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PostUK Trades Unions Excesses of the 1960s and '70s (John Heelan, -UK, 01/22/13 5:45 pm)
Henry Levin's review of the fate of Triumph (Meriden) (21 January) hits the nail on the head--as usual. In the late 1960s and early '70s, I lived and worked in the heart of the UK manufacturing industry in the Midlands, designing and implementing applications for that industry and observed the problems on a daily basis. It was the era in which the actions of over-powerful trades unions converted the UK economy into today's post-industrial one, almost wholly dependent on service industries.
The Midlands manufacturing area became the the source of wage inflation throughout the UK, as different trades unions demanded wage parity with each other despite having very different skill sets. Even sections within the same union would demand parity with their more skillful colleagues (e.g., lathe operators demanded parity with the far more skilled toolmakers that designed, constructed and maintained the very tools the relatively unskilled lathe operators used). One of my projects was held up for six months while the company negotiated with the union that was demanding pay parity with computer operators for unskilled machine-workers.
Then there was inter-union strife, so-called "demarcation disputes" (e.g. only a member of the electricians union would be allowed to change a blown light-bulb), leading to "walk-outs," "lightning strikes," and "flying pickets." The net result was that customers could not rely on getting their products either on time or to the quality standard for which they had paid. (Henry is correct about the prevalence of "manufactured defects" to increase overtime opportunities. In one factory where I was installing a new system, the operators frequently made "mistakes" when cutting valuable metals and had to discard the unfinished pieces into a container each had under their machines. Unsurprisingly, at the end of shifts, many of those containers found their way to the unofficial scrap-metal dealer who actually had an informal office on-site!)
This trend was not just limited to the manufacturing sector but also endemic in the docks, mines, ship-building, railways, power stations and so on. On arriving back at LHR after trips abroad, our first question was always to find out which of the LHR unions were on strike--baggage handlers, firemen, maintenance workers, etc. There was always somebody!
Weak governments usually surrender to their paymasters and turn a blind eye to actions deleterious to the UK's common good. The Wilson/Callaghan Labour governments were in thrall to the trades unions. The Heath Conservative government was too weak to challenge the unions in the way that Thatcher did later. Yet successive Conservative governments did/do little to rein in the actions of big business (Henry Levin already alluded to the asset-stripping that killed Triumph and eventually the UK motorcycle industry), the banks and finance industry, preferring to find ways of transferring public assets into private pockets at heavily discounted prices. This process was continued by the Conservative-Lite Blair/Brown governments, and continues today with the Cameron government with its lack of control of the banks, the privatisation of the NHS and educational system. Nowadays, little of the UK's strategic infrastructure is owned by genuine UK companies rather than UK branches of overseas corporations.
The actions of the trades unions were instrumental in pushing the UK to a Post-Industrial Age. The actions of big business and the finance industry together with moving service industries to low-cost off-shore locations are gradually pushing towards the UK to yet another Age.
Perhaps there is a potential PhD thesis waiting to be written--"UK: 150 years from Empire to Subaltern State"?
JE comments: John Heelan makes a powerful case for how the trades unions contributed to the UK's demise as a manufacturing nation. From today's perspective, where organized labor is just a shell of its former self, the days of the "uppity" unions seem so long ago.
UK Trades Unions Excesses of the 1960s and '70s
(Istvan Simon, USA
01/22/13 4:00 PM)
I can add a few observations to this interesting dissection of the UK economy of the late 1970s. The first observation I would like to make in response to the wistful post of John Heelan (22 January), who, it seems to me, uses the expression "post-industrial service economy" in a nostalgic way, is that there is nothing wrong with a post-industrial service economy. All modern economies become service economies. Manufacturing continues to be important, and it is actually coming back to the United States, but it is eclipsed by the services.
As I mentioned before, I spent 1983 in the UK in Cambridge. And so I was witness to the denouement of the situation that John Heelan describes, in which Margaret Thatcher broke the power of the Unions. It had to be done.
