Engineering: turning ideas into reality - Innovation, Universities, Science and Skills Committee Contents


Memorandum 64

Submission from the Society of Motor Manufacturers and Traders (SMMT) Ltd

1.  INTRODUCTION

  1.1  The Society of Motor Manufacturers and Traders (SMMT) is the leading trade association for the UK automotive industry, providing expert advice and information to its members as well as to external organisations. It represents more than 500 different sized member companies ranging from vehicle manufacturers, component and material suppliers to power train providers and design engineers. The motor industry is a crucial sector of the UK economy, generating a manufacturing turnover of £47 billion, contributing well over 10% of the UK's total exports and supporting around 850,000 jobs.

  1.2  SMMT welcomes the opportunity to submit a response to this inquiry. This response has been developed by SMMT in consultation with its membership. We support the Committee in looking at engineering in the UK and look forward to its final report and timely Government action on this important issue.

  1.3  The key points in our response are:

    -  A strong and innovative UK engineering base is integral and important to the UK economy and sustainability of the automotive sector.

    -  There are competitiveness issues related to engineering for the sector. It must compete with other sectors to attract and recruit quality engineers and then, remunerate and retain them. The attractiveness of engineering and manufacturing careers is an ongoing issue.

    -  The sector works closely and hopes to continue to work closely with other organisations involved in engineering, stakeholders and Government and hopes the topic remains a high-profile. A key problem is access and engagement with the skills system-such as tax credits.

2.  SMMT ENGAGEMENT

  2.1  The SMMT has broad engagement with the engineering agenda. Part of SMMT's committee structure is the Design Engineering Group. The group exists to enhance the competitive position of the whole of the UK design engineering sector, both in the UK and internationally and help inform the SMMT view on the UK automotive and transport technology service industry. The committee consists of representatives from SMMT member companies. The SMMT also administers Foresight Vehicle, the UK's prime knowledge transfer network for the automotive industry.[237] The Foresight Vehicle programme has generated over 100 individual projects, which have delivered a wide range of advances in manufacturing processes and product concepts. Foresight vehicle was refocused under the Automotive Innovation and Growth Team (AIGT) in 2002 which brought together major stakeholders from the automotive sector to identify the issues most likely to have the greatest impact on the long-term profitability of the sector. AIGT considered engineering support as crucial to the sector. We look forward to "AIGT II" in 2008 when progress and next steps will be reviewed, refocused, revised and implemented. SMMT is closely involved in this process and stresses the importance of Department for Business, Enterprise and Regulatory (BERR) as a champion for automotive engineering.

  2.2  SMMT Industry Forum, is the business improvement arm of the organisation. Industry Forum was established in 1996 with the aim of achieving sustainable world class operations in the UK automotive manufacturing and supply chain industry.[238] The original focus was on manufacturing process improvement in the automotive sector-based around its MasterClass product delivered by specially trained engineers working with shop-floor teams. Industry Forum has also trained engineers for other business improvement organisations in sectors such as aerospace, agriculture, metals and ceramics, and also for the regional initiative, the North East Productivity Alliance. The current products and services offered include lean assessment, team leader training, supply chain improvement, value stream mapping and raising purchasing performance. Industry Forum has also designed and developed products for the Automotive Academy and assisted the Academy in training trainers to strengthen the national delivery capability. In January 2007 the Automotive Academy now has been subsumed into the National Skills Academy for Manufacturing (NSAM).[239]

  2.3  In October 2006, SMMT made a comprehensive submission to the Trade and Industry Select Committee's inquiry into skills shortages and the future of UK manufacturing. The submission outlined the diversity of the UK automotive industry, and the existence of difficult challenges to business improvement progress with the skills agenda. In January 2007 SMMT also submitted written evidence to Education and Skills Select Committee Inquiries into Post-16 Skills Training and 14-19 Specialised Diplomas, this was followed by an SMMT member giving oral evidence on the skills needs of SMEs. The evidence is documented in the final reports of these inquiries.

