In just over a year, the North East Automotive Alliance (NEAA) has grown its membership to over 150, hosted a large-scale expo for more than 300 delegates – including the MP in charge of the Northern Powerhouse, James Wharton – formed a number of industry-led groups to identify and tackle issues and growth opportunities, and secured EU funding to help local SMEs build their capabilities.
The CEO, Paul Butler, is the only cluster benchmarking expert in the UK and who dedicated his MBA dissertation to the impact of clusters, is in no doubt of the powerful impact they can make on an industry.
“The key concept is to create a network and to bring industry together to highlight any issues, constraints or growth opportunities in their sector,” he explains. “It’s not about sharing trade secrets; it’s about industry collaborating to maximise their growth potential.”
The business cluster concept was first introduced and popularised by Michael Porter in 1990.
He studied ten leading nations to find out why particular areas lead the world in their field, including Silicon Valley in California, and the automotive markets in Germany and Japan.
“Porter found that each area had two key characteristics,” explains Paul. “Value creation and a tight geographical location where ideas and skills could flow easily.”
Paul helped to sow the seeds of an automotive cluster in the North East at an event for sector leaders at Lumley Castle in Durham back in February 2014, while working for NEPIC, another local cluster focused on the process industry and one of the top performing clusters in Europe.
After the concept was embraced, Paul was then asked to head the newly formed NEAA, taking up the role of CEO in March 2015.
One of the first tasks for Paul and the alliance’s small team has been to identify the true value of the North East automotive sector. Working with the Department for Business, Innovation and Skills (BIS), the alliance has identified that there are 30,000 people employed within 237 direct supply chain companies and organisations in the North East, with a combined turnover of £10.2 billion.
Confirming just how important the sector is for the North East and its economy, the NEAA has looked to build a strong network of OEMs, tier one suppliers, SME component manufacturers and sole traders, as well as local supporting service companies and organisations.
Membership now stands at just over 150 and is growing at a rate of around ten new members a month. The NEAA has also created a number of work groups where local automotive industrialists can collaborate on issues that have an impact on their sector.
The first of these, lead by Peter Watson, plant manager at Kasai (formerly R-TEK), has been the business excellence group, which looks to identify and share ideas of best practice. A number of site visits have subsequently been arranged for members, with Paul reporting that companies have generated well in excess of 200 ideas to improve their own businesses.
The second group, chaired by Matt Boyle, CEO of Sevcon and co-chaired by Ian Malcolm, the MD at ElringKlinger (UK), is focused on skills.
“It is predicted that the UK automotive sector will generate between 50,000 and 100,000 jobs in the next five to ten years,” says Paul. “We see around 10,000 of those coming to the North East and, combined with around 8000 people reaching retirement in the same period, the region could be faced with a significant skills gap unless we act.”
The alliance and the skills focus group, which currently comprises 32 industrialists and 14 key training providers, has identified four pillars of focus: the future workforce, apprenticeships, graduates and the development of the current workforce. It is currently building a strategy to address issues and harness the potential in all four of these areas.
More recently, a third working group for innovation and technology has been created to encourage more activity in this area.
“This best thing about these working groups,” says Paul, “is that it is industry driving the strategy forward. They identify the issues and the areas of focus, as well as the activity that is needed.”
While NEAA can boast the likes of automotive giants Nissan and Komatsu as members, a significant part of the alliance’s first year has been spent engaging SMEs.
The NEAA worked with 27 SMEs as part of an EU funding programme and is currently in the process of securing around £1.3 million of private and EU funding to work with a further 160 automotive SMEs over the next three years.
Building credibility into the alliance – nationally and internationally – has also been key for Paul and the NEAA team, who have worked hard to achieve Bronze Label status by the European Cluster Excellence Initiative, an accreditation which benchmarks cluster groups on qualities such as achievements, recognition and management.
The NEAA is youngest cluster to achieve the Bronze Label, and is targeting gold accreditation in the next 12 months, which, according to Paul, will “open up a lot of opportunities to collaborate with other clusters across Europe”.
Other priorities for the alliance as it enters its second year is to maintain the growth of the membership, develop the current working groups and launch a new trade and investment group to help members, particularly SMEs, enter new markets.
The NEAA Expo will also return to Sunderland’s Stadium of Light on September 22, 2016.
Expert speakers, the popular Meet the Buyer event and technical workshops will again feature on the day, as well as a new Technology Showcase to promote innovative thinking in the region.
Meanwhile Paul and the team can be proud of NEAA’s first year – which has exceeded all expectations – but they remain focused on building upon the alliance’s successful beginnings.
Paul concludes: “The NEAA has had an extremely successful first year but it’s very important that we maintain that momentum and reward the willingness of the industry to collaborate for the benefit of North East sector.”