THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT INDUSTRY UNITED KINGDOM Fact Pack

1
THE AUTOMOTIVE AND CONSTRUCTION EQUIPMENT
INDUSTRY UNITED KINGDOMFact Pack

• Swedish Trade Council in the United Kingdom
• 2006

2
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• British Construction Equipment Industry
• Recommendations
• References

3
THE MANUFACTURING INDUSTRY IN THE UK IS 5 TIMES
AS LARGE AS THE SWEDISH MANUFACTURING INDUSTRY -
the automotive industry is traditionally strong
in the UK

• The total turnover of the UK manufacturing
  industry is SEK 6.338 billion
• the Swedish manufacturing industrys turnover is
  SEK 1.357 billion
• There are approximately 155,000 companies within
  the manufacturing industry in UK
• 3.4 million employees
• The average gross wage for an industry worker in
  the UK is SEK 110 per hour
• 12.8 of the gross wage is paid by the employer
  as social security costs

5 largest manufacturing industries in the UK
billion SEK
The transport equipment industry amounts to 15
of the total manufacturing industry
Source Eurostat
4
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• British Construction Equipment Industry
• Recommendations
• References

5
THE UK PRODUCTION OF CARS AND COMMERCIAL VEHICLES
TOTALS SEK 668 BILLION IN 2004- 70 of all
vehicles are exported
Production cars and commercial vehicles industry
in the UK
billion SEK
Bodies SEK 4.5 billion
Vehicles and engines SEK 44.4 billion
Tyres SEK 24.2 billion
Parts SEK 144.2 billion
Electrical SEK 14.3 billion
The industry grew more than 7 in 2004 due to
higher export demand
Source SMMT Report 2006
6
1.8 MILLION VEHICLES ARE PRODUCED IN THE UK- 1.6
million passenger cars and around 200,000
commercial vehicles

• 3 manufacturers
• Alexander Denis
• Optare
• Plaxton

• 4 manufacturers
• Leyland (Paccar)
• DAF (Paccar)
• Foden (Paccar)
• Alexander Denis

• 21 manufacturers
• Nissan
• Bentley (VW)
• MG Rover
• BMW
• Mini (BMW)
• Rolls Royce (BMW)
• Vauxhall/Opel (GM)
• Ford
• Jaguar (Ford)
• Aston Martin (Ford)
• Land Rover (Ford)
• GM

• Peugeot
• LTI
• Lotus
• TVR
• VW
• Toyota
• Morgan
• Caterham
• Metrocab

• 4 manufacturers
• Ford
• IBC
• LDV
• Land Rover (Ford)

Source SMMT Report 2006
Manufacturing to be phased out before 2007
7
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• British Construction Equipment Industry
• Recommendations
• References

8
MAJORITY OF PRODUCTION FOCUSES ON PASSENGER CARS
Passenger Car Production in the UK
Development

• Over the past five years passenger car
  production has remained relatively stable
• Even though decisions have been made that
  Peugeot and MG Rover are going to phase out
  production by 2007 production still remains
  stable, due to
• Toyotas Burnaston plant has seen output up 25
  in two years
• MINI output now exceeds 200,000 units annually,
  in response to sustained strong demand
• New models at Land Rover have lifted output by
  20 to new record levels in 2005

Vehicles
Source DTI
9
MAINLY GLOBAL CAR MANUFACTURERS - complex supply
chain but majority of purchasing decisions made
inthe UK
Passenger Cars
Source SMMT, STC
Manufacturing to be phased out before 2007
10
THERE ARE 19 CAR MANUFACTURING PLANTS IN THE UK
- Nissan and Toyota produce the most cars in the
UK
Passenger Cars
Manufacturing to be phased out before 2007
11
THERE ARE 19 CAR MANUFACTURING PLANTS IN THE UK
- Nissan and Toyota produce the most cars in the
UK
Longbridge
Sunderland
Blackpool
Burnaston
Ellesmere Port
Ryton
Crewe
Norwich
Solihull
Gaydon
Epsom Surrey
Oxford
Swindon
Goodwood
Source STC interview with the SMMT.
12
GLOBAL COMPETITION LEADS TO SPECIALISATION AND
INCREASED DEMAND ON SUPPLIERS
Trends within the British passenger car industry

