A specialist automotive team has been created by Clydesdale and Yorkshire Banks to support businesses in the manufacturing supply chain as it looks to build on its growing customer base. The new team has proven experience and expertise of working with tier one, two and three manufacturing businesses and understands the challenges and opportunities faced by the sector.
The team has been set up to support full banking requirements for these businesses albeit with a particular focus on those which require tooling finance. Manufacturers in the supply chain typically invest between £30,000 to £1m for each new piece of tooling, but tend not to see a return on that investment for around 18 months. The Bank’s financial support includes a rolling tooling finance facility which allows automotive manufacturers access to funding as and when they require new tools, rather than having to apply for funding every time a new component is required.
The new team will be led by Kevin Rimmer, Clydesdale and Yorkshire Bank’s Head of Manufacturing, and Automotive Director Heather Griffin.
The Bank’s increase in support comes at a time of confidence and growth in the UK’s car manufacturing sector. According to The Society of Motor Manufacturers and Traders, last year 1,528,148 cars were manufactured in the UK, a 1.2% rise on the previous year. This was a strong performance despite export values falling slightly on the back of difficult overseas markets particularly against a backdrop of slower growth in the EU – the UK’s largest export market.
Kevin Rimmer said:
“The UK’s car manufacturing industry is growing in confidence and productivity to meet consumer demand for more innovative and energy efficient vehicles.
“This growth is being fuelled by £7bn worth of investment in production facilities announced over the last two years. As a result of investment in new models, machinery and plant, the entire supply chain is set to benefit and invest in the market with further growth expected in 2015.
“The Automotive Council estimates the value of opportunity for tier two and three suppliers to be in the region of £2bn. This is in addition to the £3bn worth of opportunity for tier one suppliers. In order to meet that level of demand, the supply chain will be investing in tooling and also new people, equipment and premises.
“We are delighted to play our part in supporting the growth of the automotive manufacturing sector by providing a flexible and specialist approach.”
Michael Mychajluk, Jaguar Land Rover Supply Chain and External Engagement Manager and Automotive Council Supply Chain Group Member, said:
“The Automotive Council Access to Finance workstream has been talking to the major British Banks on how the automotive industry operates and the opportunities for growth that exist in the supply chain. The great news is that the banks have listened and actioned support through new bespoke lending solutions.”
Many UK automotive suppliers are benefiting from the sustained growth in the sector but need to extend their working capital facilities to help meet this opportunity.
One such business supported by Yorkshire Bank is tier one supplier, Tipton-based CAB Automotive which supplies interior trim parts to the automotive industry. A Yorkshire Bank customer since 2010, as well as full-banking support, CAB Automotive has benefitted from flexible tooling finance facilities which have enabled it to grow and target new markets.
Richard McCulloch, CAB Automotive’s group finance director, said:
“Yorkshire Bank has taken the time to understand the sector and our business. The team provides us with funding which is bespoke and structured to meet our immediate and long-term growth requirements.
“While the UK automotive manufacturing sector is growing and the prospects for future growth are positive, it is still a competitive marketplace. This is particularly true for smaller, privately-owned suppliers such as ourselves who are competing against larger pan-European manufacturers.”