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 industry’s 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 billionSEK The transport equipment industry amounts to 15% of the total manufacturing industry Source: Eurostat

4. CONTENT • Overview British Manufacturing Industry • BritishAutomotive 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. VEHICLE MANUFACTURERS COMMERCIAL VEHICLES (206,753 vehicles) LIGHT TRUCKS (186,948 vehicles) HEAVY TRUCKS (15,619 vehicles) BUSES (1,431 vehicles) PASSENGER CARS (1,596,356 vehicles) (Weight < 3.5 t) (Weight > 3.5 t) 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. Passenger Car Production in the UK Development MAJORITY OF PRODUCTION FOCUSES ON PASSENGER CARS • 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: • Toyota’s 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 R&D • 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 R&D 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. 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. STABILITY IN PRODUCTION LEVELS MIRRORED IN THE CV SECTOR 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 R&D is being carried out by the suppliers • Environmental aspects and lower fuel consumption are of increasing importance R&D-displacement Source: STC

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

20. British automotive suppliers Geographical concentration of automotive suppliers THERE ARE ABOUT 9,000 AUTOMOTIVE SUPPLIERS IN THE UK- manyof the top 100 automotive suppliers are present in the UK • 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. TIER 1 SUPPLIERS 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 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 Power train, exhaust systems, engines • Auto Products Driveline Tech • Bearward Engineering • Bosch Automotive • Concentric Pumps • Cosworth • Dana • Cummins Engines 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. Birmingham 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 Birmingham Coventry 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. Kent 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. TIER 2 SUPPLIERS Electrical systems Interior equipment Propulsion Body Running gear 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 Cockpit, seats, dash-board, air conditioning • Aldridge Plastics • Alpha Gary • BBW Engineering • AB Automotive Electronics • Selectronic • Bloxwich • Copper & Automotive Washer • Lander • RH Technical Industries Power train, exhaust systems, engines • Brake engineering • Flexible Ducting • Gunning • Jenvey Dynamics • Mchenkie • Schaeffler • TRW • Copper & Automotive Washer • Heartlands • Lander 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 R&D 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 MINING LIFTING ROAD Excavators, wheel loaders, backhoe loaders, Skid steer loaders, haulers Wheel loaders, drills, haulers Mobile cranes, forklifts Graders, asphalt pavers, asphalt mixers • 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. Thame Redditch/Chester-le-street Desford 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 Accessories Electrical systems Propulsion and running gear Steel construction Hydraulics 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. Mansfield Dorset Telford Daventry / Darlington Peterborough Coventry Wrexham Gloucester Norwich Nuneaton Northampton Ipswich Ebbw Vale Gloucestershire Pontypridd T1 SUPPLIERS ARE LOCATED NEAR THE VEHICLE OEMS Tyne and Wear Tyne and Wear St. Neats Source: CEA 2005, Internet

49. Stevenage Airdrie Leicester Shipley Burton-upton-Trent Tipton Surrey 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 Newtechnology Source: STC