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The Guardian (London) March 21, 2002

Copyright 2002 Guardian Newspapers Limited
The Guardian (London)

March 21, 2002

SECTION: Guardian City Pages, Pg. 30

LENGTH: 1070 words

HEADLINE: Redundant


So has the British car industry finally been forced off the road by old plants, global over capacity and the fact that it is easier to make employees redundant here than in continental Europe?

Certainly the volume producers are under severe pressure but total industry turnover is more than pounds 50bn a year and exports are worth pounds 19.8bn. The number of people employed directly by the car companies has remained fairly static over the past 10 years at more than 200,000. There are more companies making cars here than any other country in the world, including the US - though many are very small specialist firms such as TVR, Morgan and Lotus. Even Vauxhall is producing 132,000 cars annually at Ellesmere Port and across the road from the Luton car facility it is building 86,000 vans.

The GM subsidiary has started to produce new Vauxhall Vivaro and Renault Trafic van ranges at Luton and invested pounds 200m at the Cheshire plant.

It anticipates no further changes in the size of its 7,000 workforce from now on and business affairs manager David Crundwell says: "We have a stable manufacturing situation here now with both of the sites producing very strong new models."

He admits that Luton has been the only plant to close in Europe but says this was because it would have needed a lot of new investment at a time when GM needed less capacity to stem losses of more than Dollars 700m (pounds 480m) on this side of the Atlantic. It was "completely erroneous" to suggest that labour laws had any relevance to a decision made by GM Europe in Zurich rather than head office in Detroit, said Mr Crundwell

The T&G's Tony Woodley is angry: "A modern, productive, efficient profitable car plant is closing when, by any measure, it should have stayed open. It is being sacrificed for no good reason other than to increase shareholder value."

The union leader believes GM needed a sacrificial lamb to appease investors who had seen the value of their stake eroded dramatically in recent years. The same criticism was also levelled against Ford.

While Ford has turned its back on car production at Dagenham, it has invested pounds 420m in building up its diesel engine building capacity there.

It has also boosted a similar factory at Bridgend in south Wales, while continuing to produce 68,000 vans a year in Southampton. Its acquisitions of Jaguar, Land Rover and Aston Martin have given it a clutch of classic British car brands which are all accelerating away on the back of investment in new models. The new Range Rover, the X-type Jaguar and Aston Martin Vanquish are helping the Ford group to produce 440,000 vehicles annually from its 50,000 staff.

Honda and Nissan of Japan are building new models at their respective facilities at Swindon and Sunderland. Nissan was the biggest car producer last year with nearly 300,000 vehicles off the line.

Even though *** has retreated from Rover ownership it clings to that company's former Cowley plant where it has started to produce the fast-selling new Mini.

Producing cars is no longer as people-intensive as it was. PSA Peugeot-Citroen's Ryton plant produced 85,800 vehicles in 1992 with a workforce of 3,600. Today it is producing more than double that figure with 500 fewer staff.

The Society of Motor Manufacturers and Traders, the car industry's umbrella organisation, is bullish about the outlook for car making in Britain, though it remains concerned about the continued strength of the pound.

Recent foreign investment by Honda, Nissan, Ford and others shows "the UK is a great place to build cars", according to spokesman Nigel Wonnacott.

Not everyone sees the industry so positively. Karel Williams, motor industry researcher at Manchester University, says the picture is mixed. The final assemblers "have been knocked about a bit over the last 12-18 months", he says, citing the closures at Dagenham and Luton and the closeness of the call over fresh investment for Nissan's north-east plant. He adds "the real damage has been to the components industry".

The volume carmakers are effectively assembling kits imported from continental Europe, he argues. "With the strength of sterling against the euro over the last few years that's the only way that makes any sense." Mr Woodley also fears that those car companies that are left to fight it out abroad - and Britain is exporting more cars than ever before - are doing so on the back of pressurising suppliers.

"It is impossible to measure the damage that is being done to this section of manufacturing but we are talking tens of thousands of jobs being lost as the vehicle makers increasingly source their materials in low-cost eastern Europe - Poland, Czechoslovakia and Hungary."

Britain has scored with exports of luxury cars to US markets -Halewood built Jaguars are a case in point - and *** sees a serious role for the Mini in the group's overall plans to sell 1m cars a year. Cowley production is being ramped up to the 100,000 a year mark. But, according to Mr Williams, the picture for the volume makers is very different. "Large scale (UK) assembly with an indigenous components industry behind it. . . is retreating into the past."

Certainly, there are clouds on the horizon. Although Nissan agreed to build the new Micra in Sunderland, the damaging strength of the pound/euro exchange rate almost cancelled out the advantages of the plant's being Europe's most efficient producer. Nor can the Washington facility be viewed as a stand-alone plant but rather as part of the Nissan/Renault axis.

Toyota chose Britain as its first base in Europe but has since built a plant in France and is about to build another in the Czech Republic.

Sooner or later MG Rover will have to decide whether it has the wherewithal to go-it-alone with the development of a new model range or whether it will have to find a partner. The company showed a concept car at the Geneva motor show and has acknowledged that is in talks with the Chinese company China Brilliance, though no decision has been taken.

Mr Williams believes that the reshaping of the car industry and other manufacturing sectors has had a significant social cost. "The fact is that since the mid 1990s employment (growth) in the UK has been in services not in manufacturing, we have given away our manufacturing base, and that may not be such a smart move."

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