The UK government’s Department for Business and Trade has launched a Critical Imports and Supply Chains Strategy to safeguard the supply of goods including minerals and semiconductors, seen as essential for the future of the country’s domestic automotive industry. It also includes measures to protect other manufacturing sectors as well as pharmaceutical supplies.
The strategy aims to bolster manufacturing and pharmaceutical supply chains against global trade disruption in light of events including the Covid pandemic, Russia’s invasion of Ukraine and, more recently, attacks on cargo vessels in the Red Sea. Last week Suzuki and Volvo announced production stoppages because of supply shortages caused by the disruption by Yemen-based Houthi rebels.
The new government strategy outlines that an unrelenting demand for vehicles in the face of unexpected disruption, including the shortage of semiconductors in the wake of Covid, put unexpected pressure on the automotive industry’s highly concentrated supply chain.
The government paper acknowledges that automotive supply chain constraints are particularly significant for EV batteries, including the battery packs and the critical minerals needed to make batteries in the UK. It is taking a number of actions to help build resilience into the EV supply chain. Those actions include funding for British Lithium’s pilot plant in Cornwall through the Automotive Transformation Fund (ATF), and Innovate UK, as well as the £2 billion ($2.5 billion) Advanced Manufacturing Plan.
Guidance on risk
The Department for Business and Trade said the Critical Imports and Supply Chains Strategy will provide guidance for businesses on supply chain risks and the practical steps for greater protection, including regular updates on such things as export bans on critical everyday goods imposed by other countries. It said the strategy would include an online portal to enable businesses to quickly report red tape or disruption affecting their critical imports, which the government will then work to remove to save those businesses time and money.
The strategy includes a Critical Imports Council to enable it to work with businesses on identifying risks to critical imports and develop responses.
From an automotive perspective the strategy has been welcomed by the Society for Motor Manufacturers and Traders (SMMT).
“With our success powered by complex global supply chains, the automotive industry has been pleased to help shape a new strategy that will support manufacturing agility and responsiveness,” said the SMMT’s chief executive, Mike Hawes. “As we accelerate production of the cleanest and greenest vehicles, and the batteries they need, such a strategy is essential and we look forward to continuing this vital engagement to boost Britain’s resilience and competitiveness – essential to the continued success of the UK as a top tier investment destination for the automotive sector.”
In its guidance on the strategy the government said that successful impact relied on close partnership between government and business. More than a 100 UK firms are working with the government, including those represented by the SMMT, as well as the Green Lithium, the mineral processing company that is planning to build and operate a large-scale lithium refinery in the UK.
“While government bears responsibility for ensuring the UK’s resilience and security, and for supporting growth across the economy, business owns the vast majority of the UK critical supply chains.”
Source: Automotive Logistics