In the limelight: May 2019

May 1, 2019

Alison Cowie asks what the future holds for the North East automotive industry

It’s worrying times for the UK automotive industry. So far in 2019, there have already been announcements of cutting jobs and production by the likes of Jaguar Land Rover, Ford and Honda.

In our region, Nissan announced in February that the Sunderland plant would not be manufacturing the new X-Trail, despite rumoured reassurances from the UK Government. This was swiftly followed by the abandonment of the Infiniti models – putting 250 jobs at risk on Wearside.

On April 25, the Japanese manufacturer announced its second profit warning in two months, causing further concern to the 7000 employed at the Sunderland plant and 30,000 reliant jobs in the local supply chain.

Many have been quick to blame Brexit for the negative impact.

In response to the X-Trail announcement, Councillor Graeme Miller, leader of Sunderland City Council, said: “It is imperative that the Government achieves a good Brexit deal for the country, which will help secure the future of Nissan and the rest of the UK automotive industry.”

Paul Butler, CEO of the North East Automotive Alliance (NEAA), agrees that Brexit is having an impact: “Companies are trying to take a strategic approach to balance the potential outcomes of Brexit. “They’re delaying investment decisions, or hedging their bets and spreading investments across the UK and Europe,” he says.

But Paul maintains that the bigger factor impacting the industry has been “the move away from diesel internal combustion engine production, which has caught the sector and the OEMs on the hop,” adding, “Government rhetoric around anti-diesel and the increased taxation has negatively impacted consumers’ confidence in diesel vehicles.”

The diesel backlash has also accelerated the industry’s move towards emerging technologies. As way of example, when Honda announced it would be closing its Swindon plant by 2022, this was on the back of the global manufacturer announcing a massive $2.75 billion investment in Cruise – a California-based tech start-up that specialises in autonomous vehicles.

The global automotive industry is shifting dramatically towards electrification and self-drive vehicles, so what does this mean for the North East of England that has such a rich heritage in manufacturing internal combustion engines? Are we doomed?

Not according to Paul Butler, who believes the region’s existing infrastructure will help the North East not only to adapt but thrive.

“We’re a region famed for automotive manufacturing – particular in vehicle assembly – and with the right support, we can make sure that companies can modify operations and remain competitive on the world stage,” he says.
Paul says the development of the International Advanced Manufacturing Park (IAMP) next to Nissan’s Sunderland plant will attract pioneering automotive companies. He also highlights the planned Centre of Excellence for Sustainable Advanced Manufacturing (CeSAM) and the existing Advanced Propulsion Centre (Electric Machines Spoke) at Newcastle University as examples where the region is recognising new opportunities.

Paul reveals that the NEAA is also currently looking at the viability of the North East to become a testbed for research into connectionless and autonomous vehicle logistics.

“Given our unique infrastructure and high concentration of supply chain companies, we could lead the UK in developing solutions in this area,” he says.

Paul also draws attention to successful North East-based companies that are already ahead of the game.

“We have growing and emerging strengths in power electronics,” he says. “For example Sevcon, which has been bought by BorgWarner.

“ZF [the German company with facilities in Peterlee] also makes millions of electric vehicles a year while companies, such as AIVD Technology and Advanced Electric Machines Ltd, are examples of emerging North East [electric vehicle] companies doing great work.”

Another North East enterprise that is achieving unprecedented growth is Hyperdrive, which develops lithium-ion batteries and other technologies to power electric vehicles, homes and businesses.

In November 2018, the Sunderland-based company raised £6.7 million of equity funding from its existing shareholders, which will be used to expand its production facilities as it enters new international markets.

Founder and commercial director, Stephen Irish, also reveals that the company is about to announce 50 per cent growth in turnover compared to its previous financial year.

Stephen agrees with Paul that the decline in the appetite for diesel cars has impacted the region and it will take time to adapt to a low- carbon economy.

But he maintains that the North East’s reputation in automotive production, strong initiatives such as the IAMP and CESAM, and local ‘big thinkers’ in the industry, puts the region in a good position.

“I genuinely believe that the North East could be at the core of the revolution,” says Stephen. “And not just for road vehicles but in other markets too.

“But we have to act now; we can’t be complacent.”

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