SMMT Annual Dinner, 28th November

2006 President's Speech – Roger Putnam

'Welcome to the 90th SMMT Annual Dinner. I am delighted to see so many friends and colleagues from the industry here tonight and am particularly pleased to welcome our principal guests, firstly an old friend and colleague Sir Nick Scheele, Boris Johnson MP and the Rt Hon Margaret Hodge, minister of state for industry and the regions.

It's been a year since I last stood before you and much has happened in that time apart that is from retiring from Ford Motor Company (which my wife refuses to believe). You might have read nothing but bad news, factory closures, moves to Far East production bases and such, but I can assure you there's been a hatful of positive news in the last 12 months too.

Now I know that given the current conditions in some of the Industry this will be the only square meal you’ll get this week and you want to get on with it, I'm not going to rattle through a long list of good news stories. But I do want to make clear one very important development for which the entire industry in this country should be proud; it's something that has added weight since the publication of Sir Nick Stern's report into the economic impact of climate change.

Consider this: if I were to tell you that, as a result of the Stern report, UK vehicle manufacturers were about to be forced to halve energy used and CO2 in the production of every car, van and truck, you might be concerned. If I told you we'd been given four years to do it, you might think it an impossible task.

Well, here's the good news. It's not going to happen.

Here's the even better news. It already has.

In September, the SMMT published its seventh sustainability report. This documented the huge progress made by the industry to improve productivity AND drive down emissions from vehicle manufacturing in the UK.

You may not have heard about it. We shouted loudly at the time but the media didn't share our enthusiasm for this important environmental story. So I'm going to take this opportunity to say it again.

The UK motor industry has halved the energy and CO2 produced to make each vehicle at sites across the UK. And it's done it in four years. 10% of what's sometimes described as 'cradle to grave' CO2 comes during the production process, so that's a hell of a sustainability drive.

We haven't done this because we've been forced to, nor cynically jumped on an environmental bandwagon. The reason we've made progress is because a leaner, greener motor industry guarantees prosperity.

Manufacturing sites are one thing; but we're also making progress in our products.

One of the events I was most proud of supporting this year was the British International Motor Show, a platform for many of the biofuel, hybrid and cleaner diesel technology models coming to market. Some of our colleagues at IMIE, the show organiser, are with us tonight. They, too, should be proud of what they have done to raise the profile of the UK motor industry and to present a motor show with a clear emphasis on our environmental responsibility.

At the outset we gave them a tough brief: take an event with declining audiences, an industry unconvinced and a cynical media. Then turn it into a major success.

By any measure they delivered a ground-breaking show. We were back in London, there were a hatful of genuine world launches, a prime minister's reception for global CEOs, and a keynote conference looking at sustainability issues.

It put Britain back on the international radar, a modern, compact show, hosted in the world's most vibrant city.

We can now look forward to 2008. The building blocks are in place and we will expect full manufacturer attendance. Because, while 2006 took us back to the premier league, we can only become the Chelsea of international shows if the industry is United behind us.

Motor show wasn't the only successful event this year. The commercial vehicle show was one too. Sometimes partnerships can be rocky, even those at the centre of government (allegedly). But the commercial vehicle partnership involving the SMMT, Road Haulage Association and the Institute of Road Transport Engineers delivered the most successful CV and ATS show in years.

Just some of the highlights: record number of van and truck launches; 672 exhibitors and a 10% increase in business visitors to more than 30,000. Business was brisk.

And of course the show is not just about vans and trucks; it includes ATS, the automotive trade show, a showcase for companies in the aftermarket, bodyshops and those who supply garage equipment. Many of you are here tonight.

The CV Show Partnership brings breadth, unity and a joined-up approach. Most of all it does the business. No wonder exhibitors are already signed up in droves for 2007.

So much for 2006…. let's briefly look to the future. You will know that each year, part of my task as SMMT president is to oversee an annual survey, pooling the views of around 100 senior industry executives. Many of you contribute, answering questions about business confidence, threats, opportunities and future prospects. It's an annual, health-check that has become a hugely important tool for SMMT.

This is the survey's fourth year. So themes are emerging. I want to focus on just two tonight, skills and over-regulation. Put simply, we need more of the former, and less of the latter.

