The North East Automotive Alliance (NEAA) has stressed the importance of ensuring companies survive current challenges in the sector, following a national report that raises concerns for supply chain firms.
The Society of Motor Manufacturers and Traders (SMMT) said the country risked losing critical suppliers before they could compete for future business. It said many such firms were in “distress” amid soaring costs and lower demand.
Report highlights supplier distress
The SMMT paper said some suppliers were running at about half capacity, raising the cost of every component and harming competitiveness. It also pointed to insolvencies among UK vehicle and component manufacturers, which soared 180% over the past ten years.
Paul Butler, chief executive of the NEAA, said: “The North East has a highly concentrated and strategically important automotive supply chain, so the issues highlighted by the SMMT are particularly relevant to our region. Our suppliers have repeatedly demonstrated their ability to innovate, improve productivity and respond to major structural change, but they cannot do that indefinitely against an uncompetitive cost base and weakening demand.”
Call for coordinated action
Butler added: “For the NEAA, this reinforces the need for coordinated action on business costs, productivity, innovation, skills and supply-chain resilience, alongside support that enables SMEs to invest for the next generation of automotive opportunities.”
He also noted the timely introduction of the Supplier Readiness & Transformation Programme, an investment initiative designed to help build a resilient electric vehicle cluster in the region.
Regional suppliers show resilience
Despite the concerns raised by the SMMT, recently published accounts for two of the region's key supply chain companies showed resilience. German-owned parts maker Elring Klinger, which has a factory at Redcar, saw total revenue grow 3.1% to £19.8m in 2025 as operating profits also rose from £141,000 to £1.23m. Bosses there told of a stable order book extending to 2030 and the expectation of profitable years ahead.
Washington-based interior and exterior trim maker Kasai saw a fourth consecutive year of profits, with turnover growing from £69.7m to £72.8m while operating profits grew from £1.7m to £4.1m. The Nissan and Jaguar Land Rover supplier said it had continued to improve performance.
Industry leaders warn of lost capability
SMMT chief executive Mike Hawes said: “Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible. Once their skills, tooling and expertise are gone, investment becomes harder to win and far harder to bring back.”
He added: “The opportunity to re-shore component spending in Britain is real, but we cannot take it for granted. Industry must improve productivity and work to secure critical capability, matched by government action on energy costs, market access and targeted investment support.”
