Chinese firms keep UK auto industry ticking

Minister Counsellor, Zhou Xiaoming (middle) visits London Taxi Company in Coventry in late July. [Provided to China Daily]

Green car plans and investment help rejuvenate Coventry's auto credentials

The iconic black cabs of London may soon be the harbingers of a "green revolution" in the United Kingdom, thanks to the concerted efforts of a Chinese company.

Green shoots have already started sprouting in Coventry, a city in the county of West Midlands in the UK, where the local economy has a new lease of life thanks to the investment, jobs and green car plans announced by Chinese automaker Geely Automobile Holdings Ltd. Other Chinese companies are also adding new vigor and jobs to the region, often described as the center of auto activity in the UK.

Chinese companies that seek to expand both their global reach and knowledge base see having manufacturers based there as a good strategy for development.

Geely paid 11 million pounds ($18.4 million) for 80 percent of Manganese Bronze HoldingsPlc, the parent of London Taxi Co, the firm that makes the iconic black cabs, in February 2013 after buying 20 percent in 2006. Seven months after the Manganese Bronze acquisition, Geely has commenced full production of the black cabs at London Taxi Co's old factory in Coventry.

London Taxi Co is scheduled to launch its TX5 model with an investment of 300 million pounds soon. The hybrid electric taxi is designed to have zero emissions, with its exterior in a similar shape to the current London black cab.

Peter Johansen, vice-president of Geely's black cab operation, said the company now possesses the requisite funds and the capabilities to improve the green credentials of its existing vehicle.

London Taxi Co currently employs 211 people, more than double the number it had before the Geely buyout. Of its current staff, 66 are engineers and technicians.

"We have not finalized our staff plans for next year, but I expect that we would employ around 250 directly or indirectly with further increases as we begin building and ramping up our new factory," Johansen said.

Daniel Li, chairman of the London Taxi Co and chief financial officer of Geely Group, said: "We will stick to our plans and deliver what we promise."

Sales revenue has risen steadily since the acquisition. Sales in 2013 reached 33.9 million pounds, and the figure was 25.3 million pounds for the first six months of 2014, a 245 percent year-on-year growth. The plant is scheduled to build 1,440 vehicles, mainly to be sold in the UK. In addition, about 850 vehicles will be made for overseas markets in Azerbaijan, Australia, Egypt and India.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said that "the manufacturing and engineering sector is vital for the past, present and future of Coventry and Warwickshire's economy".

"The automotive sector is very much part of that, and this region remains a hotbed of activity," he said.

Coventry is often called the home of the British auto industry and has spawned several big brands like Jaguar, Rover, Triumph, Healey and Riley. While the area is still at the heart of the UK's motor industry, government officials and business leaders are keen to ensure that the region retains the skills it needs to secure a bright future.

And that is precisely what Geely and other Chinese companies are helping do in Coventry.

"A year ago, when I visited London Taxi Co, it was rather quiet. But this time when I came to the factory, it was bustling with activity," said Zhou Xiaoming, minister counselor for economic and commercial affairs at the Chinese embassy in the UK.

Zhou said the auto industry has become "a hot spot of Chinese investment in the UK, especially in Coventry", adding that Chinese private firms are also playing an important role.

Shandong Yongtai Chemical Group Co, a privately owned manufacturer from Shandong province, took majority ownership of Covpress, a UK-based car parts maker, in a deal worth 30 million pounds in July 2013.

Covpress has seen remarkable growth since then. As a direct result of a 10 million-pound infusion into the industrial unit and 2.6 million pounds for machinery purchase, 75 new jobs have been created at the Canley-based business unit, with turnover up 22 percent in the last 12 months. New orders are also mounting, with the longest contract extending to 13 years.

You Xiaoming, CEO of Shandong Yongtai, said: "We have signed a five-year contract with a luxury sedan manufacturer worth 230 million pounds, and a 13-year one with MPV (multi-purpose vehicles) carmakers valued at 384 million pounds."

Veneer Manufacturing Centre of Jaguar Land Rover was acquired by Lawrence Automotive Holdings Ltd from Zhejiang province in November 2010.The value of the deal was confidential.

The company has seen significant growth since the acquisition due to the launch of the new Range Rover from Coventry. Lawrence worked with JLR to transfer their staff back to the other JLR sites during a training program to employ more than 600 new people on-site.

Mark Beecroft, vice-president of Lawrence, said: "The acquisition has demonstrated China's commitment to overseas growth and expansion."

You from Shandong said in July that the company will invest a further 15 million pounds to support the firm's continued growth and stay on top of the demand.

"We have exciting plans. Over the next two years, specific plans are already in place to inject further investment to modernize and expand the Covpress facility," You said.

"This will add much needed capacity and create more career opportunities."

Its latest investment plan will increase the workforce from about 550 to more than 700 in the next two years, making Coventry one of UK's largest private sector employers.

Such efforts have also been welcomed by the local populace.

Kit Halliday, joint CEO (Europe) for Covpress, said he believes that Chinese companies will not change the existing corporate culture and management strategy.

"The perception that Chinese investment in the UK is to overhaul the UK corporate culture and management code with a Chinese mentality is utterly false. There might be some apprehension at the start of the merger, but when business picks up, along with the creation of more job opportunities, everyone is happy," Halliday said.

Zhou from the Chinese embassy said: "The business communities from both China and the UK are keen to work together. The partnership serves to benefit both the UK economy and China's privately owned businesses' expansion abroad."