THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED PAGE 1

Nick Grout

BIS Automotive Unit

Automotive Industrial Strategy

SMMT Open Forum,

19 March 2014

Nick Grout,

BIS Automotive Unit

Industrial Strategy: government and industry in partnership

• Industrial Strategy: to give businesses the

confidence to invest.

• Key principles:

- Long term

- Partnership with business

- Whole of Government approach.

• 5 major themes: emerging technologies; access

to finance; skills; public procurement; supporting

sectors

An approach welcomed by business

• "What's critical is identifying where a long-term partnership between business and government can make the greatest difference when it comes to encouraging investment and boosting exports," - John Cridland, Director-General of the Confederation of British Industry (CBI)

• “Companies and sectors with the potential to deliver new technology and long-term growth in the economy will do it where there is a coherent, consistent and certain approach from government” – EEF

Industrial Strategy Sectors

Aerospace (March 2013) Aim: Maintain existing UK market share; secure UK employment

Life Science Strategy (Dec 2011) and one year on update (Dec 2012) Aim: To make the UK the global hub for life sciences

Nuclear (March 2013) Aim: Grow the global market share; set out role that nuclear plays in UK energy mix

Agri-tech (July 2013) Aim: increase inward investment and exports

Education (July 2013) Aim: Increase the UK's education exports

Information Economy (June 2013) Aim: to seize the opportunities from new ICT technology

Offshore wind (August 2013) Aim: Build competitive and innovative UK supply chain

Oil and Gas (March 2013) Aim: Increase inward investment in energy supply chain

Construction (July 21013) Aim: make the UK the global leader in sustainable construction

Automotive

(July 2013) Aim:

Investment in R&D;

grow and develop UK supply chain

Professional Business Services (July 2013) Aim: make the UK the global hub of expertise

Why Automotive?

• From 2002-12 the automotive sector accounted for an

average of 0.7% of UK GVA and 5.9% of UK manufacturing

jobs

UK automotive industry turnover in 2013 exceeded £60

billion (an all-time record, and 9% up on 2012).

Automotive exports totalled £31.5 billion in 2013 (9% up

on 2012 another all-time record), accounting for 6.3% of

UK's entire exports of goods and services.

Automotive Strategy –

“Driving Success”, July ‘13

- A shared vision for a

prosperous, globally

competitive and growing UK

automotive manufacturing

industry

- Automotive Council leadership

Over the past few decades the UK

automotive industry has been transformed

Headlines from Strategy:

• £6 billion investment from global

vehicle makers in the last two years

• UK 4th largest vehicle producer in

Europe – making 1.6 million vehicles

(one every 20 seconds), & 2.5 million

engines

• Over 80 per cent exported, to more

than 100 countries

The Strategy is framed around key

challenges and opportunities, with

an action plan to address these:

Innovation and technology

• Almost none of Europe’s new cars powered solely by petrol or diesel engines by 2040: a once in a lifetime technology change

Supply chain

• Domestic supply chain relatively weak – on average only one third of the parts in UK manufactured vehicles are sourced here: estimated £3bn opportunity if UK suppliers could compete better

Skills

• Concerns about a shortage of engineers & other skilled workers; need to build the talent pipeline

Business environment

• Strategic partnership is key to improve the business environment for the UK automotive sector, in a highly competitive global context

Strategy Actions and Priorities:

Technology – including £1bn joint investment in Advanced Propulsion Centre;

technology roadmaps

Supply chain – including establishing Automotive Investment Organisation,

access to finance cooperation framework agreed with the banks

Skills – high level “roadmap” for skills, to create “talent pipeline”

Business Environment – Establishment of new Automotive Council Group to

address, to cement the UK as a globally competitive place to do automotive

business.

Kick-starting the ULEV market: £500m HMG investment announced for 2015-2020,

building on £400m current investment; ULEV strategy published in September

- The Strategy is long term. Some actions are well advanced (e.g. APC, AIO), for

others workplans are more embryonic.

Automotive Council structures – strategy implementation

Automotive

Council

Technology WG Supply Chain WG Business Environment &

Skills WG

Workstreams:

- Skills

- UK international

competitiveness

- UK business

environment

- Europe (and trade)

Workstreams:

- Establish Advanced

Propulsion Centre

- Future technology and

R&D co-ordination

- Intelligent mobility

- Manufacturing

technology

-Energy storage (non-

electro-chemical)

-[Design]

Workstreams:

- Understanding supply chain

demand and capability

- Improving long term supply

chain competitiveness

- Satisfying supply chain

demand (though inward

investment by existing

suppliers or new entrants)

- Access to finance (w BBA)

- Innovative processes for

premium manufacturers

International competitiveness

Chair: Tony Walker,

Toyota

Skills

Chair: Jo Lopes, JLR

UK business environment

Chair: Gareth Jones,

ebm-papst

Europe

Chair: Andrew McCall, Ford

Business Environment

and Skills Group

Chair: Nigel Stein, GKN

Business Environment & Skills

Challenge / opportunity Response

Skills: Concerns about a

shortage of engineers & other

skilled workers; need to build

the talent pipeline

Industry consensus skills “road map” and action plan to

deliver this.

Business environment:

Strategic partnership is key to

improve the business

environment for the UK

automotive sector

Building evidence on the UK as a good place to do

automotive business; understanding policy impacts and

costs; maintaining and enhancing the UK’s flexible labour

market; engaging local enterprise partnerships (LEPs),

devolved partners and other local decision makers;

supporting UK influence in and on Europe; supporting key

free trade agreements.

14

Workstreams and priorities

Skills UK International

Competitiveness

UK Business

Environment

Europe

• Employer

Ownership Industrial

Partnership bid

• Apprenticeship

“trailblazers”

• Auto Council

scholarship scheme

• Attracting more

young people,

especially women,

into automotive

careers and to study

STEM subjects

• Exploring future

Employer Ownership

Fund opportunities

• Develop a

scorecard of the

UK’s international

competitiveness. To

include: tax;

incentives; labour

flexibility; energy.

• Interacting with

LEPs – established

an Automotive

Council LEP

Leadership Forum in

January 2014

• Predictability of

policy and regulatory

requirements and

incentives –

including ULEVs

• Public procurement

pipeline

• Making the UK

voice heard: in

setting standards; in

trade agreements;

and in the policy

agenda.

• Reviewing

mechanisms for EU

engagement.and

how to work together

for most impact.

• Reviewing

evidence on the

benefits and issues

for the automotive

sector of UK EU

membership