The resurgence of the British motor industry is among the most remarkable economic stories of recent times. It boomed after the birth of mass motoring, then crashed in spectacular style thanks to industrial strife in the 70s, before being salvaged by foreign owners. Today, three new cars roll off production lines each minute in places such as Solihull and Sunderland – and we should take stock of this sector’s astonishing success.
This remains an industry laden with national symbolism. Think of the swinging sixties, those stylish Minis and E-Type Jaguars. A decade later it was stuck in reverse, so shackled by strikes and short-termism it served as a showcase for a stagnating economy. Things could not be more different now. The country’s carmakers motored through the downturn, and latest figures show an export-led boom with soaring sales, rising employment and significant investment in new plants and products.
This industry offers signposts on the road to prosperity – although now ones to be followed rather than avoided. For a start, and most importantly, it shows the positive power of globalisation as a dynamic force. The high-tech car plants and specialist engineering firms dotted around Britain rebuke those that argue global capital is inevitably engaged in a race to the bottom.
When foreign firms arrived to buy up brands such as Rover, there was hostile talk of ‘betrayal’ and ‘sellout’ from both the xenophobic right and anti-globalisation left. Yet car makers from Germany, India, Japan and the United States invested heavily – an astonishing £7 billion in the past two years alone – and pursued long-term strategies, even reviving