Who says Britain doesn’t make anything any more? The motor industry shows not only that manufacturing exists in this country, but that it can survive and indeed thrive outside of the European Union.
The British motor industry is bucking the trend of decline – even though there are no longer any major British-owned motor manufacturers. It is an industry that thrives outside of the EU and demonstrably would thrive even more without the EU’s destructive restrictions.
The history and current state of the British motor industry provides a clear exposé of how employers and governments have worked together over many decades to point the finger of blame for their mistakes on workers.
It also shows how they sought to destroy trade union organisation to prevent workers from defending themselves – but mistakes were made by the unions too. In this feature we highlight the opportunities for the future of the industry and workers’ central role in it.
The motor industry in Britain has changed dramatically over the past fifty years, from the days when Fords, for example, was a pacesetter for industrial wage settlements, thanks to the organisation and determination of trade unions like the Amalgamated Engineering Union and the Transport and General Workers Union.
Just as the trade unions have changed through merger and takeover, so the industry has been transformed by foreign ownership and new technology.
But the motor industry is so much more than cars and includes bus, truck, van, engine, taxi, formula one racing car, specialist off road vehicle, coach, specialised construction vehicle and component manufacture.
Today, Britain is home to a range of manufacturing plants including 7 mainstream car, 7 commercial vehicle, 9 bus and coach, 8 premium and sports car, 8 Formula One and over 100 specialist and niche manufacturing plants. In addition there are 13 research and development centres as well as 6 design centres.
The industry as a whole employs 731,000 workers, of whom 146,000 are directly employed in manufacturing and 38,500 in motorsport including 25,000 engineers. In 2013, this workforce produced 1.6 million vehicles, of which 1.24 million were exported – making Britain the fourth biggest vehicle maker in Europe behind Germany, Spain and France.
The number of vehicles manufactured in Britain is increasing, while it decreases in every other European country except Slovakia. This growth is in marked contrast to the decline of manufacturing as a whole in Britain.
So why is the British motor industry bucking the trend of decline? Some have suggested that it was in part down to people spending their PPI compensation on this sector. But the real reason is the increase in export potential in Russia, the Far East (particularly China), and South America.
‘How did Britain end up without any major motor
manufacturers being British-owned?’
China is expected to import more automotive products each year for the next five years. Some 10 per cent of all British car exports go to Russia. Jaguar Land Rover, for example, exports 300,000 vehicles every year, 80 per cent of its production. China is now the company’s biggest overseas market (replacing the USA), while Land Rover is the leading SUV brand in Brazil.
Nissan’s Sunderland plant produced 500,000 cars last year. This is more than in Italy, where the Fiat Motor Company decided to transfer its production of the quintessentially Italian Fiat 500 to Poland. Most of those vehicles produced at the Nissan Sunderland plant are the Qashqai, 80 per cent of which are exported. Vauxhall’s Ellesmere Port plant produced 73,000 Astra models, of which 76 per cent were exported.
Almost half of the 2.5 million cars sold in Britain are built in Germany. These statistics explain why the motor industry is not bothered by the possibility of Britain’s exit from the European Union.
On the one hand its exports to non-EU countries are set to grow further, especially to China, Russia and South America. Secondly, the trade in cars is a strong reason why the EU will not raise trade barriers against an independent Britain. Why would Germany let obstacles be raised against its motor industry’s single biggest market?
The same argument can be made for other manufacturing companies. For all Cameron keeps trying to woo countries like India and China into increasing trade with Britain because these are among the world’s fastest-growing markets, Britain is not permitted by the EU to negotiate separate trade deals with them! Trade with these countries clearly provides part of the alternative to dependence on the EU.
British-owned JCB’s CEO and its owner have publicly stated that Britain leaving the EU would have no effect on motor manufacturing.
How did Britain end up without any major motor manufacturers being British-owned? It’s worth looking at the largest previously British-owned motor manufacturing company British Leyland (BL). It was created in 1968 by a merger of British Motor Holdings and the Leyland Motor Corporation led by Sir Donald (later to become Lord) Stokes.
At the time BMH was on the verge of collapse and Leyland was a successful commercial vehicle builder. The Wilson Labour government of the time encouraged the merger hoping that Leyland could make BMH more successful.
Unfortunately Stokes was not able to turn the new company round, with its internal competing models and rival brands. In 1975, it had to be partially nationalised by the Labour government of the day.
The company was strongly unionised, as were other domestic companies such as US owned Ford and Vauxhall, and the media tried to blame the companies' ills on the unions.
In fact, the problems were lack of new models, lack of design and development, infighting, such as the refusal of Triumph to accept the Rover V8 engine for the new Stag model, and competing brand models such as the Morris Marina and the Austin Allegro, the Triumph 2000, the Rover 2000 and the Austin Princess.
BL, under Stokes, could not properly manage the integration of the multiple companies in the group producing competing products. It failed to invest in the design, development and production of a single family of cars like Ford and Vauxhall, which would have saved on development costs and allowed benefits from the economy of scale.
In 1977, Michael Edwardes was appointed chief executive of BL by the Labour government. He announced that his first job was to take on the unions across the company. He started by closing the Speke factory in Liverpool after the workforce took industrial action. This was followed by more plant closures with the loss of 90,000 jobs and by the sacking of a union convener.