Still I would like to add my perspective to this, because what was going on in the UK is not just stubborn and stupid unions that greatly contributed to their own demise, and the demise of UK manufacturing, but also I think there is responsibility in the UK class system, and the peculiar relationship between management and labor that developed there as a result of this class system. Though there are instances in the United Sates where something similar also occurred, for example what happened to the railway industry, unions and management had a much more cordial relationship in general here, with more realistic unions that adapted to the demands of competition and modern economies. This I think explains at least in part why manufacturing is still a robust section of the United Sates economy, whereas it is practically extinct in the UK.
In 1983 wages in the UK were low when compared to what existed at the same time in the United States. But wages are tied to productivity, and that is where the rigid and stupid attitudes of not just the unions but also the Labor governments that preceded Margaret Thatcher, which gave in to the Unions, sealed the fate of manufacturing in the UK.
The attitude of labor in the UK was of rigid non-adaptability. A watchmaker, when losing his job, rather went on the dole than retrain to do something else. The attitude in the UK was very much "give me back my old job, where nothing would have to change," as if industries owed their workers their jobs, no matter whether they were profitable or not, no matter whether the quality of the products produced was bad or good, no matter whether the market changed to prefer the products of Japanese competitors--see Henry Levin's description of the competition between Honda and the old Triumph motorcycles.
Margaret Thatcher started a revolution in the UK, in which this would no longer be accepted. It was the right thing to do and the right thing for the UK. It forced a more realistic behavior from labor. It came too late to save manufacturing, but it created a modern service economy.
All the major industries in the UK were losing money in 1983. British Leyland was in the hands of the government, thanks to stupid socialist policies of previous Labor governments. And British Leyland was like all other industries, losing money big time. So in 1983, I was witness to one of the most amazing moments of stupidity that I have ever seen, which illustrates the attitudes of labor and its relations to management that I alluded to earlier.
It was called the 5-minute washup case. At the time, British Leyland was paying workers 5 minutes free time at the end of their shift, so the workers could wash up before going home. Management had declared that henceforth they would no longer pay for these 5 minutes, and workers would have to wash up on their own time. Not totally unreasonable, I would say, given that British Leyland was losing money. But labor did not think so. So they went on strike. I heard on TV all sorts of stupid comments at the time about this. Things like, "We get dirty on company time. It is only 'fair' we wash up on company time."
The union lost the strike. Margaret Thatcher, the Iron Lady, had stared down the unions, and she broke their obstructionist ways. But once again, the unions did not learn from their defeat. They continued the same ridiculous attitudes all the way to the complete death of their industries.
Unions in the United States did not do that. Under similar threats and circumstances, they cooperated much more than in the UK with management, and recognized that an industry that is losing money cannot survive in a capitalist economy. That is why we still have with us the auto manufacturing industry, which is thriving once again, which learned to make products that could compete with the excellent cars coming to our shores from Japan and Korea, Germany, and so on.
JE comments: This in an interesting thesis, that the US has tended towards more harmonious labor relations because it never had the class demarcations of the UK. The UK was also at a competitive disadvantage in manufacturing because it was saddled with old plant and infrastructure--in a sense, it is a bonus to be a latecomer to the manufacturing game.
Cameron Sawyer has also written on this topic. Stay tuned.
- Death of the UK Auto Industry (Cameron Sawyer, Russia 01/23/13 3:47 PM)
It is widely believed that the UK automotive industry was killed by trade unions. (See John Heelan, 22 January.)
Certainly, the unions played a very significant, and very negative role, in the decline of the British automotive industry. But in my opinion, not the main one.
The 1960s and 1970s were a tumultuous period in the world automotive industry, which at that time was trying to adopt different manufacturing techniques (in which our John Heelan seems to have played a direct role) and achieve different levels of efficiency compared to the basically 19th-century methods which had been used up to that point. At the same time, the products themselves were evolving fast, especially in response to new emissions and safety regulations which started to be introduced in the late 1960s, which suddenly made the automobile a rather more complex device than it had been up to then.
