Supply Chain Group Growing The UK Automotive Supply Chain SMMT Open Forum September 2012 Supply Chain Group Update:

Transcription

1 Supply Chain Group Growing The UK Automotive Supply Chain SMMT Open Forum September 2012 Supply Chain Group Update: Mike Mychajluk, Jaguar Land Rover Purchasing Manager 1

2 Supply Chain Group Introduction Horizontal & Vertical Cross Sector Engagement BIS BMW Mini Brose Calsonic Kansei Cambridge University Flambeau Europlast Ford GKN Automotive GM UK Jaguar Land Rover JCB JLR Lear Leyland Trucks MAS West Midlands Michelin UK Nissan OLEV PA Consulting Group Productiv Ltd RBS Schaeffler (UK) Ltd Sertec Group Holdings Skills Funding Agency SMMT SMMT Industry Forum Stadco Ltd TATA Steel TI Automotive Toyota TRW TSB UKTI ZF Lemforder UK Acting Chairman : Dave Allen Purchasing Director with a lead for new technologies, strategy & government programmes Jaguar Land Rover

3 Strategic Overview Workstream Positioning UK Growth opportunity is the driving factor: UK competitiveness in our sector UK competiveness in related sectors Developing existing capacity/ capability Encouraging new investment Rebuilding the UK supply chain Work stream : Close the Sourcing Gap + Develop existing UK manufacturing capacity Work stream : Encourage New UK Entrants/Reentrants/expansion Investment Work stream : Optimise UK Competitiveness Work stream : Access to finance Work stream : Component Survey Data & Intelligence

4 UK Economic Overview Macro economic factors have shifted in the UK s favour Historic trends in UK vehicle manufacture have reversed Many new vehicle projects have been announced Much of the excess UK supply chain capacity has been used already, expansion is necessary for a competitive UK sector Supply Chain investment is now required to support OEM growth. This will: Protect immediate expansion plans of the UK OEM s Create long term critical mass in the UK Supply Chain Create much needed UK employment opportunities Support the UK s Growth strategy Inward investment will require incentives; expansion of indigenous suppliers will require access to capital

5 Favourable FX & commodities but weakening economic outlook Exchange Rate USD/GBP GDP vs 2012 Q2 Budget 2012/13: $1.60 Spot: $ Budget 2012/13: $ Month Aluminium - $ per Ton Volatile economic environment UK Economy shrank by 0.5% during Q2 as the double dip recession continues. The service sector is showing signs of recovery however, the construction and manufacturing sectors remain weak. US Economy grew by 1.7% in the second quarter. Economy remains sluggish with August experiencing falling exports and weak employment. Spot: $1948 Europe Moody downgrade Europe AAA rating to negative due to the region debt exposure and negative outlook. ECB decision has renewed some confidence. China Manufacturing dipped to a nine month low in August with a PMI of 49 which indicates contraction, Fears still exist around a property bubble. Chinese banks are taking steps to boost lending UK Automotive Sector is less reliant on EU market > 55% exported = Resilience 3

6 Strong UK Investment Continues

7 RECENT JLR COMPANY HIGHLIGHTS INVESTMENT IN OPERATIONS AND RECRUITMENT 2 billion investment in 2012/13 Significant investment in three UK manufacturing sites and further investment in new advanced engine facility JLR has established the largest electric/hybrid engineering team in UK approximately 240 More than 8000 recruited in the last 2 years 336 Graduates and 104 advanced apprentices (level 3) taken on in 2011 JLR received a Corporate Responsibility Index Platinum Award (March 2012)

8 JLR SUPPLIER BASE PURCHASING ACTIVITY JLR will spend more than 9bn with its supply chain in 2012/13 JLR Global Supplier Spend m % /13

9 Strategy Development Workstreams Underway 5 priority areas have been identified All Interdependent Optimise competitiveness of UK Supply Chain Access to Finance Growth Strategies for UK Auto Supply Industry Close sourcing gap Tier 1 to Tier n Identify/ Advance Common Opportunities Encourage new entrants / re-entrants to UK 9

10 Common Opportunities Critical Workstream Project OEM Commodity Survey 5 year demand forecast of UK based OEMs Survey now available via BIS.gov.uk Identify/Advance Common Opportunities 10

11 Encourage New Entrants Each OEM requested to provide priority commodity targets Commodity Supplier A Supplier B Supplier C Supplier D Castings Machining Plastic Mouldings Stampings Sub-frames Tyres Glass etc Potential investors could be suppliers: with existing UK Operations capacity expansion currently supplying UK OEMs from overseas to OEM A willing to supply OEM B new to UK OEMs, but supplying other divisions. new to all UK based OEMs (India/China etc) UK FACES AN URGENT ONCE IN A LIFETIME OPPORTUNITY Encourage new entrants / re-entrants to UK 11

12 Optimise competitiveness Action plan Competitiveness refers to: Cost; Accreditation; Management ; Processing capabilities; Quality; Logistics; Finances Engagement with lower tiers is more difficult, Scope hard to quantify, Must be well coordinated Increase visibility Achilles Automotive launch by JLR & AML of a web based supplier pre-qualification system due to expand in 2013 with more OEMs participating Short term Actions: Secure funding from AMSCI (Cluster bids) - Construction Vehicles - Niche Luxury Many more individual automotive AMSCI bids Optimise competitiveness of UK Supply Chain 12

13 Optimise competitiveness to lower tiers Action plan Medium term activity: Understand learning from Cluster projects Identify suppliers and establish an engagement strategy Understand strategy and focus of : Reformed MAS Higher Apprenticeship Fund SEMTA strategy Long term activity Narrow and deep solution Study paper to be developed Close the sourcing gap between Tier 1 and Tier n 13

14 Access to Finance Defining the problem Work Completed to date: Workshop at BIS 26 th March - Volume OEMs / T1 s / T2+ / Niche OEMs Regional events led by JLR for Midlands banking sector Key Findings: - Sector Image outdated - Formal relationships need re-establishing - Perceived returns & Bank expectations - Scope of the problem - Tooling funding identified as specific sector issue Next steps: Engagement at more senior level with UK Clearing Banks followed by other Financial Institutions with government support Access to Finance 14

15 Supplier Investment Funding De-risking Access to Automotive Finance Create the right financial environment to take full advantage of growth opportunities in the UK Automotive Industry Banking Communication Government Collaboration Improve understanding within Banking Sector of Automotive Growth Potential Secure Supply Chain Funds for the UK Automotive Sector Address specific sector needs ie. Tooling Solution Alternative Funds Develop alternative investment funds non-bank, equity Investigate alternative supply chain financing products reverse factoring Supply Chain Finance

16 Development Summary Momentum building on a complex project But A long way to go within a potentially short Window of Opportunity Access to Finance Optimise competitiveness of UK Supply Chain Growth Strategies for UK Auto Supply Industry Close sourcing gap Tier 1 to Tier n Identify/ Advance Common Opportunities Encourage new entrants / re-entrants to UK 16