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Post Death of the UK Auto Industry
Created by John Eipper on 01/23/13 3:57 PM

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Death of the UK Auto Industry (Cameron Sawyer, Russia, 01/23/13 3:57 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.

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  • 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?

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