Thatcher saw this as a good example for her to follow after she formed a government in 1979. In 1984, the Jaguar marque was sold off, subsequently bought by Ford along with the successful Land Rover marque. Both would later be sold to the Indian Tata Group. The successful truck division was sold to the Dutch company DAF.
The BL bus division was spun off to become Leyland Bus. Rover became jointly owned with Honda of Japan – and then was sold by the government to British Aerospace, which subsequently sold it to BMW. BMW was only interested in the Cowley plant to develop the Mini.
The remaining Rover and MG marques were sold to a hedge fund, Phoenix, when BMW offloaded its other manufacturing assets of the original Rover Group. Government money assisted with the sale to Phoenix. Then in 2005, Phoenix’s MG Rover went into administration and its key assets were bought by the Chinese company SAIC. Chinese-built MGs are today being part assembled at the old Longbridge site.
The other British-owned mass car builders were the Rootes Group, that included the Hillman, Sunbeam, Humber, Singer, Commer and Karrier. They were taken over by the struggling US giant carmaker Chrysler in 1967, which then sold on the remnants of the company to the French company Peugeot in 1978. Peugeot closed its last remaining plant at Ryton in Coventry in 2007 with the loss of 2,300 jobs.
Luxury carmakers Bentley is now owned by Germany’s Volkswagen while Rolls Royce motors has been carved up between Volkswagen and German car maker BMW.
What a sorry tale of the destruction of an industry! Capitalism, with financiers at the helm, played at car manufacture from the 1960s, interested only in asset-stripping and short-term profits. It enlisted governments to help each phase of its dirty game, and together they sought political profit from blaming and punishing the unions.
The wave of so called “new” car-makers began to arrive in the late 1970s following the collaboration between Rover and Honda, but the first new plant was to be the Nissan plant in Sunderland. Thatcher offered Nissan a deal, in which it could buy the land for its new plant at agricultural rates at a knockdown £1,800 per acre. Honda started production in 1985 and opened a new engine plant in 1989. Toyota followed in 1989.
‘Free of EU industrial policy, we could invest in the capital and training needed.’
Clearly all these dramatic changes had an effect on the workers and trade unions in the industry. Both BL and Chrysler had launched fierce anti-union campaigns, encouraged by Thatcher and the media. Thatcher joined in with attacks on unionised industry and with more anti-union laws. But, again encouraged by Thatcher, Nissan was to launch itself as the first union-free motor giant. The Amalgamated Engineering Union, already shedding members at an alarming rate, not just in the motor industry, but in the manufacturing sector as a whole following Thatcher’s assault on industry, felt its back was against the wall.
Nissan was persuaded to engage in a “beauty parade” of trade unions to be recognised in a single-union agreement with a no-strike clause. To its shame, the AEU “won” this deal, which led to an independent works council with workforce representatives that had no connection with the union. So the AEU was never to be in negotiation with the company.
Today, membership density is just 25/30 per cent of the workforce in most of the “new” Japanese companies. So Thatcher’s plan was clear. Close down as much of the unionised motor industry as possible and replace it with non-union plants, or at least plants where the unions had no power.
Honda and Toyota followed suit, with the merged union of the AEEU, a combination of the AEU and the EETPU, signing up to the same sweetheart deals. This became a model for other employers, especially from Japan and South Korea, to follow.
Today, most of the long established motor manufacturers like Ford and Jaguar Land Rover still have collective bargaining. Unite and the GMB are the main unions, and Unite has recognised the motor component sector as a growing part of the industry. It has tried to meet the new situation, creating a Vehicle Building and Automotive section of its membership that includes the component sector. It campaigns around its policy that calls on the government to build on and extend Britain’s domestic supply chains – pointing out that too much of the supply chain for vehicles comes from overseas.
Unite also calls for government to encourage public sector bodies to support British manufacturing jobs through their procurement bodies. In other words, British public sector employers should buy British-made vehicles for their fleets. Also the motor manufacturers should buy components from British-based companies.
Desirable as these may be, both of these policies are, of course, not permitted by the EU and in particular by TTIP (see Book Review, page 22). Unbelievably, Unite argues to stay in the EU, whose policy is to create a motor industry hub in countries like Slovakia, based on cheap skilled labour! Slovakia currently produces more cars per capita than any other country.
What Britain has to offer is the skills of its engineers, whether building McLaren Formula 1 cars or Land Rovers. As a nation we need to be expanding those skills, passing them on to new generations, developing new clean technology for powering motor vehicles.
Out of the EU we could implement Unite policies. Out of the EU there will continue to be no trade barriers, because, as previously quoted, half of the 2.5 million cars a year imported into Britain are built in Germany. Not the VWs, Audis, BMWs and Mercedes, but two of Britain’s favourite brands: Ford and Vauxhall. Ford only builds engines in Britain today. So Germany has much to lose from raising trade barriers with Britain.
Out of the EU, Britain could negotiate trade deals with those countries that want British vehicles – China, Brazil, Russia and so on. Free of EU industrial policy, we could invest in the capital and training needed, and develop transport and other policies that support British industry.
● related article: 'Motorsport valley': a centre of manufacturing excellence