, South Wales on a site which was mothballed by Sapa in 2014 due to tough market conditions and over capacity, according to the Guardian. The plant was previously used for aluminium extrusion but will be refurbished for the change of purpose.

The move comes as manufacturing confidence is faltering due to uncertainty over Brexit. Financial backing of £550,000 from the Welsh government was given as the reason why Bedwas was chosen over another of Sapa’s European sites.

The new factory will be producing cabs for the London Electric Vehicle Company, which is developing a zero-emissions taxi ahead of moves to ban diesel and petrol cars and vans in the UK from 2040. London is already subject to a congestion charge and Low-Emission Zone.

Production will commence at the plant from late 2017, using materials sourced from Spain. Output will increase steadily over the next five years.

Welsh First Minister Carwyn Jones said: “The opening will create a range of new job opportunities and give a new lease of life to the area.”


Confidence in UK car production boosted by Nissan’s £100 million investment in Sunderland factory

Japanese car manufacturer Nissan Motor Co Ltd is to make an investment of GBP100m in its Sunderland plant, securing at total of 34,000 jobs in both manufacturing and the supply chain into the next decade, it was reported on Thursday.

The announcement indicates that confidence in the UK’s car industry has increased. The Sunderland plant reportedly produced over 500,000 cars in 2014, which makes it the biggest car plant in the UK. The factory, which employs 6,700 people, is said to make more cars than the whole of the Italian car industry. Figures from the Society of Motor Manufacturers and Traders, reportedly show that UK car production in the first half of the year reached a seven-year high of 793,642 cars, which equates to three cars being produced every minute.

Nissan will produce a new version of its successful Juke small so-called crossover model at the Sunderland factory, where it already manufactures the Qashqai, Note and the electric Leaf models. The plant is also geared up to begin production for the company’s premium Infiniti brand

According to reports, Nissan’s European design team in Paddington, London, and European Engineering Headquarters in Cranfield, Bedfordshire, will be instrumental in the development of the new model.

Chancellor George Osborne was quoted as saying that the announcement was “fantastic news”, adding: ” Our ambitious plan to build the Northern Powerhouse means building on the area’s strengths – including manufacturing – and this announcement is an important sign of Britain being chosen as a global leader in car production.”

Tony Burke, assistant general secretary at Unite union, was quoted as saying: “We warmly welcome the decision of Nissan to build the new Juke model in the UK, when it could have gone to one of Nissan’s plants abroad.

“The decision demonstrates the confidence the industry has in a highly skilled and dedicated workforce across the UK automotive industry.”

UK manufacturing output down 1.5% in January

The chances of the UK avoiding another recession are looking slimmer today, with official figures showing a drop manufacturing output for January.

After the announcement by the Office for National Statistics (ONS) this morning the pound fell against the dollar and the euro.

On a seasonally adjusted basis, UK manufacturing fell by 1.5% between December 2012 and January 2013. This was weaker than expected and has fuelled fears that the economy may contract in the first quarter, officially entering its third recession in five years.

Driven by reduced oil and gas extraction, output for mining & quarrying was down 2.4% from December and there was also a drop of 0.2% in the waste management sector. These falls were partially offset by a 1.2% increase in the energy supply sector. Overall, industrial production was 1.2% lower than in the prior month.

Compared against the same month last year, industrial production in January 2013 declined by 2.9% and the narrower measure of manufacturing output was down 3.0%.

A separate report released today by the ONS showed that the UK’s deficit in trade in goods shrank in January, although this was because imports fell more than exports.

The goods trade deficit narrowed to GBP8.2bn, from GBP8.7bn in December. Total exports of goods from UK manufacturers decreased by GBP900m or 3.5%, to GBP24.4bn, while total imports fell by GBP1.4bn or 4.2% to GBP32.6bn.

As in previous months, the dominant services sector helped to offset the goods trade deficit. According to the ONS the UK had an estimated surplus of GBP5.8bn on trade in services in January.

Including the trade in goods and services the overall deficit was an estimated GBP2.4bn in January, compared with a deficit of GBP2.8bn in December.

David Kern, chief economist of the British Chambers of Commerce (BCC), said that more effective action is needed to ensure that the untapped potential of many British exporters can be used to drive a sustainable recovery.

Growth for UK car manufacturing in January

Car manufacturing in the UK grew by 1.2% in January but commercial vehicle production slumped, the Society of Motor Manufacturers and Traders (SMMT) said today.

A total of 129,049 cars rolled out of the factories in the first month of the year, and strong domestic demand meant that output of cars built for the UK market increased by 26.1% year-on-year.

Mike Baunton, interim chief executive of the SMMT, said that despite ongoing economic challenges, growing demand for UK-built products in emerging global markets, combined with major new investment, indicates that 2013 will be a strong year for automotive manufacturing.

According to the SMMT, independent analysts have suggested that UK car manufacturing could grow a third bigger by 2016, with output expanding to almost two million vehicles each year.

The future looks rather less bright for commercial vehicle makers, however.

Output in this sector, which includes a range of vehicles from light panel vans to heavy trucks, as well as buses, coaches and minibuses, fell by 20.5% to 7,822 units in January. A 3.2% rise in output for the domestic market did little to offset a reduction of 37.2% in the production of commercial vehicles for export. In a reversal of the situation in January 2011, more than half of the UK commercial vehicle output in January 2012 was for the home market.

The SMMT expects further decreases in output over the course of 2013 as Ford scales backs its manufacturing.

January also saw a decrease in UK engine production, which declined by 5.1% to 219,757 units. Manufacturers make some 2.5 million petrol and diesel engines in the UK each year, but last month exports declined by 9.5% year-on-year while production for the the home market was 2.8% higher than a year earlier.