• Mainly global manufacturers
• Production is moving east
• Complex cross-border supply chains
• Comparative advantages in new technology

Globalisation

• Specialisation within sport, racing and luxury
  cars
• Large test market for new technology
• Large developed RD
• Competence in engine manufacturing

Specialisation

• Increased competition forces lower production
  costs
• Government and sector alliances to promote UK
  Automotive Industry
• Pressure on tier 1 suppliers to increase
  production flexibility and perform RD

Increased efficiency
Source STC
13
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• British Construction Equipment Industry
• Recommendations
• References

14
STABILITY IN PRODUCTION LEVELS MIRRORED IN THE CV
SECTOR
Commercial Vehicle Production in the UK
Development

• In 2004 UK CV production jumped 10.8 , this rise
  reflected growth of the UK's main CV producers
  due to
• Ford's Transit plant in Southampton
• The IBC plant in Luton which produces the GM,
  Renault and Nissan light commercial vehicles
• The export markets continue to play a dominant
  role in the landscape, with nearly seven out of
  ten vehicles made in the UK destined for export.

Vehicles
Source DTI
15
MAINLY BRITISH CV MANUFACTURERS- majority of
purchasing decisions made in the UK
Commercial vehicles
Source SMMT, STC
Manufacturing to be phased out before 2007
16
THERE ARE 12 CV MANUFACTURING PLANTS IN THE UK
Commercial vehicles
Source SMMT, STC
17
THE COMMERCIAL VEHICLE INDUSTRY IS CONCENTRATED
IN THE MIDLANDS
Scarborough
Leeds
Leyland
Birmingham
Coventry
Long Bridge
Gaydon
Luton
Warwick
Guildford
Southampton
Source Internet, SMMT
Manufacturing to be phased out before 2007
18
MAINLY SPECIALISED MANUFACTURING TO CATER FOR THE
DOMESTIC MARKET
Trends within the British commercial vehicle
industry

• Mainly traditional UK manufacturers
• Production is moving east
• Comparative advantages in new technology

Globalisation

• Increased competition and continuous price
  reductions
• The margins for domestic produced vehicles
  continuously decreasing
• Manufacturing of specialised vehicles for UK
  market (i.e. Double-deckers)

Competition and price reductions

• Even more RD is being carried out by the
  suppliers
• Environmental aspects and lower fuel consumption
  are of increasing importance

RD-displacement
Source STC
19
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• British Construction Equipment Industry
• Recommendations
• References

20
THERE ARE ABOUT 9,000 AUTOMOTIVE SUPPLIERS IN THE
UK- many of the top 100 automotive suppliers are
present in the UK
Geographical concentration of automotive
suppliers
British automotive suppliers

• The highest concentration of suppliers to the
  automotive industry can be found in the
  Midlands
• Many of the companies have less than 100
  employees and are family owned
• There are approximately 6,000 tier 1 and 3,000
  tier 2 suppliers in the UK
• Suppliers are becoming more integrated into
  the manufacturing process

21
MOST LARGE TIER 1 SUPPLIERS ARE PRESENT IN THE
UK- there are 2,974 tier 1 automotive suppliers
in the UK
Electrical systems
Interior equipment
Propulsion
Body
Running gear

• Cables, bus systems, embedded systems
• Allen Group
• Assembled supplies
• Calsonic Kansei .
• CTP Wipac
• CTS Corporation
• Delphi Electronic Sys
• Bosch Automotive
• Siemens VDO 
• TRW
• MCS Group

