The launch of the tooling finance proposition, the first of its kind, comes in response to an urgent request for funding assistance by the UK Automotive Council, a body which represents the industry. The Council claims the UK risks losing valuable orders and opportunities for job creation if the need for funding is not met.
Tooling is the process of equipping a factory with machinery and tools for a particular manufacturing process. The cost of tooling can range from £30,000 to over £1m for an 18 to 36 month period. Suppliers to the vehicle industry, often SMEs, have difficulty funding this through existing finance solutions, a gap the innovative new proposition aims to fill.
Richard Hill, Head of Automotive, Commercial & Private Banking said:
“When a supplier receives the good news that they have won a contract, invariably they are given a requirement to fund making the tooling. This can be restrictive as sometimes they don’t have the working capital to fund it as well as other requirements.
“Automotives are one of the UK’s biggest export industries and therefore this sector is extremely important to the UK economy. The launch of specific Tooling Finance funding from RBS is a great example of what can result from the unique partnership between industry, RBS and the Department for Business, Innovation & Skills. In this instance the bank has come up with a solution to help the UK's pressurised supply chain and, in turn, the UK economy.”
Around 82,000 people work in the 2,350 UK companies which regard themselves as automotive suppliers, making it an important industry for the UK economy, especially when it come to exports. It is also a growing industry, with UK vehicle production expected to increase from 1.5m to 2.2m units by 2016.
The proposition is being launched this week to national and trade press and key industry stakeholders.