March 5, 2017 blog

Long-term investment in the age of continuous disruption: an example from the automotive sector

National Automotive Innovation Centre is an example of how different organisations have joined hands with the UK government to develop a vision for tomorrow

Rapid leaps in technology are bringing exciting opportunities for disruptive business but also unprecedented challenges for established economic and political models. Around the world, from Indian Prime Minister Modi's "Make in India" campaign to the evolution of an Industrial Strategy in Britain, it's increasingly recognised that there's a need for a more strategic approach to making manufacturing and technology work for society in the broadest sense. We should be clear about this, wherever we sit on the political spectrum.

'NAIC will be a very visible example that advanced manufacturing can be a strength for the UK and that it is worth investing in.'

No strategy anywhere is ever perfect. What we look for is the optimum mix; and where we don't have all the components we need now, we know what we need to do to create them. For it to be a strategy, rather than a set of tactics or announcements, we need a smart long-term vision when the future is uncertain and the present still demands our attention. Take the automotive industry. Today, just as in the past, a manufacturer needs to develop the new models for the next few years, incrementally improving technologies. But at the same time they need both to work on the bigger leaps – more efficient electric vehicles, say – for the medium term and also to be identifying the role they will play in the smart cities of the day-after-tomorrow when communications and data technologies, rather than humans, will be the drivers of mobility (sorry for the pun).

It’s in this light that we should see one of the most exciting developments in the UK manufacturing scene arguably for decades. A few days ago, a government visit took place at the building that will house the National Automotive Innovation Centre at the University of Warwick. This is a £150m investment, the joint creation of Jaguar Land Rover, Tata Motors (European Technical Centre) and the Warwick Manufacturing Group, with the support of the UK Government’s Higher Education Funding Council (HEFCE). NAIC will be at the heart of research to make tomorrow’s vehicles lighter, smarter and more sustainable.

'NAIC is located in the Midlands, which have risen up from the ashes of the 1970s motor industry in a testament to the collaboration between investors like Tata and Jaguar Land Rover, a skilled workforce, universities such as Warwick as well as national and local government.'

NAIC is an example of how the elements can be combined into a coherent strategy. It is a joint private-public venture. For Tata companies, which have contributed the majority of the funding, it is tangible evidence of our long-term commitment to the UK. It is located in the Midlands, which have risen up from the ashes of the 1970s motor industry in a testament to the collaboration between investors like Tata and Jaguar Land Rover, a skilled workforce, universities such as Warwick as well as national and local government. It's no coincidence that so much of Tata's UK investment, from Tata Technologies' new European HQ to Tata Motors European Technical Centre, is based in the region.

NAIC depends on, but will also contribute to, a thriving and growing cluster. In today's industrial landscape, manufacturing is increasingly collaborative and clusters matter more and more. Although this will form the next stage in Jaguar Land Rover's strategy to develop its global R&D and engineering capabilities, it will benefit the industry much more widely and help to make the UK more competitive. NAIC will provide jobs for skilled engineers and, through its association with WMG, contribute to education and training from school level to postgraduate. It will of course also create a demand for more skills, which business, academia and government will have to work together to meet. But it will be a very visible example that advanced manufacturing can be a strength for the UK and that it is worth investing in.

There's a big debate going on worldwide right now about what makes a country the right place to invest. Of course, access to markets and skilled labour are always high on the list of criteria. But the list is rarely simple and decisions are made on the basis of a combination of factors meeting needs for the short, medium and long term. Each industry will have its own mix. NAIC is an exciting example of what brings the investment in, and what will be needed to make a success of it in the long term.

Written by David Landsman, Executive Director of Tata Limited

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