UK car parts industry 'faces collapse'

22 May 2002: The cost of not being in the eurozone is resulting in Britain's 19bn-euro car components industry facing collapse.

According to a report by leading UK car industry executives and senior civil servants said the continued weakness of the euro could even bring about further plant closures and job losses.

The report said that UK-based assemblers will very soon be sourcing well under 50% of their components in the UK. The continuing strength of the pound ha tilted the playing field sharply against UK operations, which include Europe's two most productive car plants: Nissan in Sunderland and Toyota in Derbyshire. Some businesses have already been closed, and further closures and job losses are likely, the report said.

The problems are compounded by inadequate investment in plant and equipment and product development, poor customer focus and a shortage of skills. Even Bentley, which is owned by Volkswagen, will source many of its new parts from overseas, particularly from Germany.

May 2002