SMMT launches Safe Harbour Scheme to prevent insolvencies and save jobs

The Society of Motor Manufacturers and Traders (SMMT) has launched a scheme to help save jobs across the UK automotive industry and its supply chain, as firms in the sector battle the impact of the Covid-19 pandemic.

The industry initiative, dubbed the Safe Harbour Scheme, allows multiple companies to come together to support critical suppliers.

The scheme aims to help preserve the UK’s automotive manufacturing capability and capacity and prevent further damage to the industry and its supply chain which has seen at least 14,000 sector jobs already lost this year.

The scheme will allow struggling firms to work with experts to find ways to minimise the risk of insolvency, by engaging with customers, lenders, creditors and other stakeholders.

Other measures could include temporary improved payment terms, financial support or new partnership or investment opportunities.

SMMT said that the impact of the pandemic has had a “devastating effect” on the UK automotive sector.

It has left car producers struggling to ramp up operations with output down by 40.2% in the first eight months representing a year-on-year loss of 348,821 cars, worth some £9.5bn to the sector – losses the SMMT said are impossible to recoup.

Commercial vehicle production is also down by 20.0% in the year to date – equivalent to more than 9,000 units worth almost £730 million.

This has led to a loss of at least 9,000 jobs across the sector as a whole with an additional 5,000 lost in the UK supply chain.

The SMMT is warning this is likely to be just the tip of the iceberg, particularly since the sector is facing the twin challenge of a worsening global pandemic and the threat of post-Brexit trade barriers and tariffs which it says could “derail” the domestic supply chain.

Mike Hawes, SMMT chief executive, said: “With the UK automotive sector badly hit by the coronavirus crisis, thousands of jobs already lost and barely weeks left until a fundamental change of trading conditions with our largest market, the EU, the pressures on automotive businesses are immense.

“Inevitably, these pressures are going to take their toll on businesses, so the Safe Harbour Scheme has been created to help any suppliers in trouble.

“It should provide valuable breathing space as the sector restarts and business and consumer confidence recovers. Ultimately, however, the industry must maintain its competitiveness to grow and for that we still look to the government to deliver an ambitious trade deal with the EU.”

Judith Richardson, global purchasing director at Jaguar Land Rover and chair of the Automotive Council Supply Chain Group, added: “The nationwide UK automotive supply chain has been built over many years thanks to huge business investment and support from successive governments.

“It remains highly competitive, with world-class facilities and a productive and highly skilled workforce. This cannot be taken for granted, however, and the Safe Harbour Scheme, combined with appropriate government support, will be essential to ensure automotive businesses can continue during these extremely challenging times and help drive a green recovery for Britain.”

The Safe Harbour Scheme and framework has been developed by SMMT with support from major manufacturers, the Automotive Council and Department for Business, Energy and Industrial Strategy (BEIS), alongside ITP partners Deloitte, Grant Thornton, KPMG and RSM. It is available to any company operating in the UK automotive sector.

Companies interested in taking part in Safe Harbour can find out more and enquire in strict confidence at: www.smmt.co.uk/member-services/safe-harbour/