Does the Industrial Strategy’s Automotive Sector Deal go far enough?


david-shepherdAutomotive is one of the first industries to be given its own sector deal, as part of the UK’s new Industrial Strategy. More than 800,000 people are employed across the wider automotive industry nationally, which accounts for 12% of total UK export of goods*, so it is welcome news that the Government has recognised that innovation is critical to the growth and development of this highly valuable sector.

Drive Midlands held three roundtable discussions last year to help inform a response to the Industrial Strategy Green Paper, specifically focusing on what an automotive sector deal should look like. Some 40 automotive businesses took part, ranging from OEMs to Tier 2 suppliers and service providers. The resulting response from Drive Midlands outlined a range of topics to address – including the importance of a 15-30 year plan for the industry, the need for more skilled engineers, and access to finance.

Now the sector deal has been published, has the industry been listened to? Broadly, the Government has delivered a deal that fully supports areas of innovation that the Midlands is leading. Funding worth £250 million for the development and deployment of connected and autonomous vehicles (CAV) is great news for the region, which has become a testbed for driverless vehicles.

Support for hydrogen is also particularly valuable for Midlands firms, with a £23 million hydrogen transport programme aiming to increase the number of publicly accessible refuelling stations and boosting demand for fuel cell vehicles. A further £80 million has been committed to a world-class automotive battery development facility in Coventry and Warwickshire – complementing the £130 million factory being built by engineering group Meggitt in Coventry.

It is crucial that the UK remains internationally competitive when benchmarked against other countries and markets. With £16 million earmarked for national supplier competitiveness and

productivity improvement programme, firms along the supply chain should be able to access greater support in making sure they are winning work from international competitors

However, there are areas of opportunity that should be explored further.  A greater emphasis on Industry 4.0 and the digitalisation of manufacture would help the UK remain internationally competitive. While skills development is identified in the sector deal, the UK still needs to produce many more graduate engineers, drive engagement with schools and overhaul craft skills provision. In addition, the emphasis on new technologies, such as CAV, are welcome – but other elements of vehicle systems and architecture still need attention. Making more funding available for capital expenditure into projects – in addition to finance for SMEs – will also help to unlock more investment from overseas.

Overall, the sector deal is a very positive start for the Midlands automotive industry. It should now be used as the basis for a much longer term plan, spanning up to 30 years. The automotive industry thrives on new technologies, innovations and consumer trends – but it also values certainty and an ongoing commitment to how R&D, skills development and business support can be scaled up in years to come.

By David Shepherd, Senior Business Development Manager, Drive Midlands

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