Ford chief loves UK engineers

The UK car industry is far from done and dusted. In fact, the popularity of cars that emit low levels of carbon may lead to a renaissance.

The UK industry is positioning itself on the cutting edge of greener motoring by working on new technology. Chris Ratcliffe / Bloomberg

"Hug an engineer when you see one," Alan Mulally, the chief executive of Ford, said in London last week. "I personally think they are the source of all wealth creation." Mr Mulally's enthusiastic endorsement of the 10,000 engineers that work in the UK for Ford may have taken some people by surprise.

After all, the UK car industry is long past its heyday and the factories that remain are all owned by overseas manufacturers who can pull their investment out in hours if they find a cheaper site. Last week, the global car industry's barons swept into Paris to unveil their latest models and technologies. But there has been no British Motor Show for two years. The last was cancelled due to the recession and there is no sign the industry is ready to risk another with drops in business, consumer confidence and sales.

The financial crisis, which led to a sudden drop in the purchase of cars in the UK and the developed world, hastened long-term changes in the motor industry. The industry's centre of gravity tipped to the East when China replaced the US as the world's largest market for cars last year - at least 10 years earlier than predicted. As Mr Mulally put it so succinctly: "China: 1.3 billion people ready to take a car trip and I think they should do it in a Ford."

Yet there are things in the British motor industry worth celebrating, even if it has taken a US business executive to point some of them out. From Ford's point of view, the UK is now the centre of excellence for its powertrain development team. Demand for low-cost new cars from the newly well-off of the Asian and South American emerging economies will help to secure UK car making jobs. A diesel engine made at Ford's Dagenham plant is as likely to power a car sold in Bangkok as one in Sunderland.

The importance of the UK as one of Ford's centres of excellence was underlined by Mr Mulally's confirmation that the giant will put £1.5 billion (Dh8.77bn) of investment into its operations there over the next five years, partly underwritten by government loan guarantees. The UK is home to six other volume car makers and eight commercial vehicle makers. About 180,000 people are employed in the British industry and a further 640,000 work in supply, retail and servicing.

The car industry in the UK generates about £50bn of turnover every year. If the global industry is now skewed towards demand in Asia, cars that emit reduced levels of carbon cars could give the UK a continuing role in the mass-market production of cars, even if assembly eventually moves East. The UK boasts it is making the first mass-market pure electric car in Sunderland - the Nissan Leaf. And with the Auris Hybrid, Toyota has chosen the UK to build its first European mass-market hybrid vehicle and the first hybrid engine built outside of Japan.

Vauxhall has also given its strongest hint yet that it will build the European version of the Ampera, its extended-range electric vehicle, at Ellesmere Port on Merseyside. Jaguar Land Rover is also investing significant amounts in premium products for the ultra-low carbon market. Paul Everitt, the chief executive of the Society of Motor Manufacturers and Traders, is confident the ultra-low carbon market is key to the UK industry's future.

"The plug-in hybrid will be a tiny part of the market for quite a time but eventually it will become mainstream, and not just in Europe but also for emerging markets." By developing battery technology in the UK, working on a new generation of combustion engines and developing lightweight composites for car making, the UK industry is positioning itself on the cutting edge of greener motoring. "We're working very hard on getting the right technology funded," Mr Everitt says. "These capabilities will be central to the next 20 to 30 years of car making."

As Mr Mulally says of his fellow engineers: "We create something out of nothing." In British motor making, an industry with a viable future is emerging from something that looked like it was on the scrap heap.