It's Top Gear all the way

Yesterday, full-year manufacturing figures from the Society of Motor Manufacturers and Traders (SMMT) were hailed as "promising", thanks to a very strong export market boosting output to around five per cent above 2010 levels.

It crowned a year marked by un-relenting good news for the UK motor industry, culminating in announcements from Caterpillar (300 new jobs), JCB (350 new jobs), Rolls-Royce Motor Cars (significant new investment) and Honda (500 new jobs thanks to the new Civic going into mass production) in December.

But how - against a backdrop of Britain on the brink of recession and the unrelentingly bad news of a decade or so ago - did it all come about?

In 2000 the UK motor industry seemed to be dying on its feet. Ford ended car production at Dagenham with the loss of 1,900 jobs, switching it to engine production instead, then Vauxhall killed off its Luton plant - and 2,500 jobs - as the UK lost out to European factories. The Phoenix Group took over Rover with a flourish but the Longbridge plant folded in 2005 and in 2006 Peugeot announced the end of its Ryton plant.

Now fast-forward to the present day and the UK is the place for mass, premium and niche car production. Last year alone saw over £4 billion pumped into UK motor manufacturing, with makers including Jaguar Land Rover, BMW and Toyota vying for headlines.

"If you didn't know what had been going on behind the scenes it would be surprising," concedes Paul Everitt, SMMT's chief executive. "But it's like that old joke; it's taken us two decades to become an overnight success."

So what explains yesterday's figures and the industry's upbeat outlook? The SMMT says it's the perfect storm of a political volte-face, a bold new era in management-workforce relationships, improved productivity and a favourable exchange rate for export.

"People were saying Britain was post-industrial, that financial services was now the generator of wealth," says Everitt. "But in 2009 there was strong realisation in political circles that things could not carry on like this. Dependence on financial services was questioned; there was a realisation that our economy needed industrial capability to create things that we could sell to people around the world again."

The automotive industry was the perfect candidate, still employing 700,000 workers in the wider automotive sector and exporting 75 per cent of its cars.

"The government realised it had to play a role in creating the right environment and circumstances for it to flourish again," says Everitt, "2009 was the turning point. Peter Mandelson [then trade and industry secretary] introduced the scrappage scheme and the automotive assistance programme, offering £2.3 billion of loan guarantees for investment in green technologies.

"[This] huge change connected very strongly with global investors. It continued when the Coalition took office in 2010."

The crowning moment? Last year when David Cameron graced a top-level London summit for EU car chiefs. "The world saw that laissez-faire Britain, afraid of manufacturing, was history," says Everritt.

The outlook for 2012? "We can't ignore the fact that the exchange rate is very favourable to the UK but we also now have a far better understanding between management and workforce than 10 years ago," says Everitt. "We have relative stability despite difficult economic times."

Professor Richard Parry-Jones, co-chairman of the Automotive Council, adds: "Once, the government let the industry stand on its own two feet, then panicked when job losses were announced.

"Now it is fully on board, providing not only financial support but, very importantly, it has changed the rhetoric: it's all about modern manufacturing of high-tech products and a great career, a great investment.

"Today foreign investors look at the UK and say: 'Ah - you've woken up; now we'll come and invest there'. All the others are saying: 'If those guys are investing, it must be good. Let's get in there too'."

Blue Monday? Not for the motor industry ...