Downturn has a silver lining for firms on Teesside

Nov 11 2008 by Sue Scott, Evening Gazette

AS UK car manufacturers slam on the brakes, countless smaller firms in the motor supply chain are feeling the impact. But Teesside technologies could put us back in the fast lane

NEWS that car sales had fallen off a cliff in October came as no surprise to Teesside companies like plastics firm Nifco, which had built a business supplying the motor trade.

It had been feeling the pinch for weeks - as had countless others in the local supply chain who had begun 2008 with high hopes for a buoyant year.

Regional car giant Nissan had got off the grid confidently enough, predicting that it would create 1,200 new jobs at its Sunderland base with a knock-on 400 more in the region.

But the plant, whose awesome capacity to make one in five cars in the UK, estimated to generate £1bn for the regional economy, finally succumbed last month to the inevitable when it announced 800 lay-offs as the global credit crunch destroyed consumer confidence and new cars backed up on the sales forecourts.

But every downturn has a silver lining. With premium dealerships hurting the most, the more fleet of foot traders including Dan Forbes of Forbes Motor Company in Swainby, quickly identified the need to swerve out of the way of oncoming financial disaster by entering faster moving, budget sectors - in his case building a website that was soon to overtake his exclusive showroom sales and led to several substantial offers to buy him out - accelerating his plans to retire by the age of 40.

Even Nissan’s pain benefited Teesport, which became the unexpected car lot for 1,243 vehicles from its Japanese factories destined for Russia.

They were diverted from the Port of Tyne docks which were already full of cars it couldn’t shift.

Phil Eadon of Allancia, an events company that organised the regional Partners4Automotive conference in September, who is himself hanging on to an executive motor in the expectation that prices will fall further next year, takes an upbeat view.

While those linked into the traditional manufacturing sector are hunkering down, he says, the throttle is still on developments that should see many of the more innovative companies on Teesside ready to move into the fast lane when the cash starts flowing again.

He says he fought to sign up traditional manufacturers to his conference, which provided a showcase for new and emerging environmentally friendly transport technologies, but without success.

“We struggled to engage with them because new technologies are potentially a threat and obviously their interest is to make their existing technology more economic and efficient rather than make a change to something new,” he says.

But while he’s reluctant to say their attitude was short-sighted, he certainly believes their options for the future are curtailed as a result.

“There’s an alternative generation of vehicles coming over the horizon using stuff that’s immediately available, such as LPG, as well as future environmentally friendly fuels, like hydrogen, that America is leading on right now.

“The more companies that can work on that and get involved and develop contacts, the better placed Teesside is going to be when these things take off. If we don’t do that we will be playing catch-up.”