Commentary: Learning to live with the Japanese

It has been a bad year for the British car industry; of that there can be little doubt. Yet the annus has been more horribilis for some than others.

Yesterday, two disparate events summed it up. In Burnaston, Derbyshire, the chairman of Toyota was cheered to the echo by 1,000 workers as the first car rolled off the production line at its new British plant.

In London, meanwhile, the management of Ford was breaking the news of a further rash of UK job losses to rather more glum-faced union representatives.

Although separated by 150 miles, the two developments were inextricably linked. Once Toyota reaches full production of 200,000 cars a year it will be employing 3,300 UK workers - similar to the number being made redundant by Ford, which produced 452,000 vehicles last year with a workforce of 50,000.

To attempt direct comparisons of productivity using such figures is invidious, since Ford carries out many more functions in the UK than Toyota does or will for the foreseeable future.

Yet the message is clear. To live with the Japanese and, incidentally, compete with the best of Europe, the 'indigenous' British car industry will employ fewer and fewer.

Later this decade, Toyota and its fellow Japanese car makers, Nissan and Honda, will be producing at least 600,000 cars in Britain with a combined workforce of about 10,000.

In common with Rover, Vauxhall and the rest of the industry, Ford's difficulties this year have been compounded by a domestic market that has fallen by a third in three years.

But Ford has also been the author of some of its own misfortunes, having misread the market too often and chopped and changed its pricing structure with bewildering regularity while still coming to terms with the ill-starred pounds 1.6bn Jaguar purchase.

The cruel truth is that without the Japanese the car industry would be in an even sorrier state than it finds itself today. Without Honda, Rover, for instance, would have been a busted flush.

For those in Dagenham who see their jobs being transferred to Derbyshire, it is of little recompense to know that the British car industry (not to mention the nation's balance of payments and the fortunes of the component supply sector) is slowly being revitalised by the Japanese.

In the long term, Ford and the rest of the car industry will also reap the benefits. But in the meantime, the process of transition will continue to be painful.