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SEDDON ATKINSON The aim is for economy of scale
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IIANAGING director of Seddon akinson Vehicles Bob Johnson ad this to say.
Although I have been in the IK for only four months, I have een enough to realise that the oming year will continue to be ifficult for the industry. I do not ee any spectacular recovery in the offing but rather a slow climb out of recession.
To see the coming year in context, it's helpful to look back on recent events within my own company. Since 1974, Seddon Atkinson has concentrated on increasing productivity and has doubled production with the existing workforce.
There has also been investment of all profits in new facilities and products to fulfil the twin priorities highlighted so often by successive British governments — those of productivity and investment.
Unfortunately, both factors count for little in a recession and in common with the rest of the industry, the company has adopted short-time working to avoid redundancies and has had to lose part of a highly skilled workforce at a time of much-reduced demand.
The fall is coupled with a high pound which makes exporting difficult and also makes the home market attractive to importers. The market situation is at its worst for many years.
Undoubtedly, the recession has set back the British industry with investment projects being. put on ice wherever possible and profitability seriously affected. With this background, I look forward to the next twelve months with the view that 'Things Can Only Get Better', while accepting that the recovery is going to be very slow. The record levels of last year are not likely to be reached again for as much as five years.
It will be tough going even during the recovery and with the pound so high, competition from importers will tend to hold prices down while manufacturing costs continue to rise. As a result, the levels of profitability and hence investment for British manufacturers will remain under pressure in the coming year.
With the accelerating costs of introducing new models and the sort of backup increasingly required by operators, any pressure on investment levels is serious.
I see the coming year marking a turning point for the industry. cv makers are increasingly turning to economy of scale in production and that inevitabl means a reduced number c vehicle manufacturers and corr ponent suppliers.
The Seddon Atkinson parer company, International Narver ter, identified the trend som years ago and has already bee working toward that goal. Th present hard times will simpl act as a catalyst to speed th process.
The aim of economy of scale i also likely to be linked with th world cv business and the it creasing requirement o countries for participation i manufacture as a condition c entry. Economy of scale wi perhaps be achieved at compc nent manufacturing centre around the world, while assem bly operations in individua countries will call up the particu lar mix of components required to meet local operating condi tions and legislation. The situa tion already exists up to a poin with cab, engine, axle and gear box manufacturers.
I believe that it is an inexora ble world trend and thougl
there may be some local up heaval and adjustment, it har much to commend it socially ir preference to the possibility o cv production dominated b any one country.
If I think further ahead than thE next 12 months, it is becausE manufacturers` planning musi be on a long-time scale. Nev% product development must an ticipate future trends by many years. The Seddon Atkinson 401, for example, will go into produc tion in January after a three-year development programme and the six new models introduced this year had similar lead times.
As far as design in concerned, I don't envisage any radical change in basic shape or ar rangement, at least for a few years. Comprehensive legis lation and the natural wish of operators to carry maximum payload will, up to a point, de sign for us! I do see energy effi ciency being a big factor and many improvements in materials, systems and quality levels. In those respects, a new $80m International Harvester re iearch centre will be providing inswers in the short term. The :entre is a striking example that ewer and larger companies are nevitable to achieve economy )f scale and to finance the latest n modern technology — econonics dictate it.
Returning to the next 12 nonths, no one needs a crystal )all. Sales will be very hard, nargins very low, and no British nanufacturer will be putting any at on If I have painted a sombre picure, it is out of business caution. fhis year we have introduced ;even new vehicle designs and n the coming year we have nore surprises for the UK.