The Automotive Industry in Lancashire

Introduction

The Lancashire motor vehicle industry is long-established and remains an important sector of the County's economy, carrying a significant part of the local engineering base. About 115 manufacturing companies are directly classified to the industry generating in excess of £800m per annum in combined turnover and employing more than 5,100 people, equivalent to 4.5% of Lancashire's manufacturing workforce (GB = 6.1%). The industry pays wages and salaries to its employees of some £150m per annum and makes purchases of goods and services averaging £500m, many of them from Lancashire suppliers.

The companies in Lancashire represent many aspects of automotive related production activities including the final assembly of a range of vehicles, the manufacture of vehicle bodies, trailers and caravans and the supply of parts and accessories for motor vehicles and their engines. In addition, there are numerous companies not included in the above figures that make electrical equipment for vehicles, automotive textile and trim suppliers, associated rubber and plastic goods as well as numerous sub contractors who supply the automotive industry with all manner of components and engineering services.

Quite apart from those engaged both directly and indirectly in motor vehicle production, there are a large number of employees in the County in the non-manufacturing 'after-market'. This includes such activities as the sale of motor vehicles, including motorcycles, and their parts, the maintenance and repair of vehicles and the retail sale of automotive fuel and lubricants. The total employment in these sectors alone in Lancashire is more than 13,500.

Employment Trends

The motor vehicles industry has had a presence in Lancashire for more than a hundred years and of all companies it is Leyland Trucks, which has had the closest association with the County. The Company began as a small operation in 1896 when the Sumner and Spurrier families founded the Lancashire Steam Motor Company, working out of a smithy in Leyland turning out wagons and chassis units. It became Leyland Motors in 1903 and steadily built a secure base supplying trucks and heavy lorries. In 1951 it took over Albion Motors at Scotstoun, Glasgow. Four years later, Scammell Lorries became part of the group followed by Standard Triumph International. By this time, Leyland Trucks claimed to be the world's biggest truck producer.

Largely because of this association with Leyland Trucks, the motor vehicles industry was a major post-war growth sector in Lancashire, directly creating more than 8,000 jobs over the 30 years to the late 1970s, as well as many others indirectly in associated supply industries (Figure 1). However, it was over this late 1960s/early 1970s growth period that the seeds of Leyland's later troubles were sown. The company's success and high profitability led to a merger (effectively a take-over) of the British Motor Corporation (ex-Austin and Nuffield organisations) to create British Leyland, the third-biggest vehicle manufacturer in the world. Years of under-investment in the volume cars business was tackled by subsidising it for three years with profits from the truck business which was a big money earner. Between 1968 and 1980 Leyland had no completely new trucks to offer while its competitors offered new cabs and engines and prepared for the competition expected in the enlarged European Community which Leyland failed to do, relying instead on its traditional markets in English-speaking Commonwealth countries. Critical to Leyland's fortunes too was the failure of its engine renewal programme during the 1970s. Its "500 engine", intended for medium-to-heavy trucks proved a disaster, its tendency to "blow up" on motorways causing a mass desertion of customers. Leyland's share of the domestic market shrank from 30% in 1973 to 17% in 1980.

In the late 1970s a rescue by the British government saw major new investment in Leyland Trucks which went into the construction of a new assembly plant, new R&D facilities and a test track as well as a renewal of the truck range. These investments were too late. In 1980 as the first of the new truck range came on stream the truck market collapsed. Leyland could not cope with the recession in the UK heavy truck market when annual demand nearly halved from 80,000 in 1980 to 44,000 two years later. Then, Leyland's export markets closed down as developing countries worldwide ran out of foreign currency to pay for imports. On top of this, competition from stronger truck producers intensified as they sought to make up in Europe sales lost when truck demand in the oil producing countries slumped.

There then began a long process of restructuring and disinvestments at Leyland Trucks that culminated, via temporary ownership from 1987 by DAF Trucks of the Netherlands, to final collapse in February 1993. More than 2,600 jobs were lost in short order, of which 1,200 were in the Lancashire trucks and parts operations, reducing the local workforce to 1,400 and to just 700 in the assembly plant. In all, largely because of the troubles at Leyland, over the 1980-93 period there was a net loss of more than 14,000 motor vehicle jobs in Lancashire.

After 1993 employment levels in the industry saw some recovery. Both production and employment expanded in the revived Leyland Trucks where daily production is now at the highest level since the assembly facility was opened 25 years ago. Many of the Company's former constituent parts, now trading as independent companies or as parts of other groups similarly enjoyed modest expansion. As shown in Table 1, the manufacture of parts and accessories for motor vehicles is now the largest employment constituent of the local industry whilst employment in motor vehicles manufacture proper is only a fraction of its previous size.

In total, directly provided employment in the motor vehicles industry in 2003 represented less than 0.9% of all employee jobs in the County and just 4.5% of all manufacturing jobs (compared with 4.0% and 9.7% respectively at its peak level in 1980). All parts of the County share in the industry but nearly 40% of all jobs are based in South Ribble where motor vehicle manufacturing still comprises more than a fifth of the manufacturing employee base. A further 20% of jobs are shared between Blackpool and Burnley (Figure 2). Of the total employee jobs, 89% are held by men and 98% of all jobs continue to be of a full-time nature.

Restructuring

The motor vehicle industry in the County has borne the brunt of severe restructuring pressures over the past couple of decades. The most high profile event was that associated with the collapse of the former Leyland Group and commercial vehicle production but has impacted across all parts of the industry and through the supply chain as part of the drive towards sustainable improvements in quality, cost and delivery. These pressures have come about as a result of major vehicle manufacturers adopting pan-European or indeed global restructuring strategies for the location of their production or assembly facilities and in sourcing components and sub-assemblies in response to powerful new competitive pressures in markets world-wide. Some local automotive production has been moved to lower cost overseas locations and has entailed the closure of local facilities.