Let's start with skills and education. Encouragingly, this year 49 per cent of companies said they had no problem finding suitably skilled employees compared to 33 per cent in 2005.

However, that means around half have difficulty and the message is that Level 3 skilled people remain the most difficult to find.

Tonight I want to praise the work done by the Automotive Academy, Sector Skills Councils and others to raise the bar. Government has acknowledged the lead taken by the motor industry, using the Automotive Academy as the template for all National Skills Academies, including the manufacturing academy launched last month.

But it's clear that there's still work to be done. And not just in training people who are already working within the industry. We need to encourage school leavers to see ours as an aspirational industry in which to develop a career.

Inside the industry we know about the breadth of career options. But, how many school kids see beyond the oil and spanners of ‘under the arches’ in Eastenders, and into the varied opportunities in areas like design, logistics and IT. I suspect that many see ours as a sunset sector, when the reality is quite the opposite.

The motor industry does have a bright future and there is optimism among UK-based companies. 82% of those surveyed said their company's business prospects are good in the next five years, compared to 74% when we first started the survey in 2003.

Let's be clear; no one is blasé about competition, particularly from emerging markets. In order to compete on the global stage, companies here and across the European mainland have to be on their game. They must be leaner, keener and greener.

Productivity has moved on in spades particularly in the UK; inward investment at car plants like MINI, Nissan and Honda and ongoing investment at my old employer, Ford, demonstrate that we can hold our own.

But it's the burden of over-regulation that continues to threaten future prosperity. Every year the survey says the same thing. Simplify the regulatory environment in which we operate.

Because it's true that the industry faces a bewildering array of conflicting rules - on safety, vehicle emissions, recyclability, construction and use, energy consumption, emissions trading and employment law. The costs can be crippling, the effect on competitiveness grave.

Of course, controls are important; but so is an industry worth £46 billion a year to the economy. An industry supporting 800,000 jobs, 200,000 of which come in manufacturing and with exports valued at around £24 billion.

Better regulation drives down costs and the process starts with the EU. European Commission vice president Gunter Verheugen recognised this and set up CARS21 last year. This high-level group featured commission members, national government representatives, the industry and trade unions and NGOs. The aim was a sympathetic regulatory framework for the 21st century. In other words, a plan to stop the auto industry being regulated out of the continent.

And the principles adopted by CARS21 – like impact assessments, joined-up policy objectives and proper consultations - are equally applicable at a UK level as well as Europe-wide. No point in better regulation in Europe if the UK decides to go it alone….and we have seen the occasional sign!

Government needs to be clear on this because our survey results show an industry with deep concerns about regulatory overload and ever mindful of the effect of unilateral action.

There is no doubt that the UK has a future in automotive, and after dinner we'll hear if Sir Nick Scheele agrees. But the reality is clear to all of us; more manufacturing will move east if over-regulation counter-balances progress on productivity and sustainability.

That's not good for automotive, the largest manufacturing sector in the UK. And it's certainly not good for the British economy. I know the Financial Services sector is not so complex and therefore very seductive but let's not forget that the Industry, the motorist and the road haulage operators provide around £60Bn to the Exchequer. Quite important I think.

Now, this is my last official function as SMMT president. I've been enormously privileged to serve the industry in these challenging times but I'm leaving you in more than capable hands. Before I call upon the SMMT’s new President to say a few words can I just thank all the management and staff at Forbes House for providing me with advice, support and friendship over the least two years, particularly Christopher and Seftton Samuels.

Now would you join me in welcoming to the stage SMMT's new president Graham Smith, senior vice-president, Toyota Motor Europe, to say a few words.'

Graham Smith's speech

'Thank you for that very kind introduction Roger.

Can I also take this opportunity on behalf of everyone within our industry to thank you again for all your time, effort and commitment in representing our industry so successfully during your presidency. You have been an excellent ambassador.

Minister of State, my Lords, ladies and gentlemen. It is a privilege and a great honour to have been elected as the new president of the SMMT.

It is also a rather humbling moment for me as I am acutely conscious that I follow in the footsteps of some illustrious industry colleagues, many of whom are here tonight. Gentlemen, I hope I can live up to the example you have set and continue to promote successfully this tremendous industry of ours.

