Attracting another car manufacturer to the UK is going to be critical if we’re going to persuade morer suppliers to “reshore” and bring more manufacturing to the UK, according to Bentley head Adrian Hallmark.
“The UK isn't anywhere near competitive enough to be part of the global supply base,” Hallmark said bluntly in a conversation with Autocar.
His argument is that the landscape of Britain’s car manufacturers - from the likes of Bentley at the top, Jaguar Land Rover in the middle and Nissan and Toyota representing the mass market - is too diverse to present a sound enough business case to a supplier deciding whether to locate in the UK rather than continental Europe.
“There's not a critical mass of a million vehicles being produced per year of the same type with the same needs from a supplier point of view,” Hallmark said.
Bringing in another manufacturer is therefore needed.
The need to build a healthy and diverse local supplier base has become increasingly important as car makers look to repair globally damaged supply chains with more reliable sources closer to home.
The Covid pandemic, subsequent semiconductor shortage, the scramble to obtain raw materials for batteries and the general fragility of the current supply model has all forced car makers to reassess their purchasing and ask how it can become more secure, reliable and – perhaps most importantly – transparent.
“Car makers in recent years have focused more and more on fewer and fewer tier-one [ie primary] suppliers,” said David Bailey, professor of business economics at the Birmingham Business School.
“The tier-ones built very long supply chains that cross borders many times, but the combination of the pandemic, Brexit, political issues, war [in Ukraine] etc has had a big impact on that. It bit the OEMs on the bum.”
In the UK’s car-making heyday in the 1960s and 1970s, the suppliers and the suppliers to suppliers were pretty much all located close to the car factories. Car makers' CEOs would drive past much of the supply chain on their way to work in the morning.
That shifted as car makers looked for economies of scale and took advantage of concentrated areas of expertise abroad to bring down prices. The few suppliers that remained close to the factory were those tier-one suppliers making the really bulky items like seats or dashboards.
That strategy is now shifting again. “We're going through a period of deglobalisation,” Bailey said.
From the beginning, the thrill of lowering unit costs by sourcing from the other side of the world was soured by compromises. Quality often suffered and the distance meant companies couldn’t react quickly if they needed to double an order for whatever reason.
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