Vehicle manufacturers have responded to the challenge of competitiveness by restructuring their product development and production processes, re-evaluating their sourcing policies and improving skill and production levels. New techniques such as just-in-time production and increased emphasis on quality control have reduced production times and improved cost efficiency. The process has resulted in substantial job losses but these have been accompanied by large productivity gains and improvements in profitability. Leyland Trucks, the commercial vehicle manufacturer, which emerged out of a rescue package put together by Enterprise plc and which is now owned by Paccar, the US truckmaker, has been at the forefront of the adoption of modern management and production techniques resulting in the achievement by the company of the lowest production costs of any European truck manufacturer. Today the company has a 1,000-strong workforce, manufacturing more than 15,000 vehicles annually, of which about 30% are exported to European markets. The 650,000 sq.ft. plant has one chassis line and recently invested in a major redevelopment, converting the high bay component warehouse into a parts distribution centre, which has become the home of Paccar Parts in the UK.

It is testimony to the strength of the management teams in the leading Lancashire automotive companies that the County has maintained and indeed strengthened its position over recent years as a base for manufacturing and component supply for the global automotive market.

Lancashire Companies

The automotive industry in Lancashire is still well represented among the major local industrial and commercial companies in Lancashire. Leading players include Leyland Trucks, designing and manufacturing a range of civilian and military trucks at its modern automated assembly plant at Leyland, and which now includes the Foden name among its product range; Albion Automotive Ltd., also operating on the Lancashire Enterprise Business Park, designing and manufacturing commercial vehicle driveline systems, chassis components and engine crankshafts; and TVR Engineering Ltd., the Blackpool based and privately owned manufacturers of high performance sports cars, engines and racing cars.

Leading component suppliers to the vehicle industry include TRW Automotive (the former Lucas Body Systems) who design and manufacture switch and electronic controls for the automotive industry worldwide in their Burnley factory. Manufacturers of interior trim for the automotive industry are also present in the County, including Vita-Achter at Burnley, designing and manufacturing engineered automotive fabrics for the British and overseas markets and Sanko-Gosei, the Japanese-owned company at Skelmersdale, who supply plastic injection moulded components for automotive markets. Multipart Distribution in Chorley provides a purchasing inventory control, warehousing and distribution service for the industry to a worldwide client base. Haldex Brake Products Ltd at Blackburn and Lipe at Haslingden, both subsidiaries of American parent Echlin, manufacture respectively heavy duty braking systems and commercial vehicle clutches. There are also a large number of commercial vehicle body builders, trailer and caravan manufacturers, including market leading east Lancashire Busbuilders Ltd.

A particular strength of the County's automotive components industry lies in the manufacture of vehicle silencer and exhaust systems. It is estimated that over a half of the UK's total output of vehicle silencer and exhaust systems come from Lancashire. Major international producers include Arvinmeritor in Blackpool with an associated technical centre in nearby Warton for prototype manufacture and testing, Bosal (UK) Ltd at Bamber Bridge and Fubaba-Tenneco UK Ltd in Burnley together with a number of smaller and specialist manufacturers. All these companies have modern plants and produce a wide variety of products for both original equipment (including catalytic systems) and the aftermarket.

Nor is the County lacking in the important automotive technical services and design activities. Inbis at Bamber Bridge are important players in the field of automotive engineering design, computer aided design and manufacture and the design and supply of automated manufacturing systems. The Leyland Technical Centre (LTC) on the Lancashire Enterprises Business Park in Leyland provides a local and international service for the testing and development of engines, gearboxes, axles and associated components. LTC's major local customers include Bentley Motor Cars, Jaguar, Leyland and Foden Trucks, and Arvin Meritor whilst international customers include DaimlerChrysler, Lear Corporation and Johnson Controls. The company's 150-acre site incorporates 12km of special roads and test tracks, laboratories and workshops, along with a fast-track manufacturing facility specialising in "one-offs" and prototypes. Also in Leyland is Torotrak, a technology transfer and development company dedicated to finding innovative improvements to transmissions for future vehicles. It is exploring the practical application of Infinite Variable Transmission (IVT) technology offering major fuel savings, reduced emissions, lower production costs and enhanced drivability. With licensing agreements with many of the world's leading volume car producers and automotive firms, Torotrak's aim is to provide the technology to secure an 80% share of all new automatic transmission production by 2010.

Backing up all this activity are a substantial number of smaller and niche market companies producing a wide range of products for the automotive market from auto-electrical and electronic components, springs, radiators, sea belt components and car care products to vehicle bodies, replica car kits, customised and specialised vehicles, trailers, caravans and folding campers. A large network of sub-contract engineering service companies, part of the "hidden" automotive industry provide further support in the form of tooling, jigs and fixtures, automotive castings, components and general machining.

Northwest Automotive Alliance

The Lancashire automotive sector is part of a wider automotive cluster across the North West of England. With annual turnover of £9bn this cluster is home to 450 automotive companies employing 43,000 people. As well as Lancashire's Leyland Trucks the region hosts such key players as General Motors' Vauxhall plant at Ellesmere Port, Ford at Halewood (Jaguar, Range Rover) and Bentley Motors at Crewe. With support from the North West Development Agency, the Northwest Automotive Alliance has been established as an industry-led organisation to provide a focus for the industry. Its role is to promote the development of world-class standards of excellence in automotive manufacture, engineering, supply chain management, innovation and workplace skills.

This page was compiled by Peter Kivell.

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