Thousands of jobs are set to be created after Jaguar Land Rover’s U-turn on plans to close a Midland plant and now the pressure is on suppliers to benefit from the decision.
Experts say JLR delivered the best news for the region’s automotive industry in a decade by deciding to keep the Jaguar plant at Castle Bromwich open amid plans to double production in four years.
The £5 billion move will safeguard around 16,000 jobs, and could create thousands more, and analysts say supply chain firms in the region now face the task of competing with global rivals to ensure they benefit from the plans.
BirminghamPost.net blogger and automotive sector expert David Bailey said JLR had indicated it plans to look internationally for parts, but efforts from regional development agency Advantage West Midlands and the Manufacturing Advisory Service (MAS-WM) in the region could be set to pay off.
Professor Bailey, of Coventry University Business School, said: “Jaguar Land Rover is looking to double production over the next four years. By 2015 the company wants to be producing 300,000 cars a year, rather than 150,000.
“That is really good news for the supply chain in the region.
“They have said they will be sourcing more internationally, particularly from India, so we will see more penetration from low-cost importers, and that will be a challenge to suppliers in the area.
“Nevertheless, those who can compete will be able to benefit from this, including a lot of companies which benefited from support from the regional development agency and the Manufacturing Advisory Service. That has helped an awful lot, and there is still enough in the region to benefit from this news.”
He added: “It is the best bit of news for the regions automotive sector certainly in the last decade.”
JLR, which employs 6,000 people in the West Midlands directly, had been expected to close its Castle Bromwich plant, leaving the Lode Lane factory in Solihull as its only Midland production site.
Simon Griffiths, chief executive of MAS-WM, said supply firms could have moved en masse to be nearer to other plants, like Halewood in Merseyside, had production of cars moved to there.
He said: “The fact these value added jobs have been safeguarded for a long time has to be welcomed.
“The bigger picture is even more positive, with a knock-on affect across the supply chain with perhaps a similar number of positions being kept and created in first, second and third tiers that produce components for JLR.
“In particular, ‘just in time’ or ‘sequenced suppliers’ who need to be within an hour’s travel time of the plant will be particularly pleased.
“Any hint of production moving to Halewood on Merseyside would have meant that companies who deliver the seats, door trims and suspension modules, would have had to follow them north and been lost to the West Midlands.”
Prof Bailey said JLR’s about-turn vindicated the efforts by trade union leaders to share the burden of the recession with tough decisions like pay cuts and part-time working.
Despite most of the motoring industry suffering a world-wide slump, JLR has flourished this year.
Overall sales were up 60 per cent in the three months to June spearheaded by a 104 per cent rise in China.
But alongside global demand comes an international list of potential suppliers.
However, Dave Leggett, managing editor of industry website just-auto.com, said: “It is obviously good news for a wide range of local suppliers but obviously to maintain competitiveness Jaguar Land Rover has to look for the best suppliers on an global basis.”