UK: Black Country blues. (3 of 4)

UK: Black Country blues. (3 of 4) - In the meantime the shakedown among car makers is savaging smaller companies in automotive components. Despite the shock treatment of the previous recession, the West Midlands still has many smaller private companies t

Last Updated: 31 Aug 2010

In the meantime the shakedown among car makers is savaging smaller companies in automotive components. Despite the shock treatment of the previous recession, the West Midlands still has many smaller private companies that have survived without modernising adequately. This second clout from above could bring their demise, plus a new round of takeovers. The only certain survivors are giants like Lucas Industries which have revolutionised their quality and production standards, invested heavily in research and development and diversified their income.

Lucas's tenacious chairman, Tony Gill, is justly proud of the company's redirection under his hand. Despite the need to cut 3,000 jobs worldwide, he feels secure in Lucas's markets. He points out that in automotives Lucas specialises in whole systems, not just parts, giving it more clout with clients, and with its new products in the growth areas of electronics and diesel, "downturns are less severe on us".

Like GKN, Lucas is setting up more and more of its new facilities overseas, closer to its customers. While this may do little for local jobs, at least it indicates that British firms can hold their own in global industries. Working in reverse, where foreign firms set up here the same formula is also providing the West Midlands and Britain with a major boost.

As mentioned before, next to local restructuring, it is inward investment which is giving British manufacturing the legs that it needs in order to be able to stride into the next century. Lucas's Gill comments: "I've got no reason at all to be pessimistic about the prospects of the UK car-making business. Most of the companies have ownership elsewhere, but that's good for the UK. Add them all together and we have very good prospects to achieve a dignified place in the world league."

Of the three big Japanese car makers setting up or already present in the UK - Nissan, Toyota and Honda - none is locating in the West Midlands. But their appearance is providing a bracing tonic for the region's huge automotive components industry. They also have set standards of quality, efficiency and competitiveness that, although frightening, have done wonders to clean up the UK motor industry.

In terms of direct investment, the United States and the European Community have been the biggest players in the West Midlands, accounting for one third each of the total sum. Two thirds of these companies are in manufacturing, including IBM, Goodyear, 3M, Dane, Thyssen and, more recently, Brose (German - car parts), Valeo Clutches (French) and Cross and Trecker (US - machine tools). The Japanese too have arrived, in the form of companies like Nippondenso (car parts), NEC (electronics) and Mitutoyo (inspection equipment).

The prediction that the West Midlands will in time see a revival of its industry base is supported by inward investment statistics. In 1984 the West Midlands attracted only 4% of total UK inward investment. Last year, according to the West Midlands Development Agency, one third of this investment came to the region - giving it the best performance in Europe. About 700 overseas companies now reside there.

Admittedly, all the glossy brochures in the world cannot guarantee that this love affair will continue - and should local suppliers not find relief soon, the area and its new convention centre could feasibly become white elephant territory.

But sane thinking suggests that new investors are coming with binoculars, not rose-coloured spectacles, in hand. It is a point that, while flattering, rubs a little sorely with Cedric Thomas of the EEF. Long-term thinking, he declares, is exactly what the British Government, British bankers and local companies are all short on.

West Midlands companies, he says, "have picked themselves up by dint of running very hard and some reinvestment. But to take the next step we find we need more substantial investment in machinery, technology and training of people." While interest rates are crippling, the banks tight-fisted and inflation high, this is impossible for most firms.

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