Leading Article: Relax: the British car industry is a success story

TIME WAS when visitors to the Birmingham International Motor Show would, like the rest of the nation, be desperate to see the latest "make or break" Leyland Wombat or whatever. Things are more easy-going now. We can take a calm look at some new designs from two of the most distinguished names in British car history: Rover and Jaguar. Both have chosen to reuse names for their attractive, retro-styled motors - Rover with its 75, Jaguar with its S-type.

But venerable though the marques may be, they are in fact the badges of "foreign" manufacturers. Jaguar is now owned by Ford, and Rover was taken over by BMW. Most famously, Rolls-Royce has been eaten up by Volkswagen and BMW. Is it a shame? Perhaps. Does it matter? No.

In an era of globalisation the notion of "indigenous" industries is clearly dead. Automotive companies, like so many other firms all over the world, are linking up, engaging on joint projects, merging. Proud names such as Mercedes-Benz and Chrysler see the need to exploit the vast new economies of scale that world manufacturing dictates. Mercedes-Benz will probably always be thought of as a German company, but many of its shares will be owned by Americans. Managerial decisions may well be still made in Germany, but they ill avail the German worker if the substance of them is to relocate manufacture to Spain or America.

What matters now is that as much as possible design, manufacture and assembly is carried out in Britain. And the signs here are much more hopeful than they have been for decades.

British industrial relations are now as good if not better than anywhere in Europe. When Nissan and Toyota built their greenfield factories they were not disappointed with the co-operative workers or the quality of the cars they made, which were every bit as good as the Japanese products. One of the greatest puzzles left over from the Eighties is why it was preponderantly foreign managements that were able to take advantage of the labour market and other reforms of that decade while British management failed to live up to the challenge. It raises some uncomfortable questions about home-grown executives in those days.

But the most common grumble of the economic nationalist is that all the value-added or design work is undertaken abroad and that Britain only serves as a screwdriver plant or a giant aircraft carrier cynically constructed to accommodate Japanese imports. But the Japanese plants also assemble high-value items such as engines in Britain. They have radically increased the "local content" of their products and, in time, will support more and more original design and engineering here. They will do so if it makes economic sense and if our designers and engineers match those in competing economies. The success of firms such as Formula 1 (designing for Ferrari) and Cosworth and a string of small automotive design outfits suggests that we have something to build on.

So will the renaissance continue? If British management was once the problem, then perhaps it is now British politicians who are letting the side down. The location of Toyota's second European plant in France rather than near the first in Derbyshire is a warning of what could happen if we stay outside the euro.

Companies will not like the exchange-rate risk. But the big danger is that our European partners won't put up with our devaluing our currency and gaining an "unfair advantage". The single market would then be in doubt. That would mean far fewer exports making their way into European showrooms. Given the uncertainty, it is too early to relax if you make Rovers.