UK is OK – thanks to the Japanese

Despite plant and company closures the country remains a European automaking powerhouse

The UK’s auto industry has changed beyond recognition since Automotive News Europe made its debut.

In the last 10 years three Japanese newcomers became the country’s top car producers as the big, traditional automakers that had dominated car manufacturing in the country since the dawn of motoring contracted or went out of business.

In 1996 Ford Motor, the Rover group and General Motors’ Vauxhall brand were the dominant players in the UK’s auto industry.

Now the Rover group, once the world’s fourth-largest carmaker, is gone. Ford no longer makes cars in the UK, and GM has only one UK car assembly plant, down from two in 1996.

Japanese automakers Nissan, Toyota and Honda all have increased their UK production. Japanese automakers built about half of the 1.56 million cars produced in the UK last year, according to estimates from UK-based market researcher J.D. Power-LMC.

In 1996 the Japanese built just over a fourth of the 1.68 million cars produced in the country.

The UK’s auto industry is “alive and well,” says Garel Rhys, an automotive academic.

“The industry has strength in making light-medium cars, SUVs, specialist vehicles and engines,” say Rhys, who retired as professor of motor industry economics at Cardiff Business School in Wales at the end of 2005.

Seven out of every 10 UK-built cars are exported compared with five out of 10 a decade ago, says Christopher Macgowan, CEO of the Society of Motor Manufacturers and Traders (SMMT), the UK’s auto industry association.

The British brands Mini and Land Rover are doing well under new owners.

In 2001 BMW successfully resurrected Mini, a British automotive icon since the early 1960s. Last year BMW produced 200,119 Minis in its Oxford plant, according to the carmaker.

Ford’s premium SUV maker Land Rover has nearly doubled its production over the past 10 years to 175,798 units. Ford bought Land Rover from BMW in 2000.

Japan’s UK rise

Nissan is now the UK’s biggest producer of cars. Nissan made 315,297 vehicles last year at its plant in Sunderland, northeast England.

In 1996, Nissan was the UK’s fourth-largest carmaker after Ford, MG Rover and GM.

When it opened in 1986, Sunderland became Europe’s first Japanese transplant factory.

Today it is considered Europe’s model for productivity, making 99 cars per person in 2002, the most recent year for comparative plant production data.

The No. 2 plant, Renault’s factory in Valladolid, Spain, built 89 cars per person.

Nissan’s success encouraged Honda and Toyota to select England for their manufacturing launches in Europe. By late 1992, cars were being made by Honda in Swindon, and by Toyota in Burnaston, which is in central England. Toyota also established an engine factory in Deeside in northeast Wales.

Decline and demise

Far from being the “screwdriver” assembly plants predicted by rival European automakers, Japanese carmakers’ plants handle duties such as stamping, body-framing, painting, casting, machining and vehicle and engine assembly.

In 1996, the Rover group, Ford and GM made roughly two out of every three vehicles. Today, that proportion is only one out of seven and declining.

Rover group, the UK’s only surviving home-grown volume manufacturer, was two years into its short-lived ownership by BMW when ANE launched in 1996.

The group included British brands such as Land Rover, Mini and MG and was responsible for more than one-fourth of all UK vehicle output.

But Rover had a history of appalling industrial relations and poor quality that BMW could not fix.

BMW pulled out in 2000. It sold Land Rover to Ford, kept Mini and handed the MG and Rover brands to Phoenix Venture Holdings, a consortium of Rover managers who created MG Rover.

MG Rover never achieved the sales it needed to be financially successful. The company collapsed in April 2005.

Chinese manufacturer Nanjing Automobile bought what remained of the once-proud automaker. Nanjing has promised to revive auto production at MG Rover’s plant in Longbridge, central England.

Ford stopped making Ford-brand cars in the UK in February 2002 when it turned its Fiesta assembly plant in Dagenham, near London, into a diesel engine plant for the entire Ford group. The US automaker had made cars in the country since 1911.

UK car buyers have not punished Ford for halting its car production in the country. While Ford’s advantage has eroded, it remains the UK market’s sales leader, as it has for the past 30 years.

Just a few weeks after car production stopped at Dagenham, GM closed its assembly plant in Luton, central England, where it built the Vectra upper-medium car. About 1,000 workers were transferred to GM’s commercial vehicle plant also in Luton. Ellesmere Port, in northwest England, is now GM’s only car assembly factory in the UK. The plant makes the Astra lower-medium car.

Luxury success

Britain’s ultraluxury marques are doing well under German ownership.

UK engineering group Vickers sparked a bidding war in 1997 when it decided to sell its Bentley and Rolls-Royce brands.

VW bought Bentley, a brand it has since successfully revived. BMW bought Rolls-Royce and built an elegant greenfield assembly plant in Goodwood, southern England, to produce an all-new model, the Rolls-Royce Phantom.

Prospects for auto production in the central England city of Coventry – the traditional heart of the UK auto industry – are less optimistic.

Jaguar ended car production at its Browns Lane factory in the city in 2005. And PSA/Peugeot-Citroen declines to make any long-term commitment about the future of its car assembly plant in Ryton, which is just outside Coventry.

The UK’s supplier base also has declined over the past decade. Once-proud component companies such as Lucas, T&N and AP disappeared or were bought by foreign firms. So did engineering contractors such as Mayflower, TWR and Cosworth Technology.

Engine boom

Barely noticed amid the upheaval, the UK has emerged as one of the world’s biggest engine manufacturing centers thanks to major investments by BMW, Honda, Nissan, Toyota and particularly by Ford.

Ford’s two engine factories in the UK will eventually supply one out of every four engines used in Ford group cars worldwide.

More than 1 million engines a year are made at its plant in Dagenham.

Production will increase starting in 2007.

The automaker also will increase annual engine output at its plant in Bridgend, south Wales, to 1 million by the end of the decade.

“In the last 10 years, the UK has become Europe’s most cosmopolitan manufacturing base for carmakers, with more volume producers here than any other country in Europe,” says SMMT’s Macgowan.

Debilitating strikes that plagued the country’s auto industry up to the mid-1990s are no longer an issue. “There is little evidence of closed shops and protectionism here these days,” he says.

The expression that sums up the transformation of the country’s industry comes from Rhys. “There is no longer a UK motor industry,” he says. “There is a motor industry in the UK.”

You can reach Richard Feast at autonews@crain.com.