SMMT CEO: 11,000 UK automotive job losses “the tip of the iceberg”

The UK automotive sector could suffer a significantly higher number of job losses than the 11,000 estimated by the Society of Motor Manufacturers and Traders, its chief executive has said.

Speaking during the inaugural Autocar Business Live event, SMMT boss Mike Hawes admitted it will be “difficult to forecast” the total number of losses that will occur once the government’s job retention furlough scheme has ended. Last month the SMMT suggested up to 1 in six UK automotive jobs could be at risk.

“We know of at least 11,000 jobs that have gone across manufacturing and retail, but I fear that is the tip of the iceberg. That is what’s publicly announced,” Hawes stated, going on to list examples of small to medium-sized firms who are going through redundancy programmes but not officially announcing the number of losses.

He cites the retail sector in UK as being one where companies are waiting to see how the market settles down before acting. The recovery won’t be overnight, either, Hawes claimed, particularly as manufacturing adapts to the pandemic.

“We’ve lost 300,000 units this year from car production - that’s 8 billion pound worth of value - and factories will struggle to make them up. Shift patterns have been affected, you can’t do overtime, the ability to maintain production levels during social distancing is difficult.

“We’re predicting production volumes of around 880,000 this year - pitifully low, lower than the financial crisis a decade ago”. Original predictions for 2020 expected two million cars to be produced in the UK.

However, Hawes stressed that despite these wide-reaching issues it is “still a fundamentally strong industry” in terms of “competitiveness…engineering excellence” and a “highly skilled workforce” that is an “absolute asset to the industry".

Signs are that sales recovery in UK is on track, however. July’s overall registration figures are yet to be revealed, but Hawes hinted that the month is “likely to be where it was last year”.

He also cautioned against people holding out for any kind of government incentive scheme, despite "unprecented discussions" between the SMMT and the UK Government. "The treasury has tried to avoid sector-specific interventions, so it is unlikely at this stage". The huge strain on the UK government's finances during the pandemic is a factor, but Hawes also stressed any industry scheme in UK would likely be focused on protecting jobs, not incentivising consumers.