Industry firing on all cylinders in Birmingham

Birmingham in the United Kingdom is emerging as a leading European business hub. The city and surrounding region is home to 75,000 companies. Over 1,100 companies are international firms. In the automotive sector companies like Jaguar Land Rover and JCB have factories in the Black Country. One of the reasons for Birmingham and surrounding region’s popularity is its geographical location in the heart of the UK. The Black Country- made up of Dudley, Sandwell, Walsall and Wolverhampton – has a flair for all things automotive. Deep-rooted connections with the industry, a reputation for quality and unquestionable expertise in the field have contributed to the Black Country’s long-held status as the UK’s automotive “center of gravity”. The area’s proficiency in this field is a real attractor for investors and related businesses.

Greater Birmingham and Solihull attracted 49 investment projects in 2012-13, almost double the 26 that came to the area the year before. This places it in the top three UK regions for attracting foreign investment “While foreign investment into Europe fell by more than 40% last year, Greater Birmingham has bucked the trend with job and project numbers rising significantly,” said Neil Rami, Chief Executive of Marketing Birmingham, in a 2013 press statement.

Automotive Industries (AI) asked David Fisken, Investment Development Manager for Marketing Birmingham what investment Birmingham and the surrounding region have been able to attract over the past few years.

Fisken: OEMs like Jaguar Land Rover have led with considerable investment. For example a £1.5bn investment in aluminum technologies at the company’s Solihull plant, creating some 1,700 new jobs, and £200m at the Castle Bromwich assembly plant, creating 1,100 new jobs. In addition there is the eagerly anticipated new Jaguar Land Rover (JLR) engine plant at Wolverhampton, opening next year which represents a further £500m investment with 1,400 jobs. This expansion, alongside the expansion of other OEMs such as Nissan, has also meant positive benefits for supply chain companies. Finally, there has been significant investment in R&D in recent months, notably surrounding low carbon vehicle technologies including the new £92m National Automotive Innovation Campus and Advanced Propulsion Centre to be based at University of Warwick. These are welcome additions to this area of the UK which currently is responsible for some 60% of the country’s automotive R&D by value.

AI: What is the automotive supplier base?

Fisken: Comprehensive! The area is home to 16 of the top 20 global Tier 1 suppliers. These are complemented by a diverse range of Tier 2 and three suppliers. There are over 1,100 active supply chain companies of which more than 200 are Tier 1 status. This breadth and depth mean that there is a broad spread of capabilities and capacities, not just in terms of components supplied to OEMs, but also in terms of the ability of local companies to supply the Tier 1 manufacturers. With regards to R&D there is a wealth of independent consultancies like Prodrive, Ricardo and MIRA Technology in the surrounding region supporting supply chain innovation and development. In addition there is a number of growing high technology companies notably in low carbon technologies, such as Zytek developing electric/hybrid powertrain technology. In addition, expertise in new and emerging manufacturing technologies is provided by the High Value Manufacturing Catapult, bridging the gap between innovation and volume manufacture.

AI: What makes the Birmingham region ideal for automotive investors?

Fisken: The region provides an optimum location from which to operate, and the ability to supply all UK OEMS within a three hour travel time. There is a critical mass of automotive expertise in the area unparalleled anywhere else in the UK. The area boasts nearly 30% of UK automotive employment, the highest concentration of automotive companies in the UK and a culture of continuous innovation in the sector through local universities, OEMs, suppliers and independent consultancies. Coupled with a supportive framework of designated zones for automotive investment such as the Advanced Manufacturing Hub and i54 sites, Birmingham and the Black Country can make a justifiable claim to be at the center of the UK’s automotive industry.

AI then asked David Bailey, Professor of Industrial Strategy, Economics & Strategy Group at the Aston Business School how he would describe the automotive manufacturing landscape in Birmingham and the Black Country.

Bailey: The performance and flexibility of the region’s automotive industry sets a great example for other sectors. The region’s automotive sector has seen several billions of pounds’ worth of investment over the past three years, most obviously via Jaguar Land Rover but also through major supply chain firms such as GKN (whose Birmingham-based, world-beating Driveline business division posted bumper profits in 2014).

