Decline, fall and a modest resurrection

Britain's car industry has suffered terribly. But it is probably through the worst, says Peter Rodgers

When the British Motor Corporation was formed more than 40 years ago from a merger of two famous old names, Austin and Morris, it was the largest car company outside America. The worst part of the history of increasing competition, under-investment, bad marketing and dreadful labour relations that came to typify the British-owned motor industry was that the outcome was never inevitable, and failure might well have been reversed at several critical points.

BMC and its successor companies, British Leyland and Rover, slid backwards in the league tables despite receiving more than £2bn of state aid in the 10 years to the mid-Eighties.

Yet as Chrysler has shown in the United States, inefficient production, dud models and enormous losses do not always have to be fatal, given dynamic managers, supportive owners and a workforce convinced that change is necessary. The one-time basket case of the US automobile industry now has $7bn cash in the bank, a pot of honey that last week attracted a $22bn takeover bid.

In the mid-Eighties, even British Leyland began to look seriously competitive again after a decade of rationalisation that included the loss of more than 80,000 jobs and the closure of five large car plants.

Its achievements were all the greater because it had been through a deep recession that slashed demand and provoked a price war between its biggest UK competitors, Ford and General Motors' subsidiary Vauxhall.

But BL had its unwilling shareholder, the British government, to contend with. Margaret Thatcher could not abide a company that to her was a symbol of all that had been wrong with British industry. She was against state ownership in principle, and any emotional attachment she may have had to continuing British ownership of an important part of the car industry was weakening rapidly. Ray Horrocks, then chairman of the Austin Rover division, described to a Commons committee in 1986 what he called the "cruel and shameful persecution of British Leyland."

That year the government attempted to break up and sell BL to foreigners: truck manufacture was to go to General Motors and cars to Ford. The Ford talks broke down over detail within three days of announcement, and GM withdrew in a huff after public outrage forced ministers to withdraw Land Rover from the sale.

Shortly afterwards British Aerospace volunteered to take BL off the government's hands for a song. This was politically popular, because the public still preferred a British solution. But BAe was soon to face difficulties of its own from which it is only now emerging, and could not afford to give BL, renamed Rover, the backing it needed to develop its chosen strategy of high quality and relatively low volume. The sale to BMW was as much to secure BAe's precarious future as Rover's.

The British government's priority by then had become investment and employment in the UK, not protecting national ownership. While Rover was scorned, and Jaguar left to be taken over by Ford in 1989, the Japanese were increasingly assiduously courted by government officials.

Honda had paved the way in 1978 with an agreement under which BL built cars to its design, and a decade later it bought a fifth of the British company, successfully helping it to modernise. But the key developments were the Japanese "transplant" factories of the mid to late Eighties, set up to get round European Union quotas on shipments of Japanese cars. The Nissan plant near Sunderland was announced in 1985, followed by Toyota, near Derby, and a Honda engine plant in Swindon. By 1999 their combined output is expected to be near 1 million cars a year.

Japanese management methods have influenced British companies and the component-supply industry has been forced into enormous leaps forward in quality that have made Britain as a whole more competitive and done wonders for the trade figures. But if continental fears are proved right, the transplants would be better described as Trojan horses. The Japanese in the 21st century could have as big a stake in European car manufacturing as the Americans now have through subsidiaries of Ford and General Motors. This will benefit Britain, now that it has been through the pain of adjustment to foreign ownership of its motor industry. The rest of the EU is right to fear the effects.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape