Investment is needed to strengthen the supply chain in the UK

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It was revealed at the end of February that Nissan have urged the UK Government to take action to encourage automotive parts suppliers to base themselves in Britain. The manufacturer stated they should create a £100 million investment fund with this goal in mind.

Car plants in Britain, including Nissan’s Sunderland plant, have long been reliant on imported parts. Approximately 60% of the components used in cars assembled in the UK originate from overseas. This creates a series of vulnerabilities, including the risk of currency shocks causing prices to fluctuate and supply disruptions.

Nissan is particularly vulnerable to these issues. In Sunderland they produce two vehicles per minute and use more than five million parts every single day. Unfortunately they only have the facilities to hold enough stock for half a day. The rest is shipped in periodically to meet demands. Any problems in the supply chain are therefore felt heavily.

Investment in the supply chain would protect against problems, protecting manufacturers. It would also result in more motor trade jobs for the UK. Both would provide big benefits for the economy and help to strengthen the automotive sector.

Nissan is not the only one to have advised the Government about the importance of investing in the supply chain. The Society of Motor Manufacturers and Traders (SMMT) confirmed that a consortium of manufacturers, including those from the motor, rail and aerospace industries, have written to the Government to encourage investment. They have called for a budget of more than £120 million.

The Automotive Investment Organisation (AIO) is already putting a concerted effort into trying to attract more suppliers to base their operations in the UK. There are plenty of fantastic selling points, including a great infrastructure, a talented workforce, and the multitude that is being invested in research and development. The additional funding would be a big help too.

It will be interesting to see if the Government does take action. At John Gibson Associates we will watch the situation carefully and be on hand to help companies looking to recruit if they create motor trade jobs.