Jaguar Land Rover have today confirmed that as of 2016, a total of three JLR-badged vehicles will be built at their new Chinese plant with a total capacity of 130,000 units a year. Is this a worrying sign of things to come from the Indian owned company?
For the first time in their history Jaguar and Land Rover cars will be made outside of the UK. The first model to be produced in the 40,000 square metre Jiangsu site will be the popular Evoque sport-utility vehicle. However, JLR bosses have been quick to rebuke any accusations that the move undermines their commitment to their UK manufacturing operation. They suggest that the £1.9 Billion investment in China will allow them to avoid paying import tariffs, source parts more cheaply and more efficiently, and benefit from lower labor costs. Currently, JLR imports its cars into China from the UK, which they say puts them at a cost disadvantage with rivals. They have made no mention of any plans to import these new models back into the UK. Only time will tell but it if that does happen it will surly be a kick in the teeth for UK automotive manufacturing.
My understanding is that Chinese government controls are such that ALL foreign car manufacturers have to have a local joint venture partner in order to operate in China. So sadly, this is inevitable. Likewise, rumours are afoot that JLR will commit to a factory in South Carolina, USA in order to serve USA customers and avoid stifling import tariffs….. You may also have read that BMW will be making MINI in Holland (bought an old Volvo factory). The common factor in all of these is cost and being close to the market. Sadly that’s the way the world works. I want to see pressure applied on BMW to invest more heavily in MINI Oxford Plant to expand production here.
Having invested so much money and tripled the workforce in their UK plants (including the new engine plant) it would seem unlikely they have plans to move production as such. This is local production for the Chinese market as the German companies already do and is only really happening because of the artificial tariff regime. The costs of car production in the UK is now very competitive which is why the automotive industry has been doing so well in recent years. There is also a renewed push for the supply chain, so as long as there are plenty of markets that are more open with low or tariff free trading terms plenty of JLR’s vehicles will continue to be produced in the UK and exported. I wouldn’t mind betting there will even still be a small demand for UK made cars to be imported into China as some customers their will be prepared to pay the extra import duties for a genuine UK made model.
The comments above are totally right. They are building cars already in India, and have plans for factories in Brazil and Saudi which will serve their respective markets, I am not sure that the USA factory is likely at the moment given the Brazil foothold. Transportation of whole cars is a massive waste of energy really, and the lead times and damage factor can cost a business quite heavily. Note that all these areas are massive growth markets and JLR is still only a very small company with tiny market shares in most regions/sectors.
One of the biggest concerns for the UK though, is component localisation – I know China has a rule that if you manufacture a car there then you have to source a significant % of the parts there – this is to ensure “knowledge transfer” into the supplier base – JLR need to be very careful that their technological advantages don’t start to leak! I am not sure how much of JLRs components are still made in the UK, but more might disappear given govt-aided strategic pricing incentives in developing economies.
It’s an inevitable consequence of moving manufacturing to the Far East & subcontinent. Shame on British industry for letting this happen. Always bear in mind that whatever we’re reassured about manufacturing staying in UK when this happens, do not believe a word of it! Dyson are another example of great British tech going overseas. But that said, is this historical? Look at railways. What could have been the case if UK patented back then? There are many other examples of great British ideas & inventions slipping out of our hands.
Luckily it works both ways, and we have benefited massively from the technologies and methodologies as well as employment and economic factors from the likes of Toyota, Nissan, Ford and Honda setting up big operations here.
We need to prove our worth and evolve to compete, and unfortunately that also means convincing people that qualities inherent in UK manufacturing are worth the extra pennies. But with the middle-classes talking the talk then walking to Aldi & Lidl… it’s a tough fight!
The UK may have benefitted from Japanese companies making cars in the UK, but only from the employment of UK labour. We have not benefitted from their technologies, or learned anything about their style of management.
Where are these BRITISH car companies springing up as a result of this learning?
As well as losing production we are also losing our ability to spell. ” and benefit from lower labor costs”. Are we letting Americanisms take our language. Next campaign save the U !