In conversation with Paul Butler | Electrification and the opportunities it brings for North East England

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In conversation with Paul Butler, Chief Executive of the North East Automotive Alliance (NEAA), about the opportunities electrification offers businesses in North East England, and those looking to invest in the region.
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The automotive sector is of strategic importance in the North East and is expected to create more and better jobs for the region. What opportunities exist for automotive companies that choose to base themselves here?

Electrification is the single biggest change facing the automotive sector and it’s something that the North East has a long history of: we were electrifying trams in the 1920s, developing EVs in the 1950s and, more recently, Nissan began producing Europe’s most successful battery electric vehicle, the LEAF, here and located Europe’s first battery gigafactory in the region. 

Because of that early work around electrification, and the fact that we have the materials and supply chains that automotive businesses need, we’re already way ahead of many other regions in the UK when it comes to vehicle electrification. Since December 2020, there has been a further £3.85bn of investment into electrification in the region which has been announced.

There is a strong push to ensure that we have onshore capability to produce key battery materials such as electrolyte, cathode and anode. The North East has a strong chemical sector, which includes Mitsubishi Chemicals who produce electrolyte. This strength and the co-location of battery manufacturers here in the region will no doubt be a strong attraction for foreign direct investment in cathode and anode manufacturing.

For me, this is the tip of the iceberg. I think we’ll see a cluster effect as more businesses move into the region, more students and graduates are attracted here, and in effect we’ll have our own version of Silicon Valley – but for electrification.

The North East is seen as paving the way in electrification. There have been some fantastic investment announcements for the North East over the last 12 months, with BritishVolt, Turntide Technologies and Nissan/Envision AESC all making significant strategic investments into the region. Why do you feel the region is well placed to drive forward the electric revolution? 

It’s not just passenger vehicles where the North East leads the way; we also have three of the top five off-highway manufacturers – Komatsu, Caterpillar and Liebherr – in the region. Komatsu already produce a highly successful hybrid excavator and are developing a full electric excavator, which, given our battery facilities and electrification capabilities, we hope will be produced here, and Leibherr produces an electrified mobile harbour crane.

We’re also fortunate to have five universities in the North East region, and research capability within them to support the sector. Within Newcastle University for instance, they are leading the UK Driving the Electric Revolution programme and are home to the Advanced Propulsion Centre’s electric machines spoke.

We’ll see more focus on electrification and the future needs of industry taking hold in our universities and that will in turn bring more students and graduates, who will enable the transfer of skills throughout the automotive sector.

Tell me more about EV North, and the work it’s doing to grow the electric vehicle sector in the North East

Our vision is for the North East to be recognised as a true automotive powerhouse which encompasses a very dynamic, forward looking and competitive supply chain that incorporates strengths in research, development and innovation in new automotive technologies and manufacturing processes.

EV North provides a way for industry to come together and demonstrate the full breadth of capability and companies we have here. It’s led by industry and is there to help us all capitalise on opportunities around electrification.

EV North has three key priorities: to promote the North East as a key global centre for manufacture and development of electrification technologies; to encourage collaborative projects to leverage public and private sector investment; and to attract investment to the region to support building and scale-up of manufacturing, research and development excellence for electrified powertrain components.

With two new electric battery gigafactories announced for the North East, as well as a new all-electric Nissan model to be produced here, what do you think are the key areas of opportunity for new supply chain companies looking to locate in the region?

One challenge for the sector is around rules of origin – for vehicles to qualify for zero-tariff export, they need a minimum level of content from the UK or EU – so it’s in the interests of the manufacturers to use UK supply chains. There’s also a cost advantage of using suppliers based near manufacturing hubs so we see a real opportunity for supply chain businesses to base themselves here.

The NEAA is doing a great deal of work to develop supply chain opportunities and we’re keen to identify businesses in other sectors that have the capabilities the automotive sector needs, and that can move into this sector. Over the next eight to 10 years we’ll see more change in the automotive sector than we have in its entire history, so there’s never been a better opportunity for companies with the right capabilities to move into the sector.

Why is it important for SMEs in our manufacturing sector to adopt new technology and digital tools within their businesses?

As a region we already have one of the most effective workforces in terms of the average number of finished vehicles per employee – nearly double the European average – and we’re also highly automated and have lower land prices than other regions.

The next big opportunity to improve our productivity and competitiveness is digitisation. As we bring new technologies in, there won’t be another region with the same level of competitiveness so it’s a huge opportunity for companies.

The North East Automotive Expo is being held in September 2021. Why should advanced manufacturing and automotive companies attend?

The Expo has developed a reputation as the premier event for the North East automotive sector. There are opportunities to meet buyers – at the last show we organised more than 100 one-to-one ‘meet the buyer’ sessions – and there will be an innovation and technology focus to this year’s event.

We attract people from across the UK to network, get an understanding of where the sector is going and what the opportunities are, and hopefully do business together.

Invest North East England and its partners from across the region support automotive businesses to expand and/or relocate in region. What would you say are the top three benefits of locating an automotive company in North East England?

We have a collaborative and cohesive network that companies moving into the region can plug into. We’re a small geographic region but we’re one of the most collaborative and there’s a depth of knowledge and support here that people can access. 

In terms of infrastructure, we have five ports and it’s very easy to export globally and also work with other businesses across the UK from here.

And finally, the NEAA acts as a soft landing for any businesses locating here. We have a really good understanding of the business support ecosystem and can make sure companies get the right support.

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Invest North East England is the first point of contact for companies looking to invest in our region. Our highly experienced team opens the door for investors to North East England’s network of specialist organisations and individuals with the information, support and advice essential to any investment decision. We co-ordinate investment enquiries on behalf of our region’s local authorities to ensure businesses are able to make the best decisions based on a wide array of information.

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