Out-Law / Your Daily Need-To-Know

UK automotive suppliers win back £1 billion of work previously outsourced overseas

16 Mar 2015, 5:30 pm

The UK's biggest car manufacturers have re-directed £1 billion of spending from overseas suppliers to Britain-based suppliers in the past three years, according to a new report.

Contracts worth more than £1bn that were outsourced to overseas based suppliers in 2012 are now being performed by UK suppliers in the automotive industry, according to the UK Automotive Council (18-page / 868KB PDF), a body made up of representatives from both the UK government and automotive companies. There are now further opportunities for 're-shoring', it said.

"Back in 2012, working together through the Automotive Council, government and industry identified a £3 billion opportunity to increase UK Tier-1 supply chain value," UK business secretary Vince Cable, who jointly chairs the Automotive Council said in the new report.

"Since then, UK vehicle makers have already re-shored in excess of £1 billion-worth of purchasing and yet as the industry grows, so the opportunities to invest are ever greater. We now estimate that over the coming years, the potential to re-shore purchases by UK vehicle makers amounts to £4 billion per annum of added Tier-1 supplier business," he said.

The Automotive Council said that initiatives such as 'Meet the Buyer' events and an "automated signposting system" could help suppliers in the UK raise their profile and promote their capabilities to car manufacturers. It anticipates the UK will be producing two million new cars a year in the future and that the growth in manufacturing, and move towards higher value vehicles, will require "ever more complex and technically advanced components" and provide opportunities for UK suppliers.

"Sales from UK suppliers to UK vehicle makers have grown by 19% through 2014, whilst sales growth at the UK vehicle makers was a more modest 5%, as the European market remains subdued," the report said. "Through this period, UK vehicle makers have been investing in new products for European and global markets, putting in place the conditions for robust growth in coming years, and expanding the opportunity for investment in the UK supply chain."

"The appetite for local sourcing remains strong, bringing the benefits of responsiveness and reduced logistics costs. Despite a steady flow of new supply chain investments, the opportunity afforded to suppliers by a growing UK vehicle industry has never been stronger," it said.