UK Automotive Industry: Job Losses

Gillian Keegan Excerpts

Tuesday 22nd May 2018 Westminster Hall

[Gillian Keegan (Chichester) (Con)]

It is a pleasure to serve under your chairmanship, Mr Bone, and I thank the hon. Member for Warwick and Leamington (Matt Western) for securing this important debate.

Job losses in the automotive industry are of great concern to everybody, particularly to those of us with car manufacturers in our constituencies. My constituency, Chichester, is home to Rolls-Royce, which is the single largest employer and employs more than 1,700 people in highly skilled, well-paid jobs. Nationally, the automotive industry provides 814,000 jobs, with an annual turnover of £77.5 billion—more than 8% of the UK’s manufacturing output. The car manufacturing industry is of great importance not just to Chichester, but to the whole country.

I began my working life in a car factory in Liverpool where I worked for seven years. When I first started work, the industry was introducing a supply chain mechanism called just-in-time. First developed in Japan, just-in-time manufacturing would revolutionise the industry and make UK car manufacturing competitive and able to compete effectively with the rest of the world. However, just-in-time manufacturing is logistically complex: components arrive from suppliers based all over the world on the same day that they are to be assembled into a car or a sub-assembly, thereby avoiding the need to store large quantities of inventory that add to overhead costs.

Over decades the automotive industry has created a highly integrated and fast-paced supply chain, and that has been facilitated in Europe through the free movement of goods within the customs union. A car comprised of parts from throughout Europe will be assembled in around 20 days from start to finish, but not a screw will have been made before those 20 days. A network of suppliers based all over the world will be involved, and parts will sometimes cross borders several times before becoming a sub-assembly that is ready for final production. To put that in context, a crankshaft in a car manufactured in the UK will cross the English channel four times before being assembled into the final car.

The success of the supply chain network depends on many parts moving in a frictionless fashion. Imagine the effect that even a small delay at customs will have. I am probably one of the few Members of Parliament who have spent days sitting in customs, desperately waiting for parts to be released, to dash them back to a car factory where a line of workers are sitting eagerly waiting for work. Stopping a line in the manufacturing business is a disaster—it means all the cost, none of the production, and a knock-on delay for other plant production in future. To say it is a costly experience is an understatement.

Such delays make car manufacturing uncompetitive and would certainly lead to job losses. Car manufacturers will not risk that happening, and instead they will have to build warehouses to house stock. That will effectively set the industry back years, sending it back to the 1980s. What effect will that have on our roads? Lorries currently pass through customs in under two minutes, but if that time is doubled, it will have a huge impact on our ports and the surrounding roads. We must be innovative when we implement new customs arrangements and utilise technology to ensure there are no hold-ups at crossing points. I am pleased that the Government are aiming to ensure that crossing points are as frictionless as possible, but we must ensure we get it right.

The size of the UK’s car manufacturing industry is impressive, but we cannot take it for granted. Every new model is highly competitive, because a number of car plants located around the world will have similar capabilities but different labour rates and market conditions. As we leave the EU, the UK must remain competitive because increasing pull factors to other locations will seek to draw investment away from our shores. Thus far the industry has shown its support by investing further in the UK, and since 2010, jobs in car companies have increased by nearly 30%. If we continue to prioritise friction-free customs arrangements and continued close co-operation with the EU on rules of origin, harmonised standards and type approvals, I am optimistic that the automotive industry will continue to thrive and grow.