Date of issue: 12th May 2009

WEAK POND HAVING A POSITIVE IMPACT ON THE UK'S AUTOMOTIVE ENGINEERING INDUSTRY

While the automotive industry and manufacturing in general are feeling the brunt of the recession Michael Meakin, a partner at chartered accountants Clement Keys who specialises in motorsport, entertainment and the media, and Sharon Quaife-Hobbs, sales and marketing director of RT Quaife Engineering Ltd, a world leader in the design, development and engineering of automotive parts, agree that the weak pound is having a positive impact on the UK’s automotive engineering industry.  

“The UK is renowned the world over for its automotive engineering expertise, especially in international motorsport, and companies operating in this area are benefiting as the drop in value of the pound against the euro is giving a welcome boost to productivity,” says Meakin. “Foreign racing teams are choosing to purchase components from UK-based suppliers because the currency situation means it is more cost-effective and this, in turn, will help save UK jobs.”

He also says the currency situation has led to European and American drivers wanting to contract with British teams, race in British series such as Formula 3 and pay for their racing in sterling because it is cheaper for them than going racing in Europe . Indeed, this is a view echoed by Daventry-based Fortec Motorsport, which has competed in a number of high-profile championships during the past 12 years and recently signed Spanish driver Victor Garcia to contest the 2009 Cooper Tires British Formula 3 International Series.  Similarly, foreign drivers are more likely to consider using British teams to compete in European series such as Formula BMW Europe or the various Formula Renault championships because it will be more cost effective in the current climate.

Whilst the weak pound is cause for concern in many areas, it does create positive opportunities for the UK ’s motorsport industry, many of which are located in the West Midlands and along the M40 corridor.  R T Quaife Engineering Ltd, which is regarded a barometer for the industry because it sells specialist products in large volumes and has experience as a supplier, sponsor and competitor, is reporting a surge in orders from the EU.

Established in 1965, Quaife is a leading designer and manufacturer of driveline and steering rack components for cars and motorcycles plus other advanced transmission and upgrade parts for road and motorsport.  It exports in excess of 70% of its production to an expanding global market. “Last year we posted our best ever sales results for the month of December thanks to the latest economic developments,” says Quaife-Hobbs. “We’ve seen a major increase in business from Europe and although there hasn’t been such a marked response from the USA as yet, teams just don’t seem to want to spend, this could well change in the coming months.”    

Honda’s announcement last December that it was pulling out of Formula One sent shockwaves through the sport and fuelled criticism of the multi-million pound budgets required to compete.  However the move to keep costs down and the success of Brawn GP has meant that the season has got off to a great start.  Four high profile wins for the UK ’s Jenson Button has provided even more of a feel good factor for the UK Industry, “The demise of the Honda F1 team would not only have impacted on the 700-strong workforce employed at its base in Brackley, but would also have had a knock on effect in terms of employment within supplier businesses,” says Meakin. “The FIA and the constructors have worked hard to reduce the costs to ensure the season started well.  As a result we are experiencing some of the biggest changes F1 has seen in 25 years, without any detrimental effect on spectators’ enjoyment.”

Technological development is the lifeblood of Formula One and new for 2009 is the Kinetic Energy Recovery System – a device that recovers the energy normally wasted under braking and converts it into power – which the drivers will be able to employ during overtaking manoeuvres and at key parts of the circuit to improve their lap times.  Each team will only be allowed a maximum of eight engines this year, while slick tyres are back after an 11-year absence and there are new rules regarding aerodynamics: the latest cars will have more grip but less down force, so they will still be slower than their predecessors.

“Industry estimates put the F1 teams’ collective expenditure for the 2008 season at£2 billion and while there is a long way to go to make the saving the FIA is committed to achieving, the new measures introduced for 2009 are expected to help reduce costs by 30%, which can only be good news for all involved,” says Quaife-Hobbs.  

Although the motor industry is going through a very difficult period Mr Meakin says motorsport remains a showcase for the UK , thanks not only to its innovative design, precision and high performance engineering companies, but also to the event management, marketing, PR and sponsorship businesses that have grown up around it.  According to UK Trade & Investment, motorsport employs some 40,000 people, including 25,000 skilled engineers, and contributes over £5 billion a year to the UK economy. “It’s encouraging that the economic situation has provided an upside for motorsport, but it is investment in the automotive engineers of the future that will ensure the industry is well-placed to thrive over the long term,” adds Michael Meakin. 

“There are now around 25 UK universities and colleges offering motorsport engineering courses – last year we helped a group of students from the University of Birmingham who are keen to make their careers in motorsport by supporting their entry in Formula Student – and the qualifications are still recognised as some of the best in the world.”