The UK’s automotive industry association, the Society of Motor Manufacturers and Traders (SMMT), has launched a Safe Harbour Scheme, to reduce the risk of insolvency and redundancies in the trade supply chain.

Under the scheme, developed with the support of the government and the Automotive Council, a company finding itself in financial difficulty, the SMMT would  “engage all relevant stakeholders and an independent third party to identify and implement agreed measures to ensure business continuity”.

These could include “steps such as temporary improved payment terms and/or financial support, or a new partnership, or investment opportunities”.

SMMT said the coronavirus pandemic had had a “devastating effect” on car manufacturing in the UK: in the first eight months of 2020, car production was down 40.2% year on year, worth £9.5bn ($12.2bn); while commercial vehicle production was down 20%, worth £730m.

This had resulted in 9,000 redundancies at manufacturers, with an additional 5,000 jobs lost in the supply chain.

SMMT chief executive Mike Hawes said: “With the UK automotive sector badly hit and barely weeks left until a fundamental change of trading conditions with our largest market, the EU, the pressures on automotive businesses are immense.

“Inevitably, these pressures are going to take their toll on businesses, so the Safe Harbour Scheme has been created to help any suppliers in trouble. It should provide valuable breathing space as the sector restarts and business and consumer confidence recovers.

“The industry must maintain its competitiveness to grow, and for that we still look to the government to deliver an ambitious trade deal with the EU,” he added.

Judith Richardson, global purchasing director at Jaguar Land Rover, and chair of the Automotive Council Supply Chain Group, added: “The nationwide UK automotive supply chain has been built over many years, thanks to huge business investment and support from successive governments. It remains highly competitive, with world-class facilities and a productive and highly skilled workforce.

“This cannot be taken for granted, however, and the Safe Harbour Scheme, combined with appropriate government support, will be essential to ensure automotive businesses can continue during these extremely challenging times and help drive a green recovery for Britain,” she said.

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