A scheme aimed at saving jobs in the automotive industry and supporting suppliers has been launched by the SMMT.
The initiative will see companies unite to help critical suppliers without breaking anti-competition rules as they look to ramp up production while fighting the economic effects of the coronavirus crisis and market uncertainty.
Automotive supply chains are so integrated and rely so much on just-in-time manufacturing techniques that one link hitting trouble can cause problems for all the other companies, including vehicle manufacturers.
However, the SMMT’s Safe Harbour scheme will allow collaborations between firms to support companies at risk while still complying with the laws governing competition, meaning all the production supply chain can be kept safe.
The scheme, which follows on the heels of the newly launched SMMT Apprentice Support Programme – a £100,000 initiative – as reported by Car Dealer, is supported by the Automotive Council and government.
It will let businesses engage with customers, lenders, creditors and other stakeholders to find ways of minimising the risk of insolvencies.
The impact of the pandemic and subsequent challenging market conditions has had a devastating effect on the UK automotive sector.
Car production fell by 40.2 per cent in the first eight months of 2020 – a year-on-year loss of 348,821 cars, worth some £9.5bn to the sector.
Commercial vehicle production also plummeted – down 20 per cent over the same period, with more than 9,000 units worth almost £730m lost.
The SMMT said this had led to a loss of at least 9,000 jobs across the entire automotive sector, plus another 5,000 in the UK supply chain – which it added was likely to be just the tip of the iceberg.
SMMT chief executive Mike Hawes said the pressures on automotive businesses were immense because of the coronavirus crisis, thousands of jobs being lost and just a short while until the end of the Brexit transition period.
‘Inevitably, these pressures are going to take their toll on businesses, so the Safe Harbour Scheme has been created to help any suppliers in trouble.
‘It should provide valuable breathing space as the sector restarts and business and consumer confidence recovers.
‘Ultimately, however, the industry must maintain its competitiveness to grow, and for that we still look to the government to deliver an ambitious trade deal with the EU.’
Judith Richardson, global purchasing director at Jaguar Land Rover and chairwoman of the Automotive Council Supply Chain Group, said: ‘The nationwide UK automotive supply chain has been built over many years thanks to huge business investment and support from successive governments.
‘It remains highly competitive, with world-class facilities and a productive and highly skilled workforce.
‘This cannot be taken for granted, however, and the Safe Harbour Scheme, combined with appropriate government support, will be essential to ensure automotive businesses can continue during these extremely challenging times and help drive a green recovery for Britain.’
Michael Aiers, purchase manager for Groupe PSA Supply Risk Management and chairman of the Automotive Council’s Finance and Sustainability Workstream, added: ‘Having started my career in manufacturing and worked for a number of suppliers and OEMs, it is my passion to preserve, protect and grow the UK supplier community.
‘Safe Harbour, therefore, will be a key initiative in helping the UK automotive sector preserve its manufacturing capability at a time of great challenge.’