There is no doubt in my mind that 2007 will be something of a watershed for us and a year that presents enormous challenges for our sector.

One of my top priorities as president will be to work tirelessly to promote the achievements of our industry and the significant contribution our industry makes to the UK as a whole.

I know that all of us in this room take our responsibilities very seriously - particularly in driving the industry towards a sustainable future. There may be some sceptics of course; some people who would seek to belittle our progress. However, as we have just heard, the evidence is demonstrable and we should ensure that everyone understands the significance of those achievements.

I am determined to share this progress with our key stakeholders and drive home our commitment to go further. My message as president will be that ours is an industry investing in the future. It is open and honest about progress and is not in the business of empty gestures.

I think this is crucial because our image has been a challenge for us in so many different areas - and not just on the environment. And image matters. It can be the measure by which policy is made, reports written and by which our customers judge us.

Rightly or wrongly, each year our SMMT survey tells us there are some tough challenges to overcome. Members express concern that our activities are not fully understood or appreciated within wider government and this perception has changed very little since the survey first began.

We must address this challenge in a positive way and I believe success will only come through greater cooperation. We must be open and honest with Government - to earn full recognition for the areas in which significant progress has been made. If we fail, the temptation to regulate may be hard to resist.

But I do not think Government instinctively wants to regulate. Regulation is time-consuming, costly and does not always guarantee a specific outcome. So our challenge is to ensure Government understands our situation and works with us to resolve our problems through discussion not prescription. And indeed I have been encouraged by clear signs of progress.

On skills, Government policy to form broad based national academies will certainly help, particularly in the area of manufacturing. But we need to go further.

As well as equipping those already in our sector with the skills they need to make a difference, we also require government support to encourage youngsters to look to our sector in the first place, to exploit the huge range of career opportunities that exist.

We want school leavers to see us for what we are – a sector with breadth, diversity and a bright future. Jointly our message should be this: if you want a rewarding career, if you want to make a difference, then automotive should be your first choice; there is no more exciting industry.

Roger has already highlighted the major achievement of the UK industry in halving the energy and CO2 produced to make each vehicle. This dramatic improvement at our production sites has helped underline our industry's environmental commitment.

This progress is also reflected in our products. There are many examples. The auto industry is clearly one of the most genuinely technology-led and innovative sectors in the UK. Ever cleaner and more fuel efficient petrol and diesel powertrains, stop-start technology, bio fuels, hybrid powertrains and leading edge safety related technologies – just some of the innovations that are delivering the future today.

We need to acknowledge this technological progress – and to shout about it. It's real, it's industry driven and it's impressive. Government should rightly continue to challenge our industry, but on the other hand it needs to continue to help support technological progress, to ensure the infrastructure is in place for new fuel types and to make incentives available to drive customer demand.

But our image is not flawless. In standards of sales, service and repair, for instance, we clearly have room for improvement. And I am in no doubt about that.

Of course I can stand here and tell you things are improving. I can say we are a vibrant, high-tech sector with a wealth of opportunities, that we are open and honest about progress. But if the experience of the most important person we know – the customer – is a poor one when he or she visits the service centre or new car showroom, then all my words ring hollow.

Our relationship with the consumer comes into sharp focus in the way they are treated, and the way work is undertaken when their cars are serviced or repaired. It's something that we have talked about for years and an issue that affects 30 million car owners nationally.

Well - the talking has now stopped; the clock is ticking towards September 2007 – that's the date when we need to demonstrate that we have put our house in order.

Make no mistake, as your new president this will also be one of my priorities: to support the work of the Retail Motor Strategy Group and see the new Code of Practice through to fruition.

That's not just about improving our image. It's about driving up standards of customer care.

So ladies and gentlemen, let me say once again what an honour it is to be your new president. Be assured you can count on the same levels of commitment, drive and energy as shown by all my predecessors. And I know that, with the excellent team at the SMMT and the support of you, my industry colleagues, we can have a successful year ahead.

Minister, Lords, ladies and gentlemen: thank you for listening to me - and please enjoy the rest of the evening.'