SMMT calls for restart support as COVID-19 threatens industry jobs

A new member survey from the Society of Motor Manufacturers and Traders (SMMT) has revealed that up to one in six jobs are at risk of redundancy. With a third of automotive workers still furloughed, and the scheme coming to an end in November, the SMMT is calling on government to address this with a support package for the entire sector to help drive demand and ease cash flow.

The SMMT says that more than 6,000 UK automotive job cuts have been announced in June, a result of global lockdowns, closed markets and shuttered plants. Showrooms in England and Wales are now re-opening and production lines restarting, but reduced demand and social distancing are slowing productivity.

SMMT is calling for a support package with measures including unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence would accelerate a sustainable restart for the market and manufacturing.

Speaking today at the industry’s annual Summit, Mike Hawes, SMMT Chief Executive, said: "UK Automotive is fundamentally strong. However, the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid. A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy.

"Government’s intervention has been unprecedented. But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth. Support delivered now is an investment in the future of one of Britain’s most valuable assets… investment that we will repay many times over."

The pending jobs crisis is amplified by Brexit, the SMMT says, so fresh free-trade agreement talks is welcome. Certainty that a full, zero-tariff deal will be in place by the end of the transition period will give businesses on both sides chance to prepare, and help drive investment into the new skills, facilities and technologies that will be integral to delivering a zero-carbon future for the UK.

SMMT has published its second Annual Trade Report for 2020, UK Automotive Trade in a post-Covid World, with new figures highlighting the risk a no-deal Brexit would pose to the UK’s status as the world’s 10th largest exporter of goods.

The impact of the pandemic on manufacturing is expected to cut annual car and light commercial vehicle production volumes by a third to just 920,000 units this year. With an ambitious, tariff-free FTA in place, full recovery is expected to take up to five years, with output reaching pre-crisis levels of 1.35 million units by 2025.2

However, a ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953. This would mean a £40 billion cut in revenues, on top of the £33.5 billion cost of Covid-19 production losses over the period.