• Power train, exhaust systems, engines
• Auto Products Driveline Tech
• Bearward Engineering
• Bosch Automotive
• Concentric Pumps
• Cosworth
• Dana
• Cummins Engines

• Cockpit, seats, dash-board,
• air conditioning
• Allen Group
• Birkby\s Plastics
• Faurecia
• Hi-flex Fluidtechnik
• MAGNA Intier
• Mitras Automotive UK
• Siemens VDO 
• ArvinMeritor
• Mahle Tennex Filter Systems
• TRW

• Body, roof, glass, doors, lighting etc.
• Coventry Pressworks
• Inalfa UK
• JC Payne
• Pilkington
• TRW
• ArvinMeritor
• GKN
• Eaton Automotive

• Suspension, brakes, axles, steering, tires
• Brake Engineering
• INA Bearings Company
• Metalrax Group
• Rimstock
• TI Group Auto Systems
• UPF Congleton
• Michelin Tyres
• ArvinMeritor
• Eaton Automotive
• TRW

Source autoindustry.co.uk, SMMT
22
TIER 1 SUPPLIERS MANUFACTURING ELECTRICAL SYSTEMS
T1 Suppliers
Source autoindustry.co.uk, STC
23
TIER 1 SUPPLERS MANUFACTURING BODY PARTS IN THE
UK
T1 Suppliers
Source autoindustry.co.uk, STC
24
TIER 1 SUPPLIERS ARE MAINLY LOCATED NEAR VEHICLE
OEMs- T1 suppliers of electrical systems and
body are mainly located in the Midlands
High Blantyre
Coventry
Tyne Weir
Coventry Press
Birmingham
Coventry
Birmingham
St Helens
Tamworth
Walsall
Gloucester
Birmingham
Denbigshire
Buckingham
Llaneli
Brierley Hill
Solihull
Source autoindustry.co.uk, STC
25
TIER 1 SUPPLIERS MANUFACTURING INTERIOR EQUIPMENT
T1 Suppliers
Source autoindustry.co.uk, STC
26
TIER 1 SUPPLERS MANUFACTURING PROPULSION
SYSTEMS- almost all purchase decisions are made
in the UK
T1 Suppliers
Source autoindustry.co.uk, STC
27
TIER 1 SUPPLIERS ARE MAINLY LOCATED NEAR VEHICLE
OEMs- T1 suppliers of propulsion systems and
interior equipment are mainly located in the
Midlands
Faurecia
Tyne Weir
Northampton
Birmingham
Liversedge
Northampton
Birmingham
Concentric Pumps
Birmingham
Birmingham
Daventry
Wiltshire
Birmingham
Leamington Spa
Denbigshire
Winsford
Mahle Tennex Filter Systems
Solihull
Salisbury
Source autoindustry.co.uk, STC
28
TIER 1 SUPPLERS MANUFACTURING RUNNING GEAR-
almost all purchasing decisions are made in the UK

T1 Suppliers
Source autoindustry.co.uk, STC
29
TIER 1 SUPPLIERS ARE MAINLY LOCATED NEAR VEHICLE
OEMs- T1 suppliers of running gear are mainly
located in the Midlands
Birmingham
TI Automotive
Abingdon
Solihull
Birmingham
UPF Congleton
Birmingham
West Bromwich
Congelton
Wrexham
Stoke on Trent
Brierley Hill
Source autoindustry.co.uk, STC
30
THERE ARE 6,097 T2 AUTOMOTIVE SUPPLIERS LOCATED
IN THE UK- fragmented market with many small
players

• Cables, bus systems, embedded systems
• Allen Group
• Amphom
• Auto Marine Cables
• Autac Products
• Centurion electronics
• Clairmont Electronics
• MCS Group
• RH Technical
• Industries

• Power train, exhaust systems, engines
• Brake engineering
• Flexible Ducting
• Gunning
• Jenvey Dynamics
• Mchenkie
• Schaeffler
• TRW
• Copper Automotive Washer
• Heartlands
• Lander

