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Model industry: carmakers suggest UK route to economic recovery

Export success key as Bentley and Nissan make most of Britain’s advantages

There is an air of refinement to the Bentley factory in Crewe. Timeless skills more akin to furniture making than automotive production remain at the heart of this elite British manufacturer. Yet even here there is evidence of the jarring changes that have yanked a once-parochial British car industry into the modern age.

While many of the bespoke vehicles rolling off the slow, deliberative production line are destined for status-hungry members of the Chinese middle class, Bentley employees can be heard uttering Japanese phrases that were alien to automotive workers 30 years ago, but are now standard shopfloor lingo. In the woodshop, where door parts carved from walnut blocks are honed to a lacquered finish, an employee describes a kaizen technique, using the Japanese phrase for relentless improvement.

A world-class British brand owned by a German manufacturer, benefitting from a production revolution started 6,000 miles away, and thriving on demand from the 21st century’s coming economic power. This is a success story that epitomises the importance of exports to Britain’s economic wellbeing, while banishing the memory of an industry that was in the doldrums 30 years ago, with a reputation for poor quality and dysfunctional industrial relations.

Bentley’s cars, which sell for £124,000 to £226,000, are produced under the ownership of its German parent, Volkswagen, but the UK industry owes its renaissance to Japan and monozokuri: the art of making things. One employee says Japanese production culture is embedded throughout the industry, adding: “Why reinvent the wheel?”

In the UK mass production of cars was reinvented three decades ago. Nissan opened Britain’s largest car plant in Sunderland in 1986, spearheading a revival that saw the UK industry make around 1.35m cars last year: a rise of about 6% on 2010. This is lower than the industry’s peak of 1.9m in 1972, but the key statistic for the economy is where the cars end up: four decades ago a third of UK-made cars were exported. Now it is eight out of 10.

The transformation is visible at the end of the production line for the Nissan Qashqai, known in the trade as a compact crossover SUV. At its start, anonymous steel plates are dragged into the maw of a giant pressing machine stamping out 22 car doors a minute. Then, in a process resembling a superorganism, parts travel through an automated chain of spark-firing weld robots and skilled workers fitting a dashboard every three seconds, and a perfectly formed vehicle trundles out every 60 seconds with its destination attached to the windshield. The acronyms that roll past underline the industry’s export strength: USR for Russia, the factory’s biggest market; UKR for Ukraine; TKY for Turkey and MOR for Morocco.

Nissan’s senior vice-president for manufacturing in Europe, Trevor Mann, says Britain is an appealing base for foreign manufacturers. The top five UK‑based carmakers in 2010 – all foreign-owned – were: Nissan, leading the way with 423,000 vehicles; BMW-owned Mini in Cowley; Indian-owned Land Rover in the Midlands; Japan’s Honda in Swindon; and the largest Japanese auto company, Toyota, in Derby.

As a premium brand, Bentley is a niche player, but it saw sales rise 37% last year as it sold more than 7,000 vehicles. According to Mann, Britain benefits from a strong domestic market, a skilled and flexible workforce, and a happy accident of geography.

“The UK is a competitive manufacturing country at the moment,” said Mann. “We are a small island, we are close to the sea – and the cheapest way to ship things around Europe is by sea. In Sunderland one of the key advantages is we are only three miles from a deep sea port and have good access to Russia, the Middle East and northern Europe.”

Carmakers are leading the economic rebalancing that the UK must undergo because Britons consume too much and manufacture too little. In 2010 the UK imported more goods and services than it exported by a margin of £41bn worth; by making more things that are consumed abroad, rather than by indebted UK households, Britain’s current account gains credit. Unwittingly, car manufacturing appears to be leading this transformation after the Society of Motor Manufacturers and Traders (SMMT) revealed domestic sales fell by 4.4% last year. This week it will reveal that production, on the other hand, surged.

“A lot of the UK’s economic problems came from too much spending and borrowing by households and government,” said Lee Hopley, chief economist at the UK manufacturers’ organisation, the EEF. “We can’t rely on either of those for growth in the future. So in terms of where growth will come from, and the parts of the economy that will generate tax revenues and employment, investment in export-driven sectors will be key.”

According to HM Revenue & Customs, in the first 10 months of last year road vehicles were second only to petroleum in the UK export market, generating £22.4bn. It is Britain’s largest manufactured export industry. But Bentley’s head of manufacturing, Michael Straughan, warns there will not be another production boom like the one set off by Nissan decades ago.

“It is really important that we protect what we have got; that the likes of Honda, Nissan and Toyota stay here, and we encourage Jaguar Land Rover, Rolls-Royce, Mini. We are not going to see a 1980s-style transplant of Japanese factories into the UK again.”

The SMMT’s chief executive, Paul Everitt, agrees. “We cannot just assume that everything will be fine. The government has to deliver on its growth agenda,” he said, referring to the chancellor’s plans for a credit-easing scheme for small- and medium-sized companies, as well as support for supply chain firms.

The medium term, at least, looks good. Nissan’s Sunderland plant will produce the Leaf electric car from 2013, Jaguar Land Rover is creating a further 1,750 jobs in the UK, and Toyota has announced plans for 1,500 new jobs at its plant in Burnaston, Derby. Toyota’s deputy head of UK operations, Tony Walker, is a car industry veteran who helped launch the Derby plant 20 years ago. Chastened by his experiences elsewhere, he said there was one overriding goal: “We were determined not to be like the British car industry.”

Although Nissan led the way in the UK, Toyota is the current pioneer of modern production. Civil servants now come to Burnaston to learn about teamwork and constant improvement, underlining the industry’s transformation. “That old industry of 30 years ago has completely gone,” Walker said. “And I don’t think the public have grasped that. There are no inefficient factories left.”

The new Bentley boys

Premier League footballers are among the prospective Bentley customers who tour the carmaker’s Crewe factory before making a purchase. They are popular visitors, often agreeing to sign autographs and chat to workers on the production line.

But for the fastest-growing group of Bentley buyers, visits are understandably less frequent. And that is not the only challenge posed by prospective Chinese purchasers, who may overtake Americans as the marque’s biggest customer by the end of next year. Chinese Bentley owners prefer to be driven by a chauffeur rather than drive the car themselves. As a consequence, the noise emitted by the exhaust pipe of the Continental Flying Spur model has become an issue.

“A Chinese customer does not want to hear the exhaust tone, and therefore we have had to change the exhaust,” said Michael Straughan, Bentley’s head of manufacturing. “If a customer wants silence in the back then that is what he will get.”

Bentley offers bespoke vehicles – an in-car humidor or TV screen is no problem – and eschews what Straughan calls the “we know best” attitude. “Chinese buyers are sophisticated customers,” he said. “They don’t want British luxury per se, they want their own car.” DM © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds