As the UK’s public battens down the hatches for the ongoing Coronavirus (COVID-19) pandemic, the British car industry prepares to put itself on ice for the upcoming weeks, possibly months. As of yesterday, all major car factories have been closed down, not only to protect their employees, but also to accommodate what promises to be a devastating fall in demand for new cars.
These are scary and unprecedented times, but in an equally unprecedented move, the UK Government has committed to a raft of emergency measures to maintain continuity of wages and employment to businesses. The Chancellor of the Exchequer, Rishi Sunak, promised to establish a Coronavirus Jobs Retention Scheme for all employers, large or small, and will cover 80% of wages, up to £2500 a month. This is in addition to a raft of corporate measures aimed at business – the message being ‘don’t lay off your staff.’
The UK car manufacturing, supply, retail and logistics industry contributes more than £6bn-worth of turnover to the UK economy and employs around 38,500 people. With a combined total of 4500 companies, it’s survival is vital to the economy, and the Government says its committed to making sure the lights go back on – hopefully in 12 weeks time, if it can bring the level of transmission of the virus down to a level that doesn’t overwhelm our NHS. And, as part of this, shutting down our car factories is seen as essential in keeping people as healthy as possible for as long as possible.
The car factories close
The final large carmaker to announce it’s to suspend operations is Jaguar Land Rover. In a statement, JLR said: ‘In light of the ongoing Coronavirus situation, Jaguar Land Rover has confirmed that it will temporarily suspend production at its UK manufacturing facilities over the course of next week.’ The company is aiming to restart operations on 20 April, but admits that whether it does is down to the ongoing situation.
Bentley Motors in Crewe announced it was mothballing operations at the factory until at least 20 April. Adrian Hallmark, Bentley Motors Chairman and CEO, said: ‘This will inevitably have an impact on our deliveries to customers, and we apologise for the inconvenience this causes, however we are working hard to minimise this disruption. Our thoughts continue to go out to all those affected around the world throughout this very sad and difficult time for so many people.’
Bentley and JLR joined Honda, which closed its Swindon factory after Wednesday’s shift on 18 March, because of difficulties in the supply chain and with a view to maintaining staff welfare. Honda is hoping to restart operations on 6 April but has said that this will come down to what the government and medical experts are advised.
The other factories now confirmed as being on temporary shutdown are:
- BMW (Hams Hall)
- MINI (Cowley)
- Nissan (Sunderland)
- Rolls-Royce (Goodwood)
- Toyota (Burnaston and Deeside)
- Vauxhall (Ellesmere Port and Luton)
The global situation
Elsewhere in the world, most major car groups have ceased production, with Volkswagen Group, Renault-Nissan, PSA, Volvo, Ford, GM and Fiat Chrysler Automobiles announcing they’ve suspended production. ‘Given the present significant deterioration in the sales situation and the heightened uncertainty regarding parts supplies to our plants, production is to be suspended in the near future at factories operated by group brands,’ said Volkswagen Group Chief Executive Herbert Diess on Tuesday.
As the pandemic brought the automotive industry grinding to a virtual halt, the Society of Motor Manufacturers and Traders’ (SMMT) Chief Executive, Mike Hawes, warned that the industry, ‘stands on the precipice.’ This is a view echoed by industry analysts. ‘Last year, with the uncertainty over Brexit, the shift away from China and diesel, it was the perfect storm. This is perfect storm part two,’ says Professor David Bailey of Birmingham Business School. ‘As assemblers shut down, it has a cascade effect on the supply chain and some of those firms will have to start shutting down too.’
Hopefully, the Chancellor’s aid package will be enough to convince the car manufacturers to stand by their UK workforces and will have gone some way to reassure those working in industry about the continuity of their employment – because more than now, that’s needed. Initially, most brands are committing to closing production lines for a short period, but the long-term outlook is far from certain as most European countries impose strict limits on the movement of people.
Carmakers could assist with the push for NHS ventilators
In a move that mirrors the shadow factories of WW2, which built military equipement, the UK Government is talking to manufacturers such as Ford and Jaguar Land Rover to see if they can help manufacture ventilators as the National Health Service ramps up preparations for mass sickness among the wider population. The Department for Health and Social Care (DHSC) had begun delivering ventilator blueprints to more than 60 military engineers and car manufacturers. Their mandate is to aim to build 20,000 ventilators in their factories, something that Prime Minister Boris Johnson hopes could begin in as little as two weeks.
According to Wired UK, this is a tough task. It reports that Mark Swift, Head of Communications at manufacturing and engineering trade body Make UK, which represents 20,000 companies, says that, because so many components are imported into the UK, it could take longer to set things up than the hoped for couple of weeks. ‘It can be done,’ he emphasises. ‘But clearly, we don’t have time.’