The grey skies and relentless showers commonly associated with the UK climate can be a real mood killer, but not for the UK deputy managing director of car manufacturer Toyota, Tony Walker. Despite meeting with fDi Magazine in the middle of what would go on to be the wettest June in the country's records, Mr Walker appeared upbeat, unaffected by the spate of bad weather.

Mr Walker's high spirits were not all down to his natural joviality; the recent news that Toyota is to boost production in the UK by manufacturing its latest hatchback model in its plant in the East Midlands no doubt contributed to his happy mood. The move will see an additional 1500 jobs created at the factory as well as more than $155m in new investment.


Moving up a gear

In the past 15 months, the success of Toyota's UK plant has been recognised through visits by UK prime minister David Cameron, chancellor of the exchequer George Osborne and the Duke of York, Prince Andrew. But times have not always been so good for the industry.  

“I have been working in the industry for 35 years," says Mr Walker. "Before I came to Toyota, we were a basket case. Nobody would care for us. But if you do not stand on your own two feet, do not expect anyone to do it for you. We have stood on our own two feet.”

In recent years, the UK automotive industry has increased both its productivity and the quality of its output. However, these changes have coincided with an increase in the price of labour in the country, which has risen in line with the cost of living. This had made manufacturing in the UK a lot less cost effective than in other countries, especially those in emerging markets. But, according to Mr Walker, investment decisions in the automotive industry are not be driven purely by the cost of labour.

“The UK is not a low-cost country, but that is not a key point. Labour constitutes only 6% of the total cost of making a car. There is absolutely no reason why [the UK] should not deliver the same results as Germany, the most successful car producer in Europe,” he says.

Export driven

Estimates by the UK's Office of National Statistics suggest that Mr Walker's views on labour are not just wishful thinking. In the first quarter of 2012, the UK car industry witnessed its first trade surplus since 1976, and exports were up by more than 20% compared to the final quarter of 2011. “The whole renaissance of the industry is export led. About 85% of what we make [in Toyota’s East Midlands plant] is shipped overseas,” says Mr Walker.

Nonetheless, there is a limit to this growth. Mr Walker says that cars should be made close to the markets in which they are sold. “It brings many benefits, such as an understanding of the market," he says. "You can design a better product if you receive feedback from the customers. Plus you have to transport it somehow."

Just like the abysmal weather, these potential limits to growth have failed to dampen Mr Walker's spirit. When he joined Toyota, he was just the fourth employee in the company's UK operation; now he is part of a team of more than 3400. Having witnessed such substantial expansion first-hand, and with further growth on the horizon, there is plenty for Mr Walker to remain optimistic about.