Government support vital: UK car-making academic

AUSTRALIA will gain valuable insight into how the British car-making industry has survived just as Ford, Holden and Toyota prepare to quit national manufacturing.

While there are no major British government programs such as those used in Australia to encourage investment, government has played a significant role, Professor Neville Jackson, the chief technology and innovation officer at Ricardo Group in the UK and a leading technology analyst and researcher, told GoAuto from his base in the UK.

Professor Jackson will address the Cars of Tomorrow Conference during the Melbourne-based Australian Automotive Week in the run-up to the Formula One Australian Grand Prix on March 16.

The British car industry has defied expectations by staging a startling comeback in the last few years, throwing off its previous mantle as the “sick man” of the European automotive sector.

Production, investment and exports are up, but there is no single major factor that has driven the renaissance, according to Professor Jackson.

Britain’s resurgence contrasts sharply with the fate of the Australian industry, which was placed on death row by the strong Australian dollar – now in retreat – and a government which appeared to favor workers in primary industry over those in manufacturing.

In 2013 British car production rose 3.1 per cent to 1.5 million cars (excluding 86,000 commercial vehicles), which means car-making has rebounded more than 50 per cent since it bottomed out at one million units in 2009, a year after the global financial crisis hit.

Growth in 2013 came despite a contraction in sales in Europe,Britain’s biggest export market. Britain exports 80 per cent of its output.

Professor Jackson said investment in the industry had exceeded £6 billion ($A11.3 billion) over the last three years, with £2.5 billion allocated in 2013 alone.

He said the upturn in the industry followed a change of heart by the Britishgovernment, which, since the days of Margaret Thatcher, had been indifferent to manufacturing.

“Essentially the UK had a big problem with an ambivalent attitude to manufacturing. The government view was that manufacturing was no longer important, that it was going to move east, to China, and that the UK economy was going to be based on services.” He said this non-policy prevailed until around 2006, when the government realised the economy was “completely unbalanced”.

“We can’t just rely on services, it doesn’t work. You can’t make an economy work by just selling each other insurance policies,” he said.

In a move that defies the conventional Australian orthodoxy that governments “can’t pick winners”, the Britishgovernment decided to encourage certain sectors.

“It has decided that these are going to be our growth industries and has produced industrial strategies in collaboration with the industry and all the key stakeholders,” Professor Jackson said.

“We have all had input into it and have decided that this is what we are going to do. It involves some investment, it involves encouragement – it involves all sorts of things.” While there is a welter of policies aimed at assisting the industry, many come from regional councils and even those offered by the national government are indirect in nature, such encouraging knowledge transfer or collaborative research and development.

Professor Jackson said the crunch time in the mid 2000s saw a number of less productive plants close, leaving the more efficient plants that were further upgraded or expanded.

He said the British car-making industry was growing despite competition from low-wage eastern European countries because it had a range of other factors working in its favor.

“Don’t get fixed on thinking that if you pay high wages, you’re not going to be competitive. You can pay competitive wages and have good productivity if you organize yourself well,” he said.

“It all comes down to this business environment thing. There are all sorts of things that come into competitiveness. I would say the key one was productivity.” And that means investments in the latest robotics and processes.

“It’s about streamlining, using the most up to date production methods, and improving quality. That’s absolutely key.” Professor Jackson said there were many factors comprising the business environment, and the mix available in Britain was attracting investment from several car-makers.

“If you were a multinational company looking to invest, build a new plant, put a new R&D centre in, where is the best place to put it? “Where can I get the best people, where are they best trained, what’s the infrastructure like, what kind of support and funding schemes are there, who else can I do my R&D with, are there collaborations available all these kind of things are what they look for.” And, as far as people go, it’s not just the highly qualified people at the top who are attractive.

“It’s not just about your high-level people, your graduates. It’s also about ‘can I get apprentices, can I get skilled workers’? If you, as a country, have a good skilled workforce, you are much more attractive to multinational investment.

“That’s really where the eastern European countries have done very well. They have focused on education.

“Yes, they have low wages, but there are some very good, well-trained people and they have done a good job. Ricardo, our own company, we have our back office in Prague in the Czech republic, where we can get hold of really excellent people.” Professor Jackson saidBritainprovided better infrastructure than eastern Europe, with better supporting industries, and better access to new technologies or information technology.

However, he said one thing other countries could not compete against was Britain’s geographical location.

“There is one big difference the UK economy has, compared with a lot of other more isolated economies,” he said.“We have a straight gateway into the European Union market.

“There are no barriers to trade into the EU market with 500 million people. A foreign company can come and set up in the UK and sell into that entire market fairly easily.”