| Good afternoon ladies and gentlemen.
Thank you for inviting me here today. I am delighted to have been asked to open your Technical Centre, which will help you strengthen your base in Britain's automotive market.
Visteon is the third largest automotive components supplier in the world, and is a very welcome member of our automotive sector, which is a crucial source of prosperity for our country. In the UK the automotive sector accounts for 850,000 jobs, both direct and indirect; represents about 2% of our GDP; and contributes 11.3% of UK exports. Seven volume carmakers and seven commercial vehicle manufacturers between them produce 1.6 million passenger cars and 230,000 commercial vehicles per year.
The UK sector's particular strengths include design engineering, especially advanced technology in motorsport. We are home to the most successful global motorsport cluster, which commands 80% of the world market. The UK is also increasingly becoming a centre for engine production, with recent decisions by Ford, BMW and Toyota to invest in significant engine production facilities here, and in "premium" cars, from the new Mini, through Jaguar and Range Rover to super luxury cars such as Bentley and Aston-Martin. Linked to this strong manufacturing base, there is a global demand for the design engineering skills of UK based companies and British designers are to be found in almost every automotive styling studio in the world.
The components sector is worth £12 billion and employs 150,000 people. Seventeen of the world's top 20 first-tier suppliers manufacture here. The Government values the very significant contribution made to the UK automotive sector by US and other overseas investors such as Visteon who have had a very positive effect on the quality of the UK supplier base.
I recognise that times are difficult because of global economic slowdown.
But the UK is performing better than most. With positive GDP growth rates and a well-managed and stable economy, we are as well placed, as we can be to weather the current difficult period. The UK now has the lowest inflation for over 30 years, and long-term interest rates are at their lowest levels for 35 years. Recent assessment by the IMF confirms the UK's strong position.
I can understand concerns about the UK being outside the Euro Zone. In principle, we believe that the UK should be part of a successful single currency provided the conditions are right. We have set five economic tests that have to be met before a decision to join can be taken. One of these includes the impact on investment. The Secretary of State said only last Wednesday that there are real potential benefits of membership of the euro, particularly for manufacturing industry in terms of currency stability, transparency of costs and simplification of the trading regime.
The level of investment by the components sector is an important issue for us. We want to see this strengthened, rising from basic Just-In-Time supply to full engineering service, encouraging more investment in R&D. We are taking active steps to support this.
In the Science and Innovation White Paper, which we published in July 2000, we set out measures to put more money into basic and strategic science and to increase the mechanisms and incentives to apply and exploit it.
The 1998 Comprehensive Spending Review increased the science budget by 15% over three years. And in July last year, the Government continued its programme of investment. The 2000 Spending Review added £725 million to the Science Budget over three years including specific funding to boost research in key new areas, that will shape life in the 21st Century. To give you a scale of that funding, from 2001 to 2004, the Science Budget will increase by 7% per year in real terms.
Of course it is not enough to have world-class science. We also need to turn that science into new products and processes. Here too we are beginning to make real progress in terms of exploitation and business innovation.
The recent HEI/Business Interaction survey showed that:
(a) In 1999-2000 there were 199 spin-off firms from HEIs compared with average of 70 a year in previous 5 years.
(b) Total patents filed by HEIs increased by 22% from 1259 in 1998/99 to 1534 in 1999/2000 [594 total patents filed in 1996/97]
(c) Proportion of HEI research income from business was 12.3% in 1999/2000 up from 10.9% in 1995/96 [US 10.1% in FY99].
We have introduced R&D tax credits for small firms expected to be worth £150 million per annum. We are consulting on similar R&D incentives for larger enterprises.
Last November, we launched the creation of twelve new Innovative Manufacturing Centres. The 12 Research Centres in the first stage of the new programme cover between them, all mainstream manufacturing activities such as aerospace, defence and automotive. The end result over the next five years is likely to be an injection of around £100 million in improving the innovation of UK manufacturing. The Research Centres will not just work with their industrial collaborators but also widely with industry and other academic institutions. We look to the new Research Centres to build on what has already been accomplished in the dissemination of technology transfer and to improve it further.
Initiatives have also been established to ensure that UK automotive suppliers are more able to compete on the world stage. They include the Foresight Vehicle Programme in which I am pleased to see that Visteon is participating. It brings together UK resources and expertise to create components and systems for the vehicles of the future. Over 400 organisations are actively involved in this £80million programme, which is sponsored, by the DTI, DTLR, the EPSRC and the Highways Agency.
The Foresight Vehicle programme is also piloting a programme looking to tackle the barriers to exploitation. Helping suppliers bring Foresight Vehicle technologies "Into Volume Supply". This represents a convergence of Foresight Vehicle and Industry Forum techniques. New product introduction with built–in quality, cost and delivery at the right time.
Working with business to drive up productivity and competitiveness in the automotive industry is a key strategic objective of the DTI. We have therefore established the Automotive Innovation Growth Team under Sir Ian Gibson, a genuine partnership with industry on policy formulation and a first within government. The team is due to issue its final report shortly. But the partnership approach to policy making it has established will continue.
All of these measures have contributed to a dynamic automotive industry in the UK. All this, I think, demonstrates that the Government is pro-manufacturing and pro-car.
Finally, as you may know, a review of my Department is currently under way. Our new focus will be on creating the right conditions for companies to drive up productivity, and on building closer strategic relationships with industry. The reshaped DTI will bring government closer to businesses such as yours than ever before.
Visteon, with its cutting edge technology and world class products is the kind of company we want to see at the heart of the British economy and I am delighted to be here today for the opening of your new Technical Centre
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