The downturn in car manufacturing caused by the recession has triggered serious problems in the automotive logistics sector, with carriers saying they are experiencing unprecedented falls in business. Following last week's announcement by Honda of a four-month closure at its Swindon factory after its net profit plummeted by 89%, new-vehicle logistics operators are warning that hundreds of transporters could be forced to park up because demand across the sector has fallen sharply.
However, the decision by the government to offer a £2.3bn loan package to prop up car manufacturing has been received with caution one parts transporter has told Motor Transport the investment should be used to encourage consumers to scrap older, more polluting cars in favour of greener vehicles. The grim economic situation is illustrated in Autologic's latest trading update, which says higher levels of exceptional costs are anticipated as a result of restructuring needed to "align the business relative to the softening automotive marketplace".
Car transporter ECM says the market has worsened since January and that it expects volumes to fall by an average of 38%. It has already been forced to make 80 staff redundant, as well as introducing short-time working and a freeze on capital expenditure. MD Ray MacDowall says: "If something isn't done to assist the plight of the carriers, many will disappear altogether.
"Those which remain will have downsized their fleets so much that we foresee a situation at some time in the next 18 months, when credit is eased and pent-up demand is released, that there will be a grave shortfall in supply of transport to cope with the economic recovery."
On the primary distribution side, Acumen Distribution, which works for first-tier suppliers, says its volumes are down substantially and that it is now focusing on remodelling its logistics schedules. Commercial director John Stocker says: "If you are only building 30% of the cars you were building before, then you are not ordering the parts. It cascades right through the chain."
Stocker adds: "We are adjusting the drivers' shifts and working with our staff. They have been absolutely brilliant in their flexibility. We are being completely flexible to keep things moving."
But not all automotive firms are feeling the pressure. Alan Ferguson, MD of North-East-based Fergusons Transport, which supplies into the Nissan plant on Wearside, says he feels "apologetic" for so far riding out the storm: "We have obviously had to lay people off; it's down to 20 at this stage out of just shy of 400. But we have managed to manoeuvre ourselves; we are still a family business, so we have been able to make quick decisions to switch resources. We are a good size for the current problem: small enough to react, big enough to cope with it."
However, Ferguson casts doubt on the efficacy of offering car manufacturers billions of pounds in loans: "A much better option is to do something similar as in Germany and pay people to scrap their older cars. It gets rid of cars that are less efficient and goes along with long-term policies to reduce CO2 emissions, as well as boosting the market from the bottom."
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