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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