• Cockpit, seats, dash-board, air conditioning
• Aldridge Plastics
• Alpha Gary
• BBW Engineering
• AB Automotive Electronics
• Selectronic
• Bloxwich
• Copper Automotive Washer
• Lander
• RH Technical Industries

• Body, roof, glass, doors, lighting etc.
• CHK .
• ITW Chronomatic
• INA Bearing
• Lander Carlisle
• Schaeffler
• JJ Engineering
• PWS
• Kiveton Park Steel
• Mills Forging
• Clydesdale Forge

• Suspension, brakes, axles, steering, tires
• Autogem
• Elmsteel
• Mechetronics
• Newbow
• Heartlands
• Kiveton Park Steel
• Clydesdale Forge

Source autoindustry.co.uk, STC, SMMT
31
T2 SUPPLIERS OF ELECTRICAL SYSTEMS TO THE
AUTOMOTIVE INDUSTRY
T2 Suppliers
Source autoindustry.co.uk, STC
32
T2 SUPPLIERS OF INTERIOR EQUIPMENT TO THE
AUTOMOTIVE INDUSTRY
T2 Suppliers
Source autoindustry.co.uk, STC
33
T2 SUPPLIERS OF PROPULSION SYSTEMS TO THE
AUTOMOTIVE INDUSTRY
T2 Suppliers
Source autoindustry.co.uk, STC
34
T2 SUPPLIERS OF BODY CHASSIS TO THE AUTOMOTIVE
INDUSTRY
T2 Suppliers
Source autoindustry.co.uk, STC
35
T2 SUPPLIERS OF RUNNING GEAR TO THE AUTOMOTIVE
INDUSTRY
T2 Suppliers
Source autoindustry.co.uk, STC
36
UK SUPPLIERS TO THE PASSENGER CAR INDUSTRY ARE
FORCED TO STAY INNOVATIVE
Trends within the British passenger car industry

• Production is moving overseas
• Tendency is for production to move to Eastern
  Europe or Asia.
• UK suppliers must focus on high skilled R D to
  maintain competitive edge

Globalisation

• High wage costs, raw material prices and pressure
  from the OEMs forces the suppliers to become more
  efficient
• Successful suppliers are merging with or
  purchasing other companies and weaker automotive
  suppliers either get acquired or go out of
  business

Costs and competition
Role of the suppliers

• Complexity is increasing in the automotive
  supply chain on a number of levels
• OEMs also are imposing new responsibilities
  regarding RD as a way to shift warranty
  responsibility and get more control over the cost
  of recalls

Source STC
37
CONTENT

• Overview British Manufacturing Industry
• British Automotive Industry
• British Construction Equipment Industry
• Manufacturers
• Suppliers
• Recommendations
• References

38
THE BRITISH CONSTRUCTION EQUIPMENT INDUSTRY IS
WORTH SEK 33 BILLION PER ANNUM - over 60 is
exported
Production machine and construction vehicles in
the UK
billion SEK
Road 22
Earth moving Lifting 62
Mining 16
The domestic production grew more than 5 2005
Source Interview with Pam Hyde, International
Business Director, Construction Equipment
Association and Market Business Development.
CECE Economic Report 2005.
39
4 MAIN PLAYERS REPRESENT 40 OF THE MARKET- JCB,
Caterpillar, Terex and Komatsu
CONSTRUCTION EQUIPMENT
EARTH MOVING
ROAD
LIFTING
MINING
Excavators, wheel loaders, backhoe loaders, Skid
steer loaders, haulers
Graders, asphalt pavers, asphalt mixers
Wheel loaders, drills, haulers
Mobile cranes, forklifts

• 5 manufacturers
• Caterpillar
• The Phoenix Engineering
• Hymix
• Terex
• Fairport Construction Equipment

