Motor Industry

Part of the debate – in Westminster Hall at 2:56 pm on 17 December 2008.

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Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield 2:56, 17 December 2008

I congratulate Sandra Gidley on securing the debate. The number of right hon. and hon. Members here today shows the strategic significance of the motor industry to the United Kingdom.

Some statistics have already been alluded to. We are talking about an industry with a turnover of £51 billion and 840,000 jobs, with 180,000 at the manufacturing end and a retail sector supporting thousands more. In the west midlands, turnover is about £13 billion. That includes not only the major manufacturers in the west midlands—Jaguar and Land Rover—but the Fords, the Vauxhalls, the Toyotas, the Nissans, the Hondas, and the BMWs.

Behind those big manufacturers are a range of performance engineering and motor sport industries. There are also niche manufacturers; Aston Martin springs to mind, as do Lotus and Morgan. Britain is home to most Formula 1 teams; it is world-class in motor sport. Behind those is an entire performance engineering industry, with specialist firms such as Prodrive, Mira and Ricardo. We then have the components industry—the supply chain. The big names in the first tier include GKN, Delphi and TRW, and behind them there are second, third and fourth-tier suppliers.

When people talk about the crisis facing the United States motor industry, it is often said that the industry did not keep up with the times—that it did not invest in new products and did not look to the future. That accusation cannot be levelled at the UK automotive industry. If the lead times, technology requirements and the research and development requirements of the UK's automotive industry are akin to other high-tech industries such as aerospace, its vulnerability to sudden downturns in the market and consumer demand will be that much more acute.

We heard that new car registrations were down by 36.8 per cent. in November. We are in real danger of spiralling problems. If major manufacturers go on downtime for a week or two, or even two months—understandably, given the crisis that they face—it will be a rational business response, but what will it mean for component suppliers that have been told for more than a decade that they must be involved in lean production? They are being told to keep their stocks down and work with just-in-time delivery. Their survival could be at stake.

However, it can also work the other way around. If a component manufacturer goes into administration—we recently saw this in the west midlands with Wagon—it can in turn, by not producing, create major problems for big manufacturers. I have the same fear as my hon. Friend Mr. Cunningham, that if we start to lose the critical mass of our automotive industry in the UK, it will not come back; it will not be there to come back when the upturn arrives. I have seen in my own constituency—I am thinking of MG Rover—what it can mean for a local community when a firm goes down. However, through the taskforces, the recovery plan and so on, we responded to that crisis and ensured that it was not as bad as it otherwise could have been—although God knows it was bad enough! When the problem is industry-wide, however, and extends further than just one firm, it is all the more acute.

What responses do we need to consider? I agreed with a lot in the hon. Lady's speech, but she was a little uncharitable in her references to the Government. She described how President Sarkozy met manufacturers and said that nothing equivalent had happened in Britain, but Lord Mandelson met the majority of major manufacturers—[Interruption.] He is not a President, as far as we know, but that dialogue did go on. My hon. Friend the Minister, who admittedly is not a President either, has also been in regular meetings with major manufacturers, and when those meetings are not taking place, his mobile is usually going off.

As far as the components industry is concerned, in the past week or so, a letter went out to major manufacturers and suppliers about the range of support either available now or in the process of negotiation.