25 years ago and now
5. It is over a quarter of a century since the
UK vehicle industry faced a similar sense of crisis. In the
1970s, productivity and industrial relations gave cause for concern
throughout the industry. In 1973-74 the giant British Leyland
Motor Corporation (BLMC) faced collapse.
It was at that time responsible for around half the total UK output
of cars. In December 1974 the Government gave the company a guarantee
of £50 million to keep it afloat, pending a thorough investigation
of its affairs and its prospects by a team led by Sir Don Ryder.
The team's report was published in April 1975, recommending public
investment on a massive scale, to provide for production of over
1 million cars in all sectors of the market by the mid-1980s.
By July 1975 British Leyland was in effect nationalised. Meanwhile,
Chrysler, the owners of the former Rootes Group, were making losses
on their UK operations and were bailed out by the Government in
December 1975. Vauxhall too were in difficulties. Of the four
volume producers, only Ford were profitable.
6. In 1975 the Central Policy Review Staff (CPRS)
conducted a review of the British motor industry. There were at
that time formidable problems: the future of British Leyland,
overcapacity, labour relations, the quality of vehicle and component
production. A change in attitude was seen as urgently required,
together with a more stable fiscal environment. The prospect of
increasing import penetration by Japanese car manufacturers was
made only marginally more palatable by the pious hope that at
least some of the traditional export markets for British cars
might be recovered. The report of the CPRS dismissed out of hand
the idea that overseas companies might produce cars in the UK.
Looking ahead, it saw a best case scenario as production of 2
million vehicles in 1985 and a worst case scenario of less than
half of that. Over the next ten years, production slumped to a
level below the worst scenario set out. The trade deficit in cars
7. Our predecessors 25 years ago on the Trade and
Industry Sub-Committee of the Expenditure Committee devoted much
of their attention for two years to the affairs of the motor vehicle
industry. Between January and June 1975 they held over 20 sessions
of oral evidence on the motor vehicle industry, and produced a
Report of over 120 pages in August 1975.
Following the authorisation of public financial support for Chrysler
in December 1975, and the publication at the same time of the
CPRS study into the motor industry , the Sub-Committee embarked
between January and June 1976 on a detailed study of the Chrysler
decision, involving over 20 sessions of oral evidence. Its Report
of over 130 pages was published in July 1976.
8. A quarter of a century later, production had risen
to record levels of around 1.8 million cars. While imports number
1.5 million, exports exceed 1 million. Three Japanese manufacturers
produce almost a third of vehicles produced in the UK, and export
most of them to other EU destinations and even to Japan. BMW are
producing at Cowley a Mini aimed at the North American and mainland
European market. Ford will end car production at Dagenham
for many decades their flagship plant but are to produce
Jaguars at Halewood, a plant with a troubled history, as well
as continuing their production of Jaguars at Coventry. Their purchase
of Land Rover from BMW seems to offer a promising future. Vauxhall
are to cease car production at Luton, but plan to continue and
perhaps increase production at Ellesmere Port. The Ryton plant,
formerly owned by the Rootes Group and then by Chrysler, has taken
on at least for the time being a new lease of life under Peugeot.
The commercial vehicle sector is doing well. There is a thriving
automotive design and technology sector. Little or none of
this was or could have been anticipated in the reports produced
25 years ago by the CPRS or our Committee predecessors. A review
of the vehicle or any other industry cannot reasonably be expected
accurately to identify the likely trend of developments in the
medium or longer term.
9. The UK vehicle manufacturing industry is seen
by some as in the midst of a crisis which could lead to the meltdown
of a significant part of the UK's manufacturing base. Others
emphasise the good news, which is rarely given the same attention.
A select committee cannot usefully or properly comment on the
prospects of large publicly quoted companies. What we can do is
to set out what we have been told and try to present a balanced
view of the current situation, and some pointers to future developments.
In view of the great interest in the House in the subject, an
early debate in the House on UK vehicle manufacturing would be