Semiconductor chip shortages, lingering Covid disruption and spiralling costs continued to weigh on the North East's automotive supply chain industry, new documents show.
A trio of the region's top suppliers to Nissan, among other manufacturers, are yet to regain pre-pandemic revenues as the automotive sector continues to face serious headwinds. Newton Aycliffe's Gestamp Tallent, Washington's Kasai UK and Eaglescliffe-based Nifco have all revealed new financials in recent days.
Chassis maker Gestamp reported a £41.m dip in turnover to £305.1m in the year to the end of December 2021, citing Covid and semiconductor supplies as the major factors for the decline. Directors at the County Durham firm said they expected chip shortages and disruption caused by the war in Ukraine to continue to hamper sales this year, suggesting they would also be below pre-pandemic levels.
Francisco Riberas Mera, a director at Gestamp, said the business was taking steps to protect itself amid the economic uncertainty and said measures stretched as far as voluntary pay reductions for some staff, a banked hours scheme for employees and cost reductions sought from some of its suppliers. At the same time, operating losses at the Spanish-owned subsidiary narrowed from £23.7m to £17m.
Meanwhile, Washington-based Kasai UK said it expected the semiconductor problem to continue suppressing sales from its two major customers, Nissan and Jaguar Land Rover (JLR). The Japanese-owned component maker described an "extremely difficult trading year" in 2021 as car production across the sector fell to its lowest level since the mid-1950s.
Kasai narrowed operating losses from £7.6m to £5.2m during the period thanks to £9m of tooling sales for the new model of Nissan Qashqai being built at the neighbouring Washington plant. However, overall sales to Nissan were down 17% year-on-year with volumes for the new, more expensive, Qashqai being below expected levels and a lag between changeover from production of the previous model.
Nissan Juke volumes were down due to semiconductor shortages though Leaf volumes increased as the manufacturer allocated more chips to its electric model - a move which can help it meet production targets. Overall turnover for the firm - which also includes its now closed Methyr plant - increased 24.6% to £66.6m, but still well below 2019's levels of £88.5m.
Writing in Kasai's accounts, director Yuki Miyauchi said: "Covid and its effect on the global supply of semi-conductors to the automotive industry has continued throughout 2022 to cause further loss of expected sales volutes at our main customers, Nissan and JLR, although not on the same scale as the first national lockdown in 2020. This naturally is continuing to have an adverse impact on the operational profitability of the company in 2022.
"The new model Nissan Qashqai model began production in May 2021, one month later than had been budgeted. Production for this model at present is still lower than expected due to the semi-conductor issues as mention above, however once the global shortage of these parts is resolved we anticipate that for the coming years the company will benefit from much increased volumes, especially for this vehicle, and will once again return to being a profitable business."
And Teesside-based plastic parts specialist Nifco UK reported a third year of declining sales to £44.2m - some way off its £65.8m turnover in 2019. The supplier to Toyota, Nissan and Ford, among others, cited the same headwinds as its contemporaries and also noted the knock-on impact of the Suez Canal blockage in March 2021.
Jim Casey, managing director at Nifco UK, said: "Despite an air of optimism from the output during Q1, the remainder of the year experienced further suppressed sales linked to a continuation of global supply chain issues that has plagued the entire global automotive industry. I’m proud of the way the team has responded and maintained focus on efficiency improvements, training and general continual improvement which has helped to offset much of the output reduction impact.
“The fundamentals of our business remain very strong and with the benefit of the efficiency improvements made over the last two years, we expect to reap huge rewards as business conditions improve.
“We remain carefully focused on forward market expectations and are working hard to secure additional future business through all of our customer partners. And, as last year, although challenges remain, underlying industry demand continues to remain strong, and Nifco remains poised to take full advantage as market conditions improve.”
While there was cause for hope in recent figures showing September was the second successive month of growth for the UK's new car market, the Society of Motor Manufacturers and Traders (SMMT) also pointed out the scale of damage to the sector. The 225,269 new cars on Britain's roads last month represented the weakest September - typically the second biggest month of the year for the sector - since 1998 with overall registrations -34.4% below pre-pandemic levels.
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