Health of the UK Automobile Industry Research Paper

Health of the UK Automobile Industry - Research Paper Example The automobile industry contributes 0.73% of the entire UK GDP but over the last decade, the industry has not been witnessing as much growth as the other sectors (Jones 1983; NAIGT 2008). The survey by the New Automotive Innovative and Growth Team (NAIGT) suggested a few success factors. (NAIGT, 2008) The survey revealed that one of the success factors of the industry was the low level of unionization and the flexible working hours that were allowed in the automobile industry that reduced labor costs. In addition, it was discovered that although the UK government does not necessarily provide more subsidies than do governments in Western Europe, they do however provide a sufficient number of them and most of the subsidies are direct i.e. in the form of grants which helps the industry to function better in the region. Furthermore, the report said that the quality of the R&D resources in the UK was very high and that in relation to Western Europe and the BRIC countries the UK offered better after sales service. In comparison to the rest of the countries in the EU, the UK government has a system of lower taxation as well as R&D tax benefits in terms of tax rate relaxation. To this end, the scope for investing in the UK Automobile Industry increases especially since England offers a more hassle-free way of exiting the industry, given lower barriers to closing down. The NGAIT team collected a variety of information about what industry professionals thought was the drawbacks faced by the companies in the sector. Firstly, they all agreed that there was a shortage of skilled labor specific to the industry. Mostly, companies suffered from lack of skilled mid-level management and engineers. It came to be understood that most of the university an college going students do not opt for engineering and those of them who do predominantly take jobs in the financial rather than the manufacturing sector. Trends over the last decade show that although, as mentioned in the success factors, the quality of the R&D resources in the UK is very high, contrariwise, the expenditure on R&D has declined. In the UK, Ford, Jaguar, and Land Rover together spend about $1 billion annually on R&D, which accounts for 80% of the industry investment.