• 2 manufacturers
• Linde
• Hyster

• 5 manufacturers
• JCB
• Caterpillar
• Komatsu
• Terex
• Kubota

• 4 manufacturers
• Caterpillar
• Fintec/Finlay
• GCM
• Brendon Powerwashers

Source CEA 2005, STC
40
THE BRITISH CONSTRUCTION EQUIPMENT INDUSTRY IS
CONCENTRATED IN THE MIDLANDS
Motherwell
Irvine/Fleet
Tyrone
Telford
Sheffield
Kimbolton
Rocester
Keynes
Ipswich
Chard
Bolton
Wiveliscombe
Nuneaton
Source CEA 2005, STC
41
ALMOST ALL PURCHASE DECISIONS ARE MADE IN THE UK
EXCEPT FOR KOMATSU
Construction Equipment
Source CEA 2005
42
ALMOST ALL PURCHASE DECISIONS ARE MADE IN THE UK
EXCEPT FOR KOMATSU
Construction Equipment
Source CEA 2005
43
THE CONSTRUCTION EQUIPMENT INDUSTRY SHARES MANY
SUPPLIERS WITH THE AUTOMOTIVE INDUSTRY
SUPPLIERS
Electrical systems
Propulsion and running gear
Steel construction
Hydraulics
Accessories

• Power train, engines, exhaust systems, axles
• Cummins Engines
• Perkins Engines
• Multi-wing
• Truflo Air Movement
• Roballo Engineering
• Dana
• International Transmission
• NEWAGE Transmission
• Kay-dee Engineering Knott
• Springfix Linkages
• Brake Engineering

• Cables, sensors, semi conductors, control units
• ASL Systems
• Prolec
• RDS Technology
• Delphi Electronic Systems
• Volex Wiring Systems
• Hirose Electric UK
• Nortek Electronic Circuits
• North Devon Electronics
• John Binns Son

• Undercarriage and body
• Miller Uk Limited
• Harford Manufacturing
• Kocurek Excavators
• West Alloy
• Caldervale Forge
• Southco
• Belcot Tool Die
• Linecross
• Bodycote

• All kind of hydraulic cylinders
• Rexroth Bosch Group
• Eaton Fluid Power Hydraulics
• Lemac Engineering
• Schaeff-terex
• Dale-Mansfield
• Kawasaki Precision Machinery (UK) Ltd

• All kind of hydraulic cylinders
• Kab Seating
• Milsco Manufacturing
• Sears Manufacturing Co
• Denso
• BAS Components Limited
• Belcot Tool Die
• Delphi

Source CEA
44
ALL PURCHASING DECISIONS ARE MADE IN UK
T1 Suppliers
Source CEA 2005, Internet
45
ALL PURCHASING DECISIONS ARE MADE IN UK
T1 Suppliers
Source CEA 2005, Internet
46
ALMOST ALL PURCHASING DECISIONS ARE MADE IN UK-
Knott makes some of the purchase decisions in
Germany
T2 Suppliers
Source CEA 2005, Internet
47
ALL PURCHASING DECISIONS ARE MADE IN UK
T2 Suppliers
Source CEA 2005, Internet
48
T1 SUPPLIERS ARE LOCATED NEAR THE VEHICLE OEMS
Tyne and Wear
Tyne and Wear
St. Neats
Source CEA 2005, Internet
49
T2 SUPPLIERS HAVE PRODUCTION NEAR RELEVANT OEMS
Roballo/Durham
Airdrie
Leigh
Gloucester
Birmingham
Worcester
Plymouth
Source CEA 2005, Internet
50
GLOBALISATION AND DEMAND FOR TAILOR-MADE
EQUIPMENT PUTS PRESSURE ON THE SUPPLIER NETWORK
Trends within the British construction equipment
industry

• Internationalisation in production, ownership and
  use of buildings
• Production is moving overseas - towards eastern
  Europe and Asia
• Lower production costs makes the competition
  price based
• Sustainable development - a challenge to the
  entire construction community

Globalisation

• Need for the UK to raise its game in the
  provision of public buildings and infrastructure
• Improvement in productivity and strategic issues
  are needed
• New health and safety legislation provides
  additional impetus towards hiring rather than
  owning tools and equipment.

