When UK car manufacturing falls, as it has done for the ninth consecutive month, the effects are not only felt in that industry but in the whole of the supply chain. A report by the Society of Motor Manufacturers and Traders (SMMT) in March found that production for the home market had fallen by 11%, with the export market seeing an even greater decline, dropping by 16.4%. It is widely accepted that the huge drop in exports to China, at less than half of last year’s sales, is set to continue, due to the slowdown of their economy.
How does this affect the supply chain?
While car manufacturers understand the need make up for having let the grass grow under their feet, and find alternatives to the once-lucrative Chinese market, the successful industry suppliers have long known that diversifying into other sectors is the secret to guaranteed regular orders. This not only helps the supplier but, in turn, it helps the car manufacturer, who wants the assurance that, when the market picks up again, as it always does, their long-standing suppliers are still around to pick up demand again and are still able to offer consistent quality.
What does the supply chain need to do to survive?
Two words; diversity and quality. The same company who specialises in silicone moulding, used in making wiper blades for a car manufacturer, for instance, might also be supplying rubber seals and other critical components to the aircraft industry. If they have made a strategic decision early on to diversify in the number and type of components they make then they should be able to weather a fall in car manufacturing.
As stringent as quality controls have to be in the aerospace industry, companies such as Meadex, who supply both sectors, benefit from applying this universal oversight in the manufacturing processes of all of their products http://www.meadex.co.uk/silicone-mouldings.
The SMMT recognises the important role of suppliers to the automotive industry and has established the Supply Group Chain, which is a collaboration between government and automotive suppliers – https://www.smmt.co.uk/industry-topics/uk-automotive/supply-chain/.
Once the car market picks up again, after the uncertainty of the Asian markets and the UK’s future relationship with the EU, car manufacturers are going to need the assurance that their long-standing suppliers can meet their increased demands, without compromising on quality.