AI: How have companies like Jaguar and JCB benefitted by setting up units in the region?

Fisken: Major firms like JLR, JCB and BMW (via its world class Hams Hall engine plant) have all located here to access the region’s rich assets. These include excellent skills, a flexible workforce, a strong innovation environment built around local universities and consultancy firms, a superb design base and low costs. Only a handful of regions in Europe have the genuine capability to completely design, develop and build a whole car, including its powertrain. This region is one of them.

AI: What is your opinion of the future of automotive manufacturing in the region – especially in the light of cheaper destinations fast emerging across the globe?

Fisken: Confidence is high in the region’s automotive industry. It can compete with anywhere in Europe on the basis of high productivity, high quality and low labor costs. The competitive position of the sector is reflected in the trend of reshoring, which is seeing manufacturing activity come back to the region. Our recent research on the re shoring of the region’s manufacturing base found 1 in 6 of the region’s manufacturers – especially in automotive – “doing” reshoring. Top of the list of drivers for local firms in ‘bringing it home’ are transport costs and quality issues overseas, followed by supply chain resilience, exchange rate shifts, rising wages overseas, the need for rapid turnaround, as well as the need to offer a service alongside manufacturing. The region is well placed to develop this further through investment in skills and technology.

AI asked Wayne Langford, Head of Investment, Programmes and Development, Invest Black Country what incentives are available to automotive investors.

Langford: The Black Country offers a range of investment incentives. We successfully piloted the AMSCI (Advanced Manufacturing Supply Chain Initiative) funding as part of a four-LEP approach to Government to provide funding for the Automotive Industry. This idea was then replicated for the rest of the nation and an additional £100m secured towards it.

We offer capital equipment grants through Regional Growth Fund and through the Black Country “Growing Priority Sectors” program. We can also offer 100% capital tax allowances on a number of sites as well as £55,000 rate relief per year for five years on qualifying areas.

Through the Skills factory we can offer funding for companies to train employees in critical manufacturing processes as well as support to fund apprenticeships. We have secured £20m to stimulate land development for companies wishing to undertake design and build investment and can provide support services to companies to help ensure any applications made for public funds have the best chance of success.

AI: Tell us a little about the region’s history which makes it ideal for automotive companies.

Langford: The Black Country is widely regarded as the birthplace of the industrial revolution which did so much to transform the globe as we now know it. Leading the development of metal manufacturing and process improvements over the last 200 years has embedded a way of working and a skillset in our workforce that is unrivalled in terms of technical ability, collaboration and personal endeavor. The mix of low operating costs, collaborative partnerships and world class engineering skills has created the perfect environment for companies in the automotive sector to thrive, best exemplified by the multi-million pound investments from automotive companies up and down the supply chain tiers.

Innovation, pragmatism, a superb location and close knit, intricate supply chains make it an ideal location for companies in the automotive sector – particularly those that serve OEMs and Tier 1 suppliers across the country. Nowhere else in the UK produces so many unique high value components ranging from brake castings for the Bugatti Veyron, door locking mechanisms for every Evoque sold globally and bespoke trims and wheels for Aston Martin, Bentley, McLaren and Jaguar Land Rover.

AI: What investments does the region hope to attract from automotive OEMs in the future and how do you hope to achieve these targets?

Langford: The Black Country is home to the largest High Value Manufacturing Cluster in the country and this supply chain for the automotive sector is best exemplified through the Black Country Bullet (www.blackcountrybullet.co.uk ). We want to attract OEMs into the area, but importantly we want to be the place of choice for their Research and Development and their supply chains who will continue the tradition of the Black Country as the supply chain center of the country. We will achieve this by providing the right conditions for growth including ensuring access to finance is easier, suitable sites and premises are available, support to access export opportunities and key customers is improved and that local people are skilled to be able to undertake the critical tasks that companies coming into the area really require.