£1 billion investment in the UK automotive supply chain

17 May 2012

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17 May 2012 | Kamalpreet Badasha

General Motors is to spend around £1 billion in the UK supply chain with a £125 million investment in its Vauxhall Ellesmere Port car factory.

At least 160,000 Astra vehicles will be produced each year from 2015 creating 700 jobs in the Cheshire area. This will lead to local supply content increasing by at least 25 per cent, according to the Society of Motor Manufacturers and Traders (SMMT).

Vauxhall chairman Duncan Aldred said the investment would create 3,000 jobs in the supply chain. The SMMT said that every job in UK vehicle assembly supports 7.5 elsewhere in the economy.

Aldred also revealed that Vauxhall will be doubling the UK component content in its cars while spending £1 billion with contractors. The SMMT believes that at present about 80 per cent of all vehicle component types can be purchased in the UK.

Forum of Private Business senior policy adviser Phil McCabe said separately: “Many of the components for the new Astra will come from abroad, and while UK suppliers will be involved, it would be preferable for our supply chain to be doing more in the interest of our economy.

“Manufacturers like being near suppliers, with high logistics costs only increasing forecourt prices. So improving supply chain finance is not only sensible but vital for the sector to continue growing and creating jobs.”

The investment follows the conclusion of a labour force agreement, which comes into force in 2013. The four-year agreement will enable the Ellesmere plant to operate 51 weeks of the year if necessary.

In an interview with BBC News today, business secretary Vince Cable said GM Vauxhall could apply for the government’s ‘supply chain initiative for advanced manufacturing’. The initiative is set up as a competition, which provides funding from a pot of £125 million to manufacturers who create competitive supply chains. The competition has been divided into two streams with deadlines in June and September 2012.

Cable also revealed that Britain is running a trade surplus in cars for the first time in a generation.

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