British car plants can be competitive with the best on the Continent.
It was a hard, relentless and frightening year, one that raised the spectre of the 1930s depression. And if the forecasters are only half right, 1993 will bring no more than the first glimmerings of recovery. Yet there were some important signs as the year closed that not all the gains the British economy made in the 1980s had been surrendered to recession.
The best news came from Louis Hughes, the president of GM Europe when he announced that Vauxhall's car assembly plants at Luton and Ellesmere Port were among his company's "lowest cost plants in Europe". Since devaluation, Ellesmere Port had been turning out Vauxhall Astra's for a remarkable £364.30 per car less than the same model coming off the assembly lines in GM's German and Belgium plants.
For years efficiency comparisons between German and British car plants have been embarrassing. To hear that the performance of British plants has drawn ahead is nothing if not an indication of a shop floor revolution.
It would be no surprise to hear that Nissan's Sunderland plant is one of the most efficient in the world. Sunderland is a new plant with a hand-picked labour force and no history of labour-management confrontation. Ellesmere Port and Luton could not be more different. Both are old plants, operating within a traditional union framework and both have seen their fair share of disputes. The message is clear: given good management and successful products, even once indifferent British plants can be competitive with the best on the Continent.
Nor is the success story merely a spin-off from devaluation. GM's European bosses say the Luton plant assembling the Cavalier had established a significant cost advantage over its German counterpart, Russelsheim near Frankfurt, before devaluation. The German workforce had been told that a Cavalier/Opel from Russelsheim was costing DM750 more than one from Luton.
Productivity is still behind at the British plants but the gap is closing. However, labour costs are lower and quality levels are as good as those on the Continent. One consequence has been a big build up in exports to European markets over the last two years.
The Vauxhall story is not unique. Almost on the same day, Land Rover announced that it was increasing production of the Discovery range of four-wheel drive vehicles to 600 a week, a 20% increase on output at the beginning of September when production was raised from 500 to 550. The expansion has come despite the recession because of strong demand in Europe and growing sales in Australia, the Middle East and Japan.
At the CBI's annual conference in the autumn there was a lot that was not good news. The CBI's new body, the National Manufacturing Council, for example, revealed a study that showed Britain only 13th in the world competitiveness league. There was other gloomy news as well about manufacturing: output is down 8% since 1990, investment has fallen 25% over the same period and the number of jobs has dropped by 11% since mid-1990.
Yet it was not all gloom. Exports of manufactures rose 5% in 1991 and a further 3% in the first half of 1992. Productivity rose by 58% between 1981-1991 and Britain's share of main manufacturing countries exports was rising.
At times the conference was a bruising affair, with businessmen venting their feelings about government performance. But when it came to discussion of industrial policy, Michael Heseltine was able to offer some help: with export finance and services, "a war on red tape" and the creation of a special competitiveness unit and studies of the problems facing industry. It was thin stuff. Nevertheless, what mattered was that his message was unequivocally that manufacturing is important and is seen as a key to economic success by the Government.
If the message was of more substance than the measures, this should not come as a surprise. There are few of us who believe in the magic wand theory: wave it, spend more money and all will come all right. What does matter is economic stability. Government can create this, then more managers will successfully slog down the same hard road of product improvement that Vauxhall took.
Roger Eglin is managing editor of The Sunday Times.