The failure of the British automotive industry resulted more than anything, in my opinion, from its failure to modernize either manufacturing techniques or products, which caused it to quickly lose its competitiveness in the face, especially, of very strong Japanese competition. If in the 1940s and '50s, drivers all around the world carried tool kits and expected to have to deal with technical problems on the roadside, by the late 1960s drivers (among whose ranks women were appearing at a rapid rate) were becoming less tolerant to the idea that a driver must needs be a driver/mechanic. In the key US market, the niche occupied by British cars in the 1950s had been practically completely taken over by Japanese cars by the late 1960s. In 1959, the UK was the world's No. 2 car producer; by 1960 the UK had been passed by Germany; by 1970, by which time Japan had completed its meteoric rise to become the world's #2 car producer, the UK had been passed also by France to become #5. By 1975, the UK was producing only 1.6 million units a year or only 5% of the world market, cars still powered mostly by long-stroke pushrod engines designed in the 1930s.
So this trajectory of decline was well established before the trouble with the unions started. The UK automobile industry failed to keep up with the revolution in car design and manufacturing techniques which the rest of the world managed (the US automobile industry also had enormous problems keeping up, but in the end, unlike the British, it succeded, after various close brushes with death). Part of the failure is no doubt due to the vast amount of time and energy of management which was sunk into dealing with the--as it seems today--insane unions. Another part of the failure was the whole atmosphere in the UK at the time that capitalism was outmoded, and so the government is ultimately responsible for everything, not the management of companies, an atmosphere expressed in endless regulation and state interference with the management of private enterprise. But whatever were the contributory causes, it was ultimately an overall and total failure of management, and a failure of innovation. The ultimate blame really belongs with management, not with the unions, or anyone else.
After the industry had become irretrievably uncompetitive, asset-stripping was an absolutely rational next step. Asset-stripping doesn't work if the assets are being used productively.
JE comments: Presently, three of the top five auto producers are in Asia: China, Japan, and South Korea. (The US #2 and Germany #4 round out the top five.) The UK is #14, one spot behind...Iran.
Death of UK Manufacturing
(John Heelan, -UK
01/24/13 8:52 AM)
Cameron Sawyer and Istvan Simon gave their interesting perspectives (23 January) on my note about the decline of UK manufacturing (exacerbated by union strife) and the inexorable rise of the service industry. Both perspectives have elements of truth in them. Cameron blames management and lack of innovation: in my experience manufacturing management was playing a catch-up game with the competition, especially with German competitors that post-WWII were able to use Marshall Plan money to re-equip plants with the latest machinery while UK manufacturing continued to struggle with outmoded machine tools. Further, German competitors had a more motivated and productive workforce, leavened with a supply of lower-cost immigrant "gastarbeiters." Management was also at fault at times by refusing to acknowledge reality. (I know from personal experience one major aircraft engine manufacturer that refused to recognise the rapidly increasing cost of design and production, and relied on its undoubted product quality to see it through the bad times. It did not and they went bust.)
Cameron suggested there was a view that capitalism was outmoded and government intervention was more important. Difficult to support, as there were successive Conservative governments from 1951-1964 and 1970-1974. However the view that "government intervention was more important" was at its height during Labour governments (1964-1970 and 1974-1979). Another sociological element (in my humble opinion) was a general attitude that still said, "Well, we won the war didn't we!" that ignored reality. The major union damage was done between 1964 and 1979, which includes the period of the weak Heath Conservative government that caved in to union power.
Istvan compares treatment of unions in the UK and the US and blames the UK class system. Once again, there is some truth in that suggestion, but I suggest it stems more from the traditional stand-off between labour and management that still pertained until perhaps the late '80s. In praising the cooperation between labour and management in the US, Istvan forgets the 35 or so major US strikes in the 1960s and '70s. (Such events as the United Auto Workers nationwide strike against General Motors. That strike lasted 67 days, triggering layoffs at parts suppliers and steel companies. Nor let us forget the 1981 Air Traffic Controllers strike that Reagan ended by sacking 11,345 of them.) The best management approach I observed was in the multinational that employed me. The UK manufacturing workforce demanded a union as there were entitled to do under the law. The management agreed, but pointed out that pay rates would descend considerably to the union's basic rates for that industry. The request for a union disappeared..
Regrettably neither Cameron nor Istvan commented on the second part of my hypothesis, in which I suggested that governments in thrall to their paymasters in big business are as much a danger to the long-term economy of of their countries as those governments dominated by union power.
JE comments: Thoughts on John Heelan's second hypothesis?
- Death of the UK Auto Industry (Cameron Sawyer, Russia 01/23/13 3:47 PM)