By Matthew Fell, Director for competitive markets, CBI
I am often asked why the Confederation of British Industry (CBI) supports the vision for an industrial strategy for the UK economy. Critics decry: isn’t industrial strategy simply about picking winners? Hasn’t government intervention in business always ended in failure?
To explain why I have encouraged the CBI to champion a new industrial strategy for the UK, I allude to the success of our competitor nations, including Germany, France and South Korea, all of whom have long-term strategies in place to champion their key sectors and to support manufacturing, R&D and innovation. But, an equally compelling example is much closer to home.
The UK automotive sector has rebounded strongly from the global economic slowdown in 2007-08 which resulted in substantial losses for carmakers around the world. UK new car sales in 2008 fell to 2.13m, the lowest total since 1996. This downward trend was forecast to continue, with gloomy predictions about the long-term future of the UK’s car industry.
Five years on, the UK now possesses some of the most productive car plants in Europe and the sector generates around £30 billion of annual export revenues for the UK economy. Global vehicle manufacturers have invested over £6bn in the UK over the last two years, including Nissan’s announcement of £420m investment to start production of the 100% electric Nissan LEAF in Sunderland and recent plans from Jaguar Land Rover to create 800 new jobs at its advanced manufacturing facility in Solihull.
This is excellent news for the industry and for UK Plc. But, what has been the secret behind this renaissance? Well, many CBI members credit the strong industry leadership of the Automotive Council and its close collaboration with government as a key factor in improving business confidence and providing certainty about the long-term direction of public…
Established in December 2009, the Automotive Council is driven by leading UK automotive industry representatives and is jointly chaired by Vince Cable MP, the Secretary of State for Business, Innovation and Skills. The Council is currently in dialogue with government to develop an industrial strategy for the UK automotive sector which builds on the strengths of the industry and positions UK automotive firms for future investment and growth in both the domestic market and abroad.
In advance of the launch of the strategy, the CBI published a brief on the UK automotive sector last week highlighting its long-term growth potential. Full Speed Ahead calls on government and business to capitalise on the momentum that is in place by setting out an ambitious plan to sustain the long-term competitiveness of the UK’s car industry.
We identify specific opportunities: enhancing the UK’s capabilities in automotive R&D – particularly in low carbon vehicle technologies; strengthening the supply chain; and addressing shortages in the supply of skilled engineers coming out of university and the schools system. In addition, with economic and political uncertainty in Europe likely to result in difficult trading conditions in the European car market, UK automotive firms must also extend their reach into fast growing global export markets, such as China, India and Russia.
By targeting support in these areas, and providing long-term certainty to business about the direction of policy and the favourability of the UK business environment, the Government can complement efforts to rebalance the UK economy towards trade and investment and ensure that the UK automotive sector is at the heart of its vision for a UK industrial strategy
