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Automotive Academy 4th Annual Lecture

The Rt. Hon. Alistair Darling MP,  Former Secretary of State for Trade and Industry
House of Lords,  07 December 2006

Welcome to the 4th Automotive Academy Annual Lecture.

This event has become an important fixture in the automotive industry’s calendar.

In previous years it has attracted distinguished speakers from Ford, Nissan and Bentley. Today you have the honour of welcoming Mr Fujio Cho, Chairman of the Board of Toyota to give this year’s lecture.

Health of Car Sector

The UK automotive sector overall remains in good shape.

Seven of the top ten vehicle makers in the world and nineteen of the top twenty component makers, manufacture in the UK. The UK is seen as a good place to do business by this industry and we want to keep it that way.

The recent announcement by Ford to spend £1bn here to make the UK a leader in environmental technologies demonstrated the UK’s technical abilities. And, importantly, the quality of Ford's people here.

It is exactly the kind of investment the Government is determined to encourage.

And in the last few weeks we have seen the launch of the new Mini, now featuring British-made engines, and the new Nissan Qashqai, the first of which rolls is due to roll off the Sunderland production line in the New Year. Not only made in Britain but designed and developed here too.

Sales of the new Civic are so strong that Honda has announced a major expansion at their plant in Swindon, creating 700 jobs.

All this new investment in UK car production shows that it remains a crucial building block of the UK’s manufacturing base. Bringing over 200,000 high quality jobs in vehicle production.

The 1.6m vehicles produced in the UK last year is nearly twice the number made in the early 1980s. And close to the 1.9 million peak of UK car production in 1972.

The UK’s automotive manufacturing industry is truly dynamic, accounting for 1.1% of GDP, adding £10 billion of value. And over 6.5% of the total for the whole UK manufacturing sector.

We have developed a particular strength in the power train sector. We make almost 3 million engines a year worth £3 billion – earning £800 million in exports. We are a significant net exporter.

And Ford sources 25% of its entire global engine production from the UK.

Over 2,600 companies in the vehicle components sector contribute £5 billion to the economy and employ 130,000.

It exports over £6 billion worth of goods annually. 75% destined for Europe and over £1 billion-worth to the Americas.

Clearly, the world’s major automotive companies are attracted to the UK. And they should be.

We have an unrivalled combination of design and engineering excellence. A skilled and flexible workforce. And a Government that strives to create the best business environment for companies to prosper - whether domestic or with foreign firms.

But there are challenges still to be met.

This is a very competitive, truly global industry, undergoing significant change.

Recently, substantial job cuts were announced by Volkswagen in Belgium. But at the same time, in a changing market, Volkswagen sold more cars in China than Germany in 2004. I was in China last week and saw that!

Globalisation means that established manufacturers face new opportunities. But also new challenges. Such as the competitive challenge from low-cost countries - Eastern Europe, India, China – that is, and will continue, to grow.

And, all of you in the industry are aware of the responsibility for tackling climate change. And the increasing demands from consumers and regulators to produce ever more fuel efficient, less polluting vehicles. Cars today are 25 times cleaner than 25 years ago.

In such an environment, high-level skills are of fundamental importance to our economic prosperity. And they are playing an increasingly important role in the industry’s capacity for innovation and growth.

They touch upon everything the industry does. Shortening your product cycles. Satisfying customers. Managing supply chains and complex logistics. And sustaining businesses.

And they touch every level of your workforce from the shopfloor, to technicians and engineers, and right to the very top, where the decisions of inspirational leaders are so critical to success.

And as Lord Leitch’s report shows the need to drive up skills is of immense importance.

It was for these reasons that we, together with you, established the Automotive Academy in 2003.

The Academy promotes globally competitive standards of training and skills development for the UK automotive industry.

It has established a core training curriculum and assesses and monitors the quality of teaching and training to ensure British automotive workers have the best skills possible.

In the last twelve months the Academy has had a tremendous impact. Making a real difference.

178 additional automotive companies have staff with newly accredited qualifications.

Over 3,500 people have started training programmes and initiated around 9000 improvement programmes back at their own businesses.

I am pleased to announce today that agreement has been reached formally to subsume the Automotive Academy into the National Manufacturing Skills Academy.

The new Academy, to be officially launched next month, will start to spread its activities into the whole of the manufacturing sector.

For the automotive business, it means that the service to customers will continue seamlessly and become more efficient.

For other manufacturing sectors it means that they will benefit from the experience of the car industry.

And is yet another example of how the automotive industry is leading the way. Blazing a trail that others can follow.

Turning now to today's lecture. The Toyota catch phrase, 'the car in front is a Toyota' is becoming a reality in more ways than one.

Toyota is now the second largest global automotive manufacturing company. And is widely expected to overtake General Motors in the near future.

Toyota invests around £1.75b in the UK. UK production began in 1992. Today it employs nearly 5,000 people who in 2005 produced nearly 300,000 cars and 188,000 engines for the global market.

My first visit to SoS for the DTI was to Burnaston. And Toyota has just announced that the all-new Toyota Auris will be built in the UK at its plant in Burnaston, with engines supplied from its engine plant in Deeside, North Wales.

Delighted that Mr Cho, who has been a major figure in that success - and was this year honoured with an honorary knighthood in recognition of Toyota’s success and the benefits it has brought to the UK - has agreed to give this year’s lecture.

Mr Cho joined Toyota in 1960 and was appointed as a Director of Toyota Motor Corporation in 1988. He is best known for building up Toyota’s plant in Georgetown, Kentucky, from scratch, while he was President of Toyota Motor Manufacturing from 1988 to 1994.

He was so popular with his US staff that when he left to return to Japan to become company president, they gave him a 10 minute ovation.