The motor industry has been on the up in the UK: production increased every year from 1986 to 1999, making it the fastest-growing of any of the major Western European producers. The industry employs 787,000 people across the UK and cars are a pivotal part of the UK manufacturing sector.

 
The West Midlands is the heartland of the UK car business: around 30 per cent of the industry is based there and it supports 16,300 jobs in production alone. MG Rover, Land Rover, Jaguar and Peugeot are the big names, but the region is also home to the smaller Morgan and Reliant motor companies and the van manufacturer LDV.
But actual car production is only one element of a large and varied business.

Component suppliers make up a significant section of the industry in the West Midlands with approximately 1,500 companies employing nearly 36,000 people. Selling and distribution of parts and accessories also accounts for a large chunk of the sector. Companies such as Halfords, AEW Ltd and Partco Ltd have their headquarters and major UK distribution centres in the region, and the big-name tyre companies of both Goodyear and Pirelli are based here.

The West Midlands is also enjoying its status as a centre for ‘niche’ automotive makers – small and medium-sized companies which produce up to 150 vehicles a year. Around 1,000 people are involved in making niche cars which retail anywhere from £15,000 to £500,000. This sector of the industry is in fact so successful that a ‘Niche Vehicle Network’, where businesses can share resources, knowledge and joint-marketing ventures, has been established, and 23 companies have joined so far.

But the future outlook for car manufacturing in the West Midlands is not quite so positive. Just last month, Peugeot announced that 850 of the 2,800 workers at its Ryton plant near Coventry have to go. The company blames increased competition in the small car market for the fall in sales of the 206.

It hopes the losses will come from voluntary redundancies, early retirement and redeployment, and they will reduce shifts from three a day to two in the summer. But the unions are already prepared for a fight against compulsory redundancies.

The long-running discussions over MG Rover, and the buyout of its historic plant at Longbridge by Chinese carmaker Shanghai Automotive Industry Corporation (SAIC), have also come to a head over recent weeks, and the two groups have now agreed terms. The deal would see some production moved from the Birmingham plant to China and the resulting job losses are expected to be heavy, possibly as many as 2,000 – a third of the workforce.

The situation at Longbridge is sensitive; the ‘Phoenix four’, a consortium of Midlands businessmen led by John Towers, bought MG Rover from BMW in 2000, with support from the government. But the group came under criticism as sales slumped and the company is now running at a loss of £80m a year. Despite further support from Westminster for the struggling firm, it is clear that without the Chinese investment, MG Rover’s survival is at risk.

Rover says production at Longbridge would continue with SAIC, but workers and unions in the West Midlands are nervous. SAIC is currently keeping the details confidential, but it is expected that the estimated £200m deal will be confirmed shortly. Chancellor Gordon Brown has vowed to do everything possible to secure the tie-up, holding talks with China’s premier and finance minister to push the case for the joint venture.

The current situation at MG Rover is a major turning point for the UK motor industry and one where the West Midlands finds itself at the centre of events. The next few months are likely to show just how strong the region’s hold on UK car production remains: for the time being the wheels of production keep turning – but it seems only a matter of time before Rover has to slam on the brakes.