Investments

• Demand to improve the overall performance in the
  sector
• Old processes are to be replaced with the help of
  innovation
• IT solutions starting to be used more extensively
  in the UK Construction Industry
• Knowledge from other sectors and outside the UK
  is demanded

New technology
Source STC
51
CONTENT

• Overview United Kingdom
• United Kingdom Automotive industry
• Recommendations
• References

52
RECOMMENDATIONS FOR MAKING BUSINESS WITH THE UK
AUTOMOTIVE CONSTRUCTION EQUIPMENT INDUSTRIES
Country specific
Fragmented Market
Many small players makes market penetration
complicated and time consuming
Dynamic market
The decision making process is short and concise
Cultural similarities Differences
British business culture is more conservative in
nature and attention to protocol is important
Industry specific
Competition based on price
Due to the large number of actors in the market,
price is main competitive advantage
Local presence Important
Having local presence in the market through an
affiliate, agent, distributor or sales office is
considered important for the establishment of
long term business relationships
One should be aware of the fact that the
establishment of a long term business relationship
is seen as a good foundation for future profit
Invest in Business Relationships
Source STC
53
HOW CAN STC-UK SUPPORT COMPANIES TO DO BUSINESS
IN THE UK?
Country specific
Market Check
Analysis of potential clients and competitors as
well as trends on the market
Distribution search
STC identifies the most suitable distribution
channels on the UK market
Recruitment
Assistance in selecting employees in line with
the needs of Swedish companies
Pre Acquisition analysis
STC selects appropriate companies for Swedish
corporations to acquire
Supplier search
Identification of companies with the potential to
provide their Swedish counterparts with key inputs
Company establishment
STC advises and supports companies that want to
establish a subsidiary in the UK
BSO
STC helps companies to kick-start their
activities in the UK by acting as their local
sales representatives
54
CONTENT

• Overview United Kingdom
• United Kingdom Automotive industry
• Recommendations
• References

55
STC HAS HELPED NUMEROUS SWEDISH COMPANIES TO DO
BUSINESS WITH THE UK AUTOMOTIVE INDUSTRY
Source STC
56
ASSARS CUSTOMER SALES SUPPORT
Goal
Assars Mekaniska AB

• Producers of barrels for making diamond drills to
  the construction industry
• A typical customer is a diamond segment producer
  who manufacturers and markets the complete
  diamond drill

• To provide Assars with knowledge about the UK
  market
• Initiate sales process towards end customers
• To identify and contact potential customers for
  Assars

STC role and contribution
Outline of project

• Research about 100 companies using different
  sources in order to identify all potential UK
  consumers
• 30 companies who fitted the customer profile and
  were subsequently contacted by the STC on behalf
  of Assars
• 15 companies had a demand for barrels and were
  provided with samples sent directly from Assars
  in Sweden, to the right contact person
• After contacts with potential customers the STC
  could provide Assars with information about the
  market, competitors, prices and special product
  requirement
• All information and contacts were then compiled
  into a report presented to Assars
• 11 companies were visited by STC and Assars in a
  visit program organised by STC

Market overview and mapping of customers
Research and contact customers
Meetings and sales discussions
Contacts
Market overview
Sales
We are very pleased with the help we got from
STC in London. We have established contacts with
all important UK potential customers and have
sales relations with some of them.
Assars
Mekaniska AB
Results

• Knowledge about all potential customers in the UK
  as well as competitors
• Contact with all potential customers in the UK
• Feedback on samples and prices
• Meetings with 11 potential UK costumers and
  Initial sales
• Assars now has sales relations with several of
  these companies