Mandelson urges car industry change
November 25, 2009
"Business Secretary Lord Mandelson is to invest £1bn in automotive research into whether cars can run on carrots and sticks."
The quip, made by comedian Armando Iannucci at the UK motor industry's annual dinner on Tuesday night, did much to raise the spirit - though only momentarily.
Ahead of the dinner, Lord Mandelson told industry leaders that if the last couple of years seemed bad to them, they could well be facing even tougher times ahead.
"This has been a tough industry to be in and it seems to me that it is only going to get tougher," he said in a speech at a Society of Motor Manufacturers and Traders (SMMT) seminar.
The motor industry is facing "two big basic problems", according to Lord Mandelson.
Firstly, there is about 20% more production capacity in the industry than there is demand, making it "inevitable that some of that European capacity is going to have to be absorbed through consolidation".
Secondly, he said, the industry needs to cut automotive carbon emissions and it needs to do so quickly.
"I think we have to accept that barring a crippling new plateau in oil prices, consumer choice alone isn't going to get us to a tipping point in decarbonising road transport fast enough," he said.
Industry darling
To address such challenges, the motor industry and the government has joined forces and created an Automotive Council, chaired jointly by former Ford executive Richard Parry-Jones and Lord Mandelson.
The Council "has the potential to bring a whole new strategic dimension to the self-management of the industry, and in particular the way it works with government", Lord Mandelson said.
"My offer is partnership," he said. "A partnership in which manufacturers show their share of responsibility for the UK supply chain.
"For our part, government will make sure that good suppliers can prosper here. We will actively seek out more companies to locate here. We're suporting the research base in a big way, especially in low carbon."
Plans to develop a closer partnership between the motor industry and the government were welcomed by industry leaders who feel the government has been too slow to respond to pleas for help for automotive companies during the last year or so.
By comparison, said SMMT president Joe Greenwell, "it's been frustrating to see how quickly foreign governments moved".
But although many in the industry feel the government should have done more, few blame Lord Mandelson for this.
"We know that his personal involvement has been instrumental in securing support from his Cabinet colleagues," said Mr Greenwell, adding that "we should recognise the support that has been given".
Lord Mandelson, in turn, cemented his role as the motor industry's darling by describing it as "the cornerstone of Britain's manufacturing economy" and stressed its importance to "our skills base, our engineering supply chains, our niche manufacturing skills".
"The trick now is to make the UK the place you just can't ignore if you're in the low carbon motor business," he said.
Research required
Governments across the world are adopting tough CO2 emission targets and "they're all heading in one direction - down", observed Professor Neville Jackson, group technology director of automotive engineering firm Ricardo.
So the UK motor industry, although shrinking, will be expected to do more.
Matthias Holweg of Cambridge Judge Business School, does not fancy its chances.
In recent years, a "decline in research and development (R&D) budgets means the UK is poorly placed for a shift towards low-carbon" solutions, he said.
"We're not talking about doing a bit more, we're talking about reversing a major R&D trend."
But doing so will be vital to safeguard the UK motor industry's future, observed Steve Radley of the manufacturers' organisation EEF.
"Design and development will become the main competitive advantage, rather than production and assembly," he said.
Lord Borwick, chairman of Modec, which makes battery powered lorries, and former chief executive of London taxi maker Manganese Bronze, was optimistic.
"There is an enthusiasm to help with the unusual in the UK," he said.
"Though I am still convinced that the product people really want is a zero emissions politician."
Print this page