Auto vendors reliant on small pool of customers

23 February 2010

23 February 2010 | Nick Martindale

Automotive suppliers in the West Midlands are dangerously dependent on just one customer, a survey of more than 200 vendors has revealed.

The study carried out by the Society of Motor Manufacturers and Traders (SMMT) in partnership with the automotive supply chain body Accelerate found that 30 per cent of suppliers relied on Jaguar Land Rover for most of their business, while others were heavily dependent on Ford.

Nearly all respondents admitted at least half of their business came from within the UK, with around 35 per cent coming from within the West Midlands area.

Paul Everitt, chief executive of the SMMT, said: “The report demonstrates the fragility of the UK supply chain and underlines the need for concerted action to support its future development.”

Joint initiatives by the government and the automotive industry to develop low-carbon vehicles could be one way of helping the sector, he said.

The survey painted a gloomy picture of the state of the auto industry in the region. Component manufacturers reported a 37 per cent fall in production in 2009, while a quarter have had to shut down operations for an extended period of time.

Rachel Eade, programme manager for Accelerate, said: “This study demonstrates that the impact of the recession is wider-reaching than we originally anticipated, with 75 per cent of respondents indicating they had reduced headcount.

“There were also reports of short-time working, wage freezes, reduced pension contributions and 25 per cent of companies implementing extended shutdowns.”

Forty per cent said they expected to have to make further redundancies in 2010, while only 12 per cent forecasted that this would not be needed.

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