Japanese spur suppliers in two-speed UK

As car makers exploit the benefits of Britain as a manufacturing base, some component manufacturers are gaining from the experience but others are losing out. William Kay reports

BRITAIN is in the throes of the most significant industrial resurgence since the Second World War. Our talent for innovation is being harnessed to new standards of efficiency introduced by Asian manufacturers using this country as a springboard into the rest of Europe.

That, at any rate, is the view of a number of academics and industrialists in the wake of two key developments last week.

First, Ford announced plans to produce Mazda cars at its Dagenham plant in Essex. Until now, Mazda had been the only large-scale Japanese motor manufacturer not producing in Europe. Then Toyota stepped forward to say it was doubling capacity to 200,000 cars a year at its Burnaston factory in Derbyshire. The £200m investment would create 1,000 jobs on site - and indirectly create several thousand more jobs at component suppliers, their suppliers and beneficiaries of more widespread spending power.

These developments follow the news in January that Daewoo, the South Korean cars group, was planning to build a £350m factory in Britain to manufacture 100,000 cars a year and generate several thousand jobs. Last year, another South Korean giant, Samsung, decided to build a £600m electronics factory on Teesside in the North-east.

While Britain is looking forward to eliminating its overseas motor-trade deficit by the end of the century, German car industry leaders last week told their economics minister, Guenter Rexrodt, that they might have to shed 50,000 jobs in the next five years unless measures are taken to improve the industry's competitiveness. The German car market shrank by 0.6 per cent in January and February, compared with the first two months of 1994.

"I am confident we are going to see a resurgence of Britain's manufacturing base," said Kumar Bhattacharyya, professor of manufacturing systems at Warwick University. "We have a low-cost workforce, a tradition of innovation and the housekeeping and product-development disciplines developed by foreign manufacturers who have come here. We have the best of both worlds, and it could be a very powerful combination."

This is a dramatic contrast with the position in the late 1970s, when British Leyland was a by-word for shoddy workmanship, and television news bulletins regularly featured shots of open-air union meetings outside car factories. But in 1984, Nissan arrived in Britain with the help of £65m in grants and tough anti-union legislation introduced by the Thatcher government.

Ironically, one of Britain's attractions, apart from the English language and good communications with Tokyo, was the lack of an indigenous car industry to compete with the Japanese for the best suppliers.

Since then, Honda and Toyota have followed suit, encouraged to set up local manufacturing by the European Union limits on imports of finished cars. That incentive has been heightened this year by the relentless rise in the Japanese yen, which makes it all the more attractive to gain access to Britain's relatively low wages.

However, a vital part of that calculation was to raise output standards. Toyota has spent £19m on training in five years, initially sending new recruits to its Japanese and US plants. The next step was to improve supplier standards, even to the extent of being forced to share suppliers with other customers in Europe.

Consequently, the Japanese effect is so far working its magic only on those UK component factories that have been selected to supply the Asian invaders. This is turning Britain's factories into haves and have-nots, depending whether they have Japanese customers. While Yukihisa Hirano, managing director of Toyota UK, was happily reporting last week that his firm's local suppliers were as good as their Japanese counterparts, a new Worldwide Manufacturing Competitiveness Study by Andersen Consulting claims that UK productivity and product quality were among the lowest in Europe.

The study says: "Despite the presence of Honda, Nissan and Toyota, and the fact that many components suppliers have improved their performance substantially, UK automotive components manufacturers lag behind the rest of Europe in productivity and quality."

According to Peter Hines, deputy director of the Lean Enterprise Research Centre at Cardiff Business School, which contributed to the Andersen research: "We are developing a two-tier manufacturing sector, divided into those companies that supply the Japanese and those that don't. The Japanese are putting dramatically higher effort into supplier development."

Alan Marsh, vice-chairman of Toyota Motor Europe, explained: "We have seen 500 per cent increases in supplier efficiency since we started operating in Britain five years ago. Toyota works as a partnership: if a supplier has a problem, we work with them to overcome it - at no charge. I think the UK industrial base has been strengthened enormously in this way."

So those companies that get on to the Japanese delivery schedules receive a bonus: a series of on-site tutorials in Japanese trouble-shooting and production techniques.

Mike Gillett, plant director at Coventry Presswork, which supplies the fuel tanks to Toyota, said: "Toyota immediately worked with manufacturing when we started supplying them. Other customers tend to work with the commercial and purchase departments, but they came into the company and looked at the manufacturing systems. Their criterion is always, let's get the shopfloor working correctly first. If they can make us healthier, that's good news for Toyota. They always looks to the long term."

One of Toyota's most frightening requirements at Coventry Presswork was that the Midlands firm abandoned its traditional piecework system. Other firms in the industry had been brought close to closure when this had been tried because, as Mr Gillett put it: "The pieceworkers thought they were on holiday when they were put on a day rate."

Toyota, however, had other ideas. Its system is based on strong "visual control" by the management, so that any slackening in production volume or quality has to be logged promptly. But Mr Gillett denied that this created a "big brother" atmosphere, arguing that it produced more involvement and communication between management and workers.

Suppliers clearly see the potential prize of supplying the Japanese as well worth some inconvenience. Coventry Presswork started supplying Toyota after it had been taken over by Lebranchu, a French group, which realised it would have to buy a British company because Toyota insisted on production being sourced near Derby. When the UK firm was bought out from Armstrong Equipment in 1987 it was employing 260 staff to turn over £7m a year. Now 265 turn over £24m a year.

Lucas Industries, which has supplied Nissan, Honda and Toyota, echoes the benefits on an international level. John Grant, the Lucas finance director, said: "The Japanese have insisted that their suppliers adopt their practices, and that has been good for us. We have improved our performance, and that is a big marketing platform for us to be able to go to European car companies and say: `We can satisfy Japanese customers, so we can probably satisfy you.' "

In a still highly fragmented industry, the Japanese message is in turn being passed from the suppliers to their own suppliers. At Unipart, the former British Leyland components subsidiary, David Nicholas, managing director of the manufacturing operation, said: "We pass the methods down the line through supplier development teams. At the end of the day, if our suppliers are not supplying us products of the right quality, that affects us. They are the weakest link in the chain."

It is not just Japanese-related suppliers who are being upgraded: the mood is spreading to other industrial customers. Rover, owned by Germany's BMW, demands standards as high as the Japanese.

In the words of Mr Hines, the advice to any ambitious components maker today is: "Find yourself a world-class customer. They will be more demanding and push you. And if you are lucky enough to find the right sort of customer they will also teach you how to do it right."

Netherlands £13.15

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
news
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
i100
Arts and Entertainment
tvChristmas special reviewed
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all