3.  INTEGRAL ROLE OF ENGINEERING

  3.1  The UK automotive sector is a significant contributor to the economy and the labour market. SMMT represents a wide range of companies of all sizes undertaking and utilising a wide-range of engineering activity. The UK has a number of other global strengths which includes the automotive design engineering sector and specialist vehicle production.[240]

  3.2  The automotive sector is under increasing global competitiveness pressures and sustainability is vital. A number of factors impact on UK automotive manufacturing:

    -  Higher relative operating costs.

    -  New technologies (both vehicle and manufacturing) and R&D intensity.

    -  Market and manufacturing growth in emerging (low-cost) markets, eg China.

    -  Central and Eastern Europe offer opportunities for growth.

    -  Heavy regulatory burdens.

    -  Skills gaps in UK manufacturing-including engineering skills gaps.

  To address these competitiveness issues in the UK we have high levels of investment and very advanced engineering (high value-added) and to support automotive manufacturing the sector has a large research, design and development profile. Maintenance and support of the UK engineering skills base, innovation and R&D is essential to the survival and development of UK automotive businesses. The challenges industry faces presents a good opportunity for engineers-striving for safe, low-carbon vehicles, whilst using new materials and improving productivity.

4.  INNOVATION, R&D AND ENGINEERING

  4.1  The terms of reference for this inquiry include "the role of engineering and engineers in the UK's innovation drive". SMMT is not able to specifically comment on individual company involvement in innovative engineering and their specific projects as these are competitively sensitive and part of business plans. We are aware that across industry there is progress and involvement, particularly in low-carbon innovation. Automotive companies' are involved in their own engineering projects, and we are also aware of their heavy involvement in new Low Carbon Vehicles Innovation Platform-which seeks to position the UK's automotive sector to benefit from growing public and private sector demand for lower carbon vehicles.

  4.2  "In 2006, UK firms in the automobiles and parts sector invested £1,087 million in R&D, making it the fifth largest sector in the UK850. R&D is an important and ongoing feature of the automotive and parts sector given its highly competitive nature and short product cycles. Subsequently, a common feature amongst leading companies is a commitment to a high level of R&D expenditure".[241] This is further emphasised by the fact that Ford accounted for 77% of total UK R&D in 2006. We know such high-levels of investment are not industry-wide and R&D investment across the sector is varied. Automotive engineering R&D is important and internationally accepted that specialist engineering in the UK is a key strength. The Government has taken steps to ensure than small and medium companies can invest in engineering R&D, however our members still comment on the difficulty of the tax credits regime and accessing R&D assistance. Moreover, larger R&D companies still struggle with low-profits to offset the credit. It may be concluded that engineering R&D for our sector plays an important role in maintaining a strong R&D (and subsequent inward and outward investment and business interest) in the UK.

5.  INDUSTRY IMAGE, ACCESS TO AND STATUS OF SKILLS AND FUNDING

  5.1  Skills are a core competitiveness issue for small, medium and large automotive enterprises. Recruitment, remuneration (cost) and retention problems are experienced throughout manufacturing. The issues of recruitment and retention are by far and above the most important for the UK automotive industry going forward. However, there are several additional core priorities which need to be addressed, one of which is raising the standard of basic skills (over Level 3).

  5.2  SMMT members frequently comment on the need to ensure STEM skills are properly taught throughout the education system and that they believe that engaging with young people (pre-14) is essential to improve the perception of careers in manufacturing/engineering industries. SMMT Industry Forum is working hard to change the perception of the engineering sector through initiatives such as the annual Youth Engineering Summit (YES). The aim of the YES is to raise awareness of engineering and its associated career options among school children aged 12-14 years old through improved information and advice.

