UK: EDITORIAL - OPPORTUNITY KNOCKS - THE BRITISH CAR INDUSTRY.

UK: EDITORIAL - OPPORTUNITY KNOCKS - THE BRITISH CAR INDUSTRY. - The pessimists have a clear view of the British car industry. To them, the sale of Rover to BMW was a potent symbol of Britain's inability to remain a world industrial power, as the last Br

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Last Updated: 31 Aug 2010

The pessimists have a clear view of the British car industry. To them, the sale of Rover to BMW was a potent symbol of Britain's inability to remain a world industrial power, as the last British-owned car manufacturer limped into foreign ownership. The industry, they say, can now only subsist at the whims of its new overseas masters, who are preying on the UK's comparatively cheap labour costs and the most employer-friendly legislation in Europe - it is fortunate that protectionism and transportation costs make it necessary for Japanese car manufacturers to have European production facilities. The last vestiges of volume car engineering skill will shortly be ripped out of the UK or left to wither away, leading to a sustained and irreversible brain drain. Further, any profits made from UK operations will be smartly expatriated and redeployed elsewhere as Britain becomes steadily poorer.

Such pessimists should be challenged. First, they need to consider the startling facts of UK car production: as Andrew Lorenz points out in his article on the British car industry (p36), the number of cars manufactured in the UK has risen from 890,000 in 1982 to 1,376,000 in 1993, and is forecast to reach 1,800,000 by 1998. Britain is expected to have a trade surplus in cars within the next five years; this has not been achieved since the early 1970s. The levels of investment in the UK's car industry over the past 10 years dwarf the expatriation of profits by foreign parent companies. The implications of these figures for the domestic workforce and for the myriad of ancillary businesses, such as the component suppliers, are obvious: the UK has a vibrant industry in place which is not going to disappear overnight.

The other factor that must not be under-estimated is the importance of globalisation, which Robert Heller considers in Perspective (p11). The automotive industry is in the vanguard of globalised industries; as boards of directors become increasingly multinational, the location of the head office becomes more and more irrelevant. A car manufacturer's management must seek the optimal location for its operations, investing according to the company's needs rather than according to parochial influences. If Ford eventually decides to locate its European research and development facility solely in Merkenich, near Cologne, at the expense of Dunton in Essex, this will be because Merkenich can do the job better. Car buyers may be able to afford nationalistic tendencies; multinational businesses are discovering that they can't.

It would clearly be preferable to have a British-owned worldwide car manufacturer to stand alongside our component manufacturers such as GKN and T and N, but that opportunity has been denied for the time being due to the spectacular mismanagement and suicidal labour relations of the post-war period. The opportunity that does exist is for British managements and work-forces to capitalise on the dramatic growth in domestic car manufacture. Those operations that can achieve and sustain world-beating performance during this period of growth will have nothing to fear in the longer term, whatever the hue of their shareholders. If enough British operations can sustain these standards, the industry in this country will develop its own momentum and direction.

The attainment of world-beating performance is more easily said than done. But if we take a look back 15 years, few people then would have imagined that two overseas companies would effectively be competing to acquire Rover's bankrupt forebear, British Leyland (even with the added spice of Land Rover). The British car industry has come a long way in recent years; it can be expected to go further.

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