Page last updated at 21:46 GMT, Wednesday, 26 November 2008

Car parts-makers fear for future

Jaguar Land Rover factory in Solihull
UK car sales have fallen by 25% in the past month
A looming recession in the car manufacturing industry is causing concern for component suppliers in the West Midlands and has prompted a motoring trade body to lobby the government for help.

The motor industry faces "a set of unprecedented market conditions," the Society of Motor Manufacturers and Traders (SMMT) said.

Car production has fallen by 25% in the past month across the UK and hit the lowest level since 1991, it said.

It warned the slowdown would have dire consequences for components suppliers, with seven of the top 20 UK suppliers based in the West Midlands.

'Dramatic drop'

"For every job in the manufacturers, there are four or five in the supply base" which could be at risk, SMMT chief executive David Smith said.

Figures from the Department for Business, Enterprise and Regulatory Reform (BERR) suggest about 194,000 people work in the UK automotive industry and about 2,500 companies employ 115,000 staff in the components industry.

Components manufacturer Barton Cold Form, which is based in Worcestershire, said it had seen a 45% drop in sales in the past three weeks alone.

Paul Denning
Paul Denning of Barton Cold Form said there had been no jobs cuts at the firm for 16 years

The firm has an annual turnover of about 9.4m and employs 98 staff at its plant in Stonebridge Cross Business Park, Droitwich.

Managing director Paul Denning said: "In the last few weeks orders have slowed right down because people aren't buying as many cars.

"Lack of finance is the big issue now.

"The concern is for the next few months in December, January and February because BMW and Honda have reduced production and are taking longer breaks than usual.

"We have already had to make two of our night shift staff redundant, that's the first I've known since I started working for the company 16 years ago."

If vehicles aren't being produced, they don't need the parts to go in them
Society of Motor Manufacturers and Traders spokesman

Mr Smith called on the government to act now.

"Urgent action is required to boost demand for new vehicles and ease the short-term cash flow pressures on UK automotive manufacturers and suppliers."

He is due to meet Business Secretary Lord Mandelson in London on Thursday and will join other automotive industry leaders asking the government to support car and component manufacturers during the economic downturn.

An SMMT spokesman added: "Most of our base is made up of component suppliers too, so we want to ensure the supply chain.

"A huge number of people are dependant on that - if vehicles aren't being produced, they don't need the parts to go in them."

Plants closing

It comes after Jaguar Land Rover, BMW and Honda UK announced they would be cutting production and extending workers' holidays.

Jaguar Land Rover, which employs about 15,000 workers in the West Midlands, confirmed it was in talks with the government amid reports the company wants a 1bn loan to help it cope with "unprecedented trading conditions".

The firm said Land Rover sales were down by 23.6 % in the UK in the past 12 months, despite sales forging ahead in the first half of the financial year.

The firm, which has plants in Castle Bromwich in Birmingham and Solihull, as well as research and development centres in Whitley in Coventry, and Gaydon in Warwickshire, introduced a four-day week in August.

It said it had received "a very positive response" to plans to make 600 voluntary redundancies.

The company announced on Wednesday it would close its Solihull plant for three weeks over Christmas, in a move dictated by the current economic situation.

BMW said it would close its manufacturing plants in Coleshill, Warwickshire, and Oxford and Swindon between 5 December and 5 January.

Honda announced on Friday it would be stopping production at its Swindon plant for the whole of February and March.

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