New study warns of production shift

The portents for Britain’s automobile manufacturers are mixed: eight out of 10 companies are optimistic about medium term growth. Nearly half warn of imperative to move production to low-cost markets. Fewer companies report problems recruiting skilled employees, but Level 3 skills remain most elusive.

Nine out of 10 companies say costs will increase significantly in the next five years, through regulatory overload, and 93 per cent believe government is not as committed as it should be to Britain’s largest manufacturing sector. But over-regulation threatens to cloud a bright future for companies in the automotive sector and could see more production moving east. That’s the central theme in an industry perspective which pooled the views of more than 100 senior executives.

The latest warning from the UK industry follows publication of last year’s CARS21 report in Europe. This pointed to the effect that inconsistent and conflicting regulatory objectives were having on European competitiveness. Recommendations were made to streamline rules and limit the cost burden to the auto industry. SMMT fully endorsed these recommendations, and today urges government to follow these principles here.

The high-level CARS21 (Competitive Automotive Regulatory System for the 21st Century) report was published in October 2005. The group published 18 recommendations, including principles for better regulation. CARS21 called for a new approach to policy-making based on proper impact assessments, consistent policy objectives, technology-neutrality, cost effectiveness, thorough consultations, lead-time needs and affordability.