The extent of global challenges in the automotive sector have continued to be made clear as yet more North East suppliers have spoken of difficulties.
Business Live recently reported how semiconductor chip shortages and Covid disruption had beset three key suppliers to car makers. And now another two prominent names - Unipres UK and Faltec Europe - have reported widening losses in their most recent sets of accounts. A third, Elring Klinger, returned to profit but warned of a "very uncertain time" in the sector.
Nissan supplier Unipres, which employs about 976 people across its Wearside site, said total operating losses had increased to £15.7m in the year to the end of December 2021, up from £13.4m in the year before. While the closure of Honda's Swindon plant in 2021 dealt the firm a blow to its sales, it said pauses in production at other customers caused by chip shortages and Covid had weighed on its performance - though it also said it expected the semiconductor shortages to end in 2022.
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Sales turnover at the firm, which also supplies Renault, fell 7% to £107.5m during the period. Despite the headwinds, Unipress invested £20.9m in its operation though said 2022 spending would be scaled down to allow for improvements to aging presses.
Writing in a report accompanying the accounts, Unipres company secretary Andrew Fawell, said: "During 2021, the business has suffered from the global semiconductor shortage that has impacted the automotive industry and resulted in the original equipment manufacturers suspending production at short notice throughout the year. This has continued into the first quarter of 2022, although is expected to recover during the year.
"The Unipres Training Academy (UTA) used to develop our apprentices and upskill the existing workforce has continued to succeed. The Academy continues to support the School Engagement Programme, which we see as crucial to the engagement of younger people in STEM related careers."
At fellow Nissan supplier Faltec Europe, turnover increased from £19.1m to £20.9m in the same year as it actually saw new vehicles sales improve slightly. However, operating losses widened considerably from £8.7m to £17.9m - driven by costs associated with the firm's move into a new factory at the International Advanced Manufacturing Park, a stone's throw from Nissan's plant.
The maker of interior and exterior trim products, which employs about 380 people, also blamed Covid and chip shortages for a slow recovery in the market. It said the ongoing move from its former Boldon Business Park site would continue until the end of 2022.
Bruce Mair, general affairs manager at Faltec Europe, said: "We continue to work through the challenges created by the Covid-19 pandemic, and global shortages within the semi-conductor sector, which depressed production manufacturing volumes with our customers. This, together with one-off costs associated with transitioning to our new state-of-the-art multimillion-pound manufacturing facility at the International Advanced Manufacturing Park (IAMP), an impairment charge of £6.4m relating to certain legacy fixed assets and delays in new model introduction plans by major global OEMs have created a significant operating loss for 2021.
"We continue to benefit from the ongoing financial support and full confidence from, our Japanese listed parent company Faltec Co. Ltd and we are attracting experienced, skilled and qualified professionals into our engineering and management teams, with several key appointments being made. Most recently, this includes Peter Watson, who joins as plant manager after 30 successful years in tier 1 automotive manufacturing, and our latest cohort of new apprentices."
Mr Muir also said the firm had made good progress throughout 2022 and expected to see benefits created by automotive manufacturers creating global manufacturing bases for specific vehicle models, along with Faltec's own efficiencies and staff training.
And on Teesside, sealing and shielding specialist Elring Klinger reported a return to profit despite a fall in total revenue. The firm reported an operating profit of £588,000 in the year to the end of December 2021, compared with a loss of £4.1m.
It said 2021 had brought about a "more settled trading environment" following what it called a catastrophic fall in the automotive sector caused by Covid. In a review alongside the accounts, the company said: "The automotive sector in general is going through a very uncertain time, with particular risks for this company due to the progress of electrification industry wide and the reduction to sales of diesel cars.
"Due to the Covid-19 pandemic there has been particular pressure on the supply and costs relating to raw materials which the company experienced towards the end of the year. There has also been a global shortage of semiconductor chips which has begun to impact the end of line manufacture of cars, this has also had a knock on impact to the demand of our own manufactured products.
"The war in Ukraine that began in early 2022 will also cause disruption to the supply and availability of commodities throughout Europe and the rest of the world, and this will undoubtedly include supply chains within the automotive sector. As well as this we are already seeing unprecedented impacts to material and energy prices which have not been planned for."
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