As well as the collapse of MG Rover, Ford pulled out of car manufacturing and Vauxhall closed Luton. What has happened is that the Japanese have taken up most of the slack, adding 300,000 units of capacity. That is not much consolation to a car worker in the West Midlands but, as far as UK plc is concerned, it is good news.
The fact is that the UK industry is now mostly made up of secure, successful car factories – the first time that can be said since the early Sixties.
Take an expected capacity of 1.5m in 2008 (a small drop because of the closure of Ryton and cutbacks at Ellesmere Port), approximately one million of that is made up of factories that are currently expanding and are profitable. The three Japanese factories plus Mini are all success stories, while Land Rover also appears to have turned the corner.
Investing in the UK
Sceptics may ask why a Japanese car factory could not go the way of Ryton – migrate to a cheaper location in Eastern Europe. In fact, the two situations are very different: Nissan, for example, has invested more than £2bn in the UK over the last 20 years.
With design facilities in London, development at Cranfield and manufacturing in Sunderland, it is an operation with very deep roots in the UK. It is also largely safe against exchange rate fluctuations, with a large part of its purchasing now in Euros.
Tribute to workforce
Contrast that with Ryton, a satellite operation in an old factory, assembling components shipped in from France.
It is a tribute to the Coventry workforce that they kept an old Chrysler factory going for over 25 years in the face of an owner who had never really wanted British plants in the first place.
The fact is that the saving in hourly labour (on average Eastern Europe is around 20% of the cost of the UK) is not enough to write off huge investments in the UK.
The future for others
But, if most factories are looking secure, what are the prospects for the others?
Ellesmere Port will be engaged in a vicious bidding war with four other European factories to be one of the four to be chosen to build the next Astra (effectively factories have to put in bids to head office as if they were third party suppliers). It will not be an easy one to win, but it is not a lost cause.
This, incidentally, was why Tony Woodley of the TGWU was sounding so moderate over the unofficial strike at the Cheshire factory – his main concern is still having members there in five years’ time.
Jaguar has different problems. Ford is more worried about coming up with models that sell. Even if it could find workers that would make the cars for free, that alone would not turn Jaguar around.
Manufacturing production figures
Production figures havge fallen since 1996 due to Ford and Vauxhall, offset by growth at Mini and Japanese carmakers.