THE ECONOMY
Caution: Westminster's industrial strategists at work
JOCK BRUCE-GARD YNE
The detailed examination that is now under way may. . . suggest that a compre- hensive merger of the car operations of Austin-Rover and Ford UK would make sense. Perhaps it would make better sense than the alternative "go it alone" policy or other joint ventures, and would be more likely to produce a stronger United King- dom manufacturing base, with more secure long-term job prospects for all . . . it is ridiculous at this stage to say that we should not even consider the options.'
Thus our unhappy brand new Industry Secretary on 5 February. Less than 24 hours later, `ridiculous' or no, considera- tion of the options was all over. Ford had been told to go away. Was this what Michael Heseltine had in mind when he told the noisy Young Conservatives in Blackpool last weekend that he did not believe that `our machinery of government is yet adequate to cope with the effort we must make in Britain to build anew and restore our industrial base'? Somehow I doubt it. It would take more than the inelegant somersault performed by poor Paul Channon to disabuse Michael Hesel- tine of the notion that Great Britain Ltd is best managed by the politicians.
Yet how typical it all was of the whimsic- al ways of Westminster with which car- making in Britain has had to contend for all of a generation! Towards the end of the 1950s the Macmillan government bribed and chivvied Ford and Vauxhall into taking on the idiosyncratic labour practices of Merseyside, and Rootes to perform a similar role on Clydeside. Then, in the 1960s, when Linwood had bust Rootes, the Wilson government bribed Chrysler to take up that thankless challenge and to compete for subsidies with the British Motor Corporation, heir to Austin and Morris, which was already in the intensive care ward. Next Lord Kearton's Industrial Reorganisation Corporation ingeniously spatchcocked BMC together with (at that stage still profitable) Leyland to form British Leyland, under the guidance of Sir Donald Stokes, a high-pressure interna- tional salesman who did not rank industrial management amongst his foremost skills. Then, in the late 1970s, when Chrysler reckoned it had had enough, Peugeot was wooed and won to pick up the baton, so that the game of competitive subsidisation might continue, and as British Leyland slithered helplessly towards receivership the improbable figure of Sir Don Ryder was plucked by Harold Wilson from Fleet Street to give it the kiss of life. When that interesting experiment came rapidly to grief the Callaghan government, at the 11th hour, at long last picked a manager, in Sir Michael Edwardes, who may not have merited the rating that he gave himself, but was at least capable of obliging those who worked for British Leyland to face the facts of life. No sooner had he knocked some sense into Longbridge and Cowley than the present Government volunteered to pay a king's ransom to induce Nissan to set up shop in Cleveland and keep BL on its toes. Such is the record of 'central management of the economy' by the Department of Industry in which the Heseltines and Wal- kers place their faith.
So we have pumped £2.2 billion into BL, and stand guarantor for a further £1.5 billion. Yet, after all the `essential' invest- ment in new product lines, BL's share of our domestic car market languishes in the high teens, and its share of sales across the European Community stands at an almost invisible 3.9 per cent. Big is not necessarily beautiful, and — as Volvo, BMW, Jaguar and Rolls have proved in turn — a relative- ly tiny market share can be highly profit- able (and also, incidentally, compatible with a high labour input) providing that you are aiming at that small segment of the market-place where quality and reliability are far more important than price. But that is not the segment which Austin-Rover cater for. Austin-Rover is trying to survive in the piranha-pool of the middle-to-lower family and corporate car market in which nobody in Europe is at present making a respectable return, and some of the piranhas — Renault, for example, or Peugeot — are more chewed against than chewing.
In this environment a shot-gun marriage with Ford (and for all Paul Channon's protests that the BL board was entirely happy about the contemplated fiancailles, there was a smell of cordite in the air) may not have been the perfect answer. It could well have been argued that the Ford-BL collective share of the UK market, mea- sured both by dealerships and by custom- ers, would have called for scrutiny by the Monopolies Commission. It may well also be true that BL's acquisition of robotics means that it would have been worth more to Ford than Ford's distribution network would have been worth to BL (and BL had not been induced to go to Merseyside).
These, however, were not the criteria by which the prospect of an Austin-Rover/ Ford engagement was surveyed at West- minster. For after Westland it is, apparent- ly, the European card which is all the rage among the assorted disaffected, from Michael Heseltine through Edward Heath to Tony Beaumont-Dark, at Westminster. Europe, they insist, must get its act together before it is swallowed piecemeal by the Yankees or the Japs. An admirable sentiment, no doubt. Only, as with West- land, the potential partners look more like the wolf than Red Riding Hood. Nor is there, for the motor-car industry as for helicopter-makers, a club of national arma- ments directors to dictate (or at least to say they would dictate) who should buy what.
In any case the most obvious potential beneficiary of what we are told is the new regime of `collective responsibility' in Downing Street is not Europe at all, but Japan Inc. Holy wedlock between BL and Ford must have called in question BL's existing liaison with Honda. All the signs are that Honda infinitely prefers an extra- marital relationship with BL — and judg- ing by the Westminster reaction to the prospect of a legal tie between Austin- Rover and Ford, who can blame them? Softly, softly catchee monkey seems to be their motto. And a good one too. We, the British taxpayers, feed the monkey, and they acquire it inch by inch.
Only what do our neighbours say then? Ted Heath was at his most richly scornful on the subject of 'guarantees' regarding UK sourcing of components once own- ership of our last remaining car-maker had passed to alien hands last week. His scorn may be misplaced. Vauxhall, we are told, is working might and main to improve its Britishness, and Nissan is pledged even- tually to be four-fifths Union Jack. But there is a vital distinction between the two which our former Premier seemed to over- look. Vauxhall gets the bits it doesn't buy in Britain from somewhere else in Western Europe. Very anti-patriotic of it, maybe: but hardly to be logically criticised by such a dedicated European as Mr Heath. Nissan — or Honda, for that matter — will presumably collect their unconsidered trifles from Japan. We already stand ac- cused of being Japan's Trojan Horse to Europe. The Government's confidence that when Nissan goes into mass produc- tion in Cleveland its products will tnp freely into France and Italy is not univer- sally shared. It takes an act of faith to believe that we would get away with a Honda-dominated BL as well.
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