British bank RBS has launched a tooling fund worth £25m, aimed at UK car manufacturing tool suppliers.
The decision to offer the bespoke Tooling Finance service came as a response to growing demand for funding highlighted recently by the UK Automotive Council.
According to RBS, the cost of manufacturing the tools used in the assembly of car components can range from £30,000 to over £1m and it estimates that car manufacturers in the UK currently require £500m of tooling from suppliers.
Michael Fallon, minister for business, said: "This new funding for Tooling Finance reflects the growing confidence and increased understanding financial institutions have towards the automotive sector – thanks to our work through the joint government and industry Automotive Council.
"Coming hard on the heels of a new Government scheme I announced this month there is now almost £50 million available for auto supply chain companies to finance new tooling."
He added his desire for the fledgling fund to act as a "catalyst" for banks to increase credit to the automotive sector "as it continues to drive the UK’s economic recovery."
Alison Rose, chief executive of RBS and NatWest commercial and private banking, described RBS’ commitment to economic recovery in the UK as "unequivocal", and added: "Through the delivery of this Tooling Finance, we hope to not only safeguard but create jobs, and relieve a stressed supply chain within the UK automotive sector – a key sector for Britain’s manufacturing industry."
David Keen, owner of tier 1 supplier RDM Group and member of the Automotive Council, welcomed the fund’s launch, and said: "Tooling Finance is becoming ever more vital in the automotive industry and is essential if we are to grow the UK supply chain.
"RBS is the first bank to launch this specific funding and has spent a considerable amount of time understanding the needs of the vehicle OEM’s and the wider supply chain," he explained, calling RBS’ new finance service a "game changer", bound to immediately garner interest among companies such as RDM.
"I look forward to seeing this initiative improving the capability of the UK supply base with a bank that clearly understands this important sector and its requirements," he added.