Britain will eventually end up as a place where only high-end cars that need 'Britishness' are made

Poor old Coventry. And it's true that Peugeot wouldn't have closed the Ryton assembly plant - couldn't have - if British employment law was as strict as it is in France. But it isn't. So the jobs are exported across the Channel and another little bit of our automotive spirit dies.

The truth is that the heart had been ripped out of Ryton long, long ago. It had been in trouble since the early 1960s. It was one of the more productive bits of the old Rootes Group empire, making solid Hillman Minxes, sporty Sunbeams and imperious Humbers, but it still had its problems: low productivity, indifferent quality, strikes. Rootes was rescued by Chrysler of America in the 1960s, which wanted a European arm just like Ford and General Motors (Vauxhall). By 1975 it had had enough and turned to the Government for financial help. Chrysler blackmailed the Wilson administration with a threat to shut Chrysler UK in weeks if it didn't get subsidies. In return, the company signed a "planning agreement", the only one between a private concern and the Labour Government. In 1978 the agreement was ignored by Chrysler which sold its European operations to Peugeot for $1. Ryton survived assembling a French Chrysler (Simca), the Alpine, and then Peugeots: a "screwdriver" plant.

At that point, three decades ago rather than last week, the engineering and design capability went and Peugeot won the real prize - the Rootes/ Chrysler dealer network through which more and more Peugeots would be profitably sold and serviced. Peugeot also gained the distinction of being a "home" make with access to the then patriotic company-car buyers. That's why you see so many Pugs on the road. So what will close at Ryton is a shrivelled version of manufacturing, just as when MG Rover died last year it was very different to what had once been the British Leyland Motor Corporation. The loss, though painful, is not half as bad as it would have been years ago. That is something.

And so the industry is on its third cycle of decline. The first was the hollowing out of UK-based Ford, GM and Chrysler/ Peugeot in the 1970s. The second was the smaller factory closures of the 1980s - Abingdon, Canley, Speke, Linwood, Bathgate and Dunstable. Now we have also seen most of the big old centres go - Ford at Dagenham, Vauxhall at Luton and Longbridge. (How much longer then for Vauxhall's Ellesmere Port factory?)

The next round of decline will take more time to arrive. The newer greenfield factories and the ones where there's been heavy investment look OK, with Nissan, Honda, Toyota and BMW (Mini) doing good, profitable business.

In the long run, though, there seems little point in trying to compete with Eastern Europe, Korea and China. We will end up as a nation that crafts those high-end cars where "Britishness" means that they must be made here - Jaguar, Range Rover, Bentley, Aston Martin and Rolls-Royce. By that time - 2016? - the French, Germans and Italians will have experienced what we've just been though at Ryton and so many other places. For them, protective employment laws or not, the agony is yet to come.

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