Auto Sector Key Driver of U.K. Economy, Industry Says

The U.K. automotive industry is in excellent economic, environmental and social shape creating 44,000 jobs across the sector last year.

The Society of Motor Manufacturers and Traders’ 15th annual automotive sustainability report covering 2013 says 14,000 of those new jobs were in manufacturing, raising the total to more than 160,000.

This growth was matched in domestic automotive manufacturing turnover, which grew 10.3% to top £64 billion ($109.6 billion).

R&D, a key strength of the U.K., increased 9.7% from 2012 to £1.9 billion ($3.3 billion) last year.

SMMT CEO Mike Hawes says the U.K. automotive industry contributes hugely to the region’s economic health by building millions of vehicles, engines and components every year and employing hundreds of thousands of people.

“The progress made by the industry over the past year alone is hugely important,” Hawes says in a statement. “Growing our skills base and encouraging more automotive suppliers to base their businesses in the U.K. is now essential for us to maintain this positive momentum.”

More than 772,000 people are employed across the automotive sector.

The Automotive Sector Strategy, launched in July 2013, sets out government and industry’s joint plan to invest more than £1 billion ($1.7 billion) into the U.K. automotive sector over the next decade.

The strategy aims to grow the industry through four distinct pillars: building a competitive business environment, growing the supply chain, building the skills base and developing the U.K.’s low-carbon R&D capabilities.

“Getting the next generation of engineers on board is crucial if the industry is to continue to expand,” Hawes says.

The SMMT says industry analysts suggest that by 2017 the U.K. could be building more than 2 million cars a year, breaking a record that has stood for more than 40 years.

While continued investment by the world's biggest automotive brands means the future looks bright for the sector, the SMMT says the rate of growth and demand for specialist skills has put manufacturers under enormous pressure to recruit and up-skill staff.

Landfill Waste Down Dramatically

In terms of environmental performance, the report highlights major reductions in carbon-dioxide output in 2013, along with a one-third cut in waste sent to landfill by manufacturing sites, to an all-time low.

An increasing number of sites have managed to divert all their waste from landfill to reach a zero landfill target. The report says only 3% of waste now generated ends up in landfill, compared with 26% in 2004. The amount of waste recycled and recovered increased from 74% to 97% over the same period.

Just 7.7 lbs. (3.5 kg) per vehicle produced ends up as landfill waste, a 91.3% reduction from 15 years ago when reporting began.

Hawes says one of the biggest challenges facing the sector is the transition to a low-carbon future, and the industry can take pride in reducing new cars’ average CO2 emissions about 25% in the past decade to 128.3 g/km in 2013.

“Clearly a significant part of a low-carbon future also lies in manufacturing processes, and the production of 25% more cars using the same energy as 15 years ago demonstrates the progress made by industry in this respect,” he says.

The carbon intensity of automotive production has been improving due to increased energy efficiency and the energy mix used, the report says.

The overall CO2 produced by signatories has dropped 42% since 1999 and 4% since 2012. Per-vehicle CO2 output has almost halved in the past 15 years, and has remained stable over the past two years.

The amount of renewable energy produced by the industry has been increasing steadily in recent years and now totals almost 40 GWh, more than double the 2009 level. This is enough renewable electricity to power 9,400 homes.

There are 11 companies producing renewable energy on-site, up from two in 2009.

To decarbonize production further, industry players have been switching to electricity produced from certified sustainable sources, up threefold since 2010 to 334 GWh in 2013. Green electricity now accounts for 20% of electricity and 7% of all energy used by the industry, enough to power almost 80,000 homes.

Hawes says the conclusion to be drawn from the new report is clear: “The current success of the U.K. automotive industry places it at the forefront of the U.K.’s economic recovery, but it also brings certain challenges. Industry has already made great strides to address these, and must continue to work towards a sustainable future.”