  5.3  Graduate recruitment into automotive manufacturing remains difficult, especially into smaller companies. There is a shortage of appropriately skilled graduates-attractiveness of engineering and understanding UK manufacturing is part of this. Recent trends in the UK output of UK engineering graduates are not encouraging-a CBI survey has shown that since 1994 the absolute number of students obtaining a first degree in engineering and technology has fallen by 11% per cent. It is clear that we face a challenge to ensure that young, bright employees are attracted to the sector in sufficient numbers. We also hear graduates are often not able to apply their skills in the workplace (ie appropriately skilled engineers). Currently we would assess that the engineering skills base in the UK is strong, but through business investment rather than from the education system and needs proper support from Government and stakeholders to ensure it is maintained. We would direct the Committee to work done by colleagues in the (then) Trade and Industry Select Committee and also to consider future skills, in particular for innovative engineering. Industry is changing-proactively and reactively as new issues arise: climate change and increasing competitiveness. Hence new skills are and will be needed and also included in training, education, qualification and business plans.

  5.4  In 2006, the West Midlands' hub of the Automotive Academy, Skills4Auto, identified 10 priorities through a special exercise with major firms led by Ricardo Strategic Consulting, one of the priorities outlined was production and process engineering.[242] Since then we have seen the skills landscape alter in our sector with creation of NSAM, the publication of the Leitch Review and implementation plan, and a review of apprenticeships, we hope all of these changes will revive and address engineering and wider skills issues for our industry. SMMT has sought to establish closer links with the Sector Skills Council for Science, Engineering & Manufacturing Technologies (SEMTA), signing a Memorandum of Understanding. SMMT has provided office space for the launch team of NSAM and, along with other major engineering organisations, seconded staff to the team. We hope that the Committee recognises the plethora of organisations involved in engineering and skills, including those named above and the EEF, CBI and other respected organisations.

  5.5  The number of organisations involved in engineering skills and the complexity of the skills system is an issue-in particular the complexity of funding. There are concerns about the way the Skills for Business network is developing, for example the confusing relationship between SSCs and professional institutes such as Chartered Institute of Purchasing and Supply (CIPS), The Institute of Engineering and Technology (IET), and The Institute of Mechanical Engineers (IMECHE). Professional recognition can be a key driver for individuals to undertake up-skilling, acquire qualifications and develop their capabilities. The split of responsibilities between Skills for Business and the professions can be confusing even for insiders to understand and can only act as a deterrent to younger members of the workforce. This is just one example. We hope the Committee will also look at how the Train-to-Gain scheme works and particularly considers the difficulties of SMEs in accessing funding and also monitor progress on apprenticeships as a renewal strategy progresses.

6.  CONCLUSION AND NEXT STEPS

  6.1  An integrated approach involving business, engineering organisation, trade bodies, government and engineers is needed to properly assess, maintain and promote engineering in the UK. SMMT and its members are heavily dependent on supporting and benefiting a strong engineering skills base. We hope the Committee will use this inquiry to raise the profile of engineering skills issues and maintain pressure on Government to consider the wider skills and competitiveness issues for manufacturing industries.

  6.2  SMMT looks forward to seeing more detail on engineering and the future of the sector in the Government's Manufacturing Review and subsequent action on a strategy and also the expected revitalisation of the Automotive Innovation and Growth Team. We expect engineering to play a key role in both of these reviews.

  6.3  Please find enclosed Motor Industry Facts 2007 which gives an overview of the sector and also the SMMT 8th Industry Sustainability Report which includes figures on all aspects of sustainability including investment, employment and skills. More information on SMMT can be found at: www.smmt.co.uk

  6.4  Should the Committee need further information on any of the content in this submission or comments directly from our membership, please do hesitate to contact Jennifer Huckstep, Government Affairs Manager, SMMT at jhuckstep@smmt.co.uk or 020 7344 9217.

March 2008







237   For more information on Foresight Vehicle: www.foresightvehicle.org.uk Back

238   For more information on Industry Forum: www.industryforum.co.uk Back

239   For more information on the National Skills Academy for Manufacturing: www.nationalskillsacademy.gov.uk/academies/sectors/manufacturing/index.html Back

240   Automotive Sector Overview, SEMTA, www.semta.org.uk/employers/automotive/sector_overview.aspx Back

241   Information on the Department for Innovation, Universities and Skills website: www.innovation.gov.uk/rd_scoreboard/?p=41 Back

242   www.skills4auto.com Back


 
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