Automotive - how low can it go?
11 November 2008
When times have been bad in the past the automotive sector has always helped the electronics industry keep motoring.
There are certain sectors that have been resilient in the past when times are bad and those are the ones that have been most successful in recent years – medical, industrial, aerospace/defence and automotive. Other industries have proved that movement offshore have not necessarily meant that the design community has had to pack its bags and follow suit – communications and more specialist consumer products are examples of this. However, there is no doubt that a strong manufacturing base helps build design expertise and vice versa.
The automotive industry has so far sustained a viable manufacturing sector and there are certain aspects of automotive design that the UK leads the world in. I think it is fair to say that, is largely for all that what we design and build component parts for ‘foreign’ manufacturers, the automotive industry is very much an indigenous one.
But this is now an industry in crisis. Globally. GM and Ford have just reported quarterly losses of $2.5bn and $3bn respectively, while BMW and Toyota have seen profits fall by over 60%. In the UK many factories are extending factory closures for the Christmas period by up to a month in some cases to try and counter the notion that more cars have been made in 2008 than are needed to see the dealers through a good part of 2009.
With dealerships struggling, and in some cases closing, one enterprising dealer even tuned-in to pound shop mentality last week by offering ‘buy one get one free’. For some reason it has the feeling of a final insult.
Potentially, if things continue in this fashion for any length of time, the consequences are dire. I think the cost-effectiveness of assembling cars in the UK must have some validity or so many factories wouldn’t have survived and investment from overseas wouldn’t have been forthcoming. It will just be a case of cutting cloth to suit the demand and this seems likely to diminish in the coming months. There is so much concern about economic crisis that it could even put the brakes on the car market to such an extent that it comes to a temporary standstill – everyone can wait for half a year for a new car if they need to.
But what will this do for the sites where design plays a significant role – typically top ‘British’ brands with an overseas parent company – companies that don’t just make cars, but design and create them as well? The concern here is that overseas companies might start becoming a bit more insular if the recession starts to bite deeper. This is purely observational and I’m not even saying it is wrong, but when the going gets tough it is fairly typical for companies to support/protect its ‘home’ factories before those abroad. While assembly lines can come and go, albeit with unfortunate consequences for jobs, design expertise is a more precious thing and is not so easily recovered once it has gone.
I trust I will be proved wrong, but just to be on the safe side, go out and buy yourself a car for Christmas. One that has been designed and built in the UK!
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