Some firms reinvent themselves in the battery era, but others struggle as work moves abroad
Corners of the Alucast factory in the Black Country would be familiar to metalworkers several centuries ago. Workers pour molten aluminium at 720C into steel moulds.
The cooling metal is then quickly pressed into shape before being sanded down into parts for gas-guzzling British sports cars.
Yet for all its traditional West Midlands manufacturing roots, Alucast is finding a role for itself in a fast-growing new industry: electric cars.
It needs to make the switch fast. The UK will ban the sale of all petrol and diesel cars by 2035, and other big car markets are following suit. The accelerated end of the internal combustion engine surprised and delighted environmental activists and has proven politically popular. Yet it has thrown into sharp relief the peril facing workers in the fossil fuel economy, who risk being left behind in the energy transition.
Nowhere is the challenge more acute than in the West Midlands, the traditional heart of British carmaking, home to companies from Jaguar Land Rover to Aston Martin, as well as an army of suppliers. The region hosts a third of all British car production and a 46,500-strong factory workforce – nearly a third of the UK total, according to the West Midlands Combined Authority.
New battery-powered technology will change the structure of the whole industry. Electric cars are mechanically simpler, with fewer moving parts, and carmakers are looking to bring more work in house.
“There is the potential to maintain a viable [UK] automotive industry, but it probably won’t employ as many people,” said David Bailey, a professor of business economics at the University of Birmingham.
The whole car industry – from the biggest brands to the smallest suppliers – has been forced to re-examine business fundamentals, and in some cases look for new ways of using their products.
For Alucast, that has meant bidding for work making parts such as battery casings. It has also invested millions of pounds in more precise computer-assisted machining, and is trying to persuade carmakers to use more lightweight aluminium rather than steel.
“They need lightweight components because the battery is so heavy, so what they’re trying to do is take out weight all the time,” said Tony Sartorius, Alucast’s chairman.
Yet in any transition of the enormity and speed facing carmakers, there will be losers. The West Midlands already has its fair share of companies that failed to keep up. Longbridge, the former home of British Leyland and its successor MG Rover, now houses a Marks & Spencer and flats named after its once-famous Austin cars. The Jaguar Land Rover factory at Castle Bromwich made Spitfires during the second world war, but its mass production days will end in 2025 – although Jaguar will still use the site for specialist operations.
GKN’s Erdington factory in Birmingham can now be added to that list. The venerable company traces its history back to 1759 in a south Wales ironworks. GKN has big electric car ambitions, with plans to grow at twice the rate of the market, a top executive trumpeted in an August interview. But those plans do not involve the UK, where it will close its last plant next year. Some work will instead go to lower-wage Poland.
The promise to invest elsewhere provoked anger among Midlands employees about to be made redundant. “We’re a proud British company with a huge heritage and they’re picking on their British factory,” said one worker, who asked not to be named.
The Erdington closure decision came only three years after the hostile takeover of GKN by Melrose, a FTSE 100 private equity outfit,provoking fury in the Midlands.
Simon Peckham, Melrose’s chief executive, said he understood the frustrations of the workers at Erdington, but argued that the factory was loss-making and that investment would create a “white elephant” in the West Midlands. That is strongly disputed by unions and local politicians. A former senior GKN executive said there were no plans to shut the factory before it was taken over.
“All sorts of promises were made about a bright future,” said Jack Dromey, the Labour MP for Birmingham Erdington. “Three years later those promises have been betrayed.”
The GKN factory made drive shafts for petrol and diesel vehicles. Unions and experts including Bailey believed the plant could have had a viable future. However, everyone acknowledges that many suppliers are hamstrung by carmakers’ uncertainty over future requirements.
“The [carmakers] have got to finally make their mind up as to where they locate and invest,” said Dromey. “I understand the enormous pressures on them, but here we are in 2021, with 2030 not that far away.”
Des Quinn, national officer at Unite, a union representing workers in many automotive factories, said the Automotive Council – a committee made up of car executives and government officials – should help map out what the industry needs so that suppliers can go ahead and invest in moving to the newer technology.
“I can only see distress if government doesn’t get the industry sat down and talking about what it needs to do,” Quinn said.
Bailey suggests there is some comfort to be taken from the failure of MG Rover in 2005, one of the UK automotive industry’s most bleak chapters. Before it collapsed, the government’s Manufacturing Advisory Service (MAS) and regional development agencies helped suppliers to diversify into areas like premium cars, aerospace and even medical technology. 12,000 supply chain jobs were saved, according to Bailey’s research.
Austerity put paid to that support. The Conservative-Liberal Democrat coalition government scrapped the MAS and the regional agencies, replacing them with public-private local enterprise partnerships (LEPs). Those replacements have been underfunded, Bailey said.
Batteries – by far the most expensive parts of electric vehicles – will be crucial to the fate of Britain’s car industry. Britishvolt, a startup, is hoping to raise money for a so-called gigafactory in Blyth, near Northumberland, while China’s Envision will expand a plant in Sunderland beside Nissan’s car factory. Yet the West Midlands is still waiting for a battery factory that would give its tens of thousands of workers hope for the future. Such is the concern that Coventry’s politicians have pre-emptively applied for gigafactory planning permission despite lacking an investor.
However, local energy infrastructure may need expensive upgrades, according to a person who has assessed the site. The developers insist the energy supply will be more than adequate, and that several foreign companies are discussing possible investments.
Andy Street, the former John Lewis boss who is now the Conservative mayor of the West Midlands Combined Authority, said that the site can be “operational ASAP once a commercial negotiation between supplier and customer concludes”.
Waiting for the customer – almost certainly Jaguar Land Rover – to decide may not be an option for suppliers, who risk being left behind if they do not move quickly.
Brandauer, based in Birmingham’s Newtown, is closing in on its 160th birthday. Yet bosses at the precision metal stamping company, which employs 60 people, realised about five years ago that they needed to start targeting the next generation of cars, or faced losing a large chunk of their business.
It has now branched out into metal lamination, producing plates that are being used in hydrogen fuel cells, a technology that could fuel zero-emission lorries. The new customers have helped it to its best year of new business on record.
“It’s not too late,” said Rowan Crozier, Brandauer’s chief executive. “It’s never too late, [but] it’s certainly time to start thinking about how you’re going to transition. The demand isn’t here yet, but it’s coming.”BUSINESS NEWS • ECONOMIC NEWS • In Business • MAKE MONEY