SMMT launches job protection scheme
After launching a scheme to protect apprentices yesterday, the Society of Motor Manufacturers has now introduced a new initiative to protect jobs in the wider industry.
The Safe Harbour Scheme, which is supported by the Automotive Council and government, provides a mechanism for automotive businesses to engage with their customers, lenders, creditors and other stakeholders to find ways to minimise the risk of insolvencies.
Given the integrated nature of automotive supply chains and reliance on just-in-time manufacturing techniques, if one link in a chain hits trouble it can undermine all the companies involved, including vehicle manufacturers, threatening an entire sector. The Safe Harbour scheme seeks to provide a legally compliant structure through which collaborative solutions can be found to support companies at risk and the entire production supply chain safeguarded.
The process begins with a confidential conversation between a company experiencing difficulties and SMMT to determine if they want to proceed, and there is no obligation to do so. For businesses deciding to enter Safe Harbour, SMMT facilitates engagement with all relevant stakeholders and an Independent Third Party (ITP) to identify and implement measures to ensure business continuity. These need agreement from all parties and could include steps such as temporary improved payment terms and/or financial support or a new partnership or investment opportunities.
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, Jaguar Land Rover and chair, Automotive Council Supply Chain Group, said: “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.”
Output down 40.2% in the first eight months of the year, representing a year-on-year loss of 348,821 cars, worth some £9.5bn to the sector. This has led to a loss of at least 9,000 jobs with an additional 5,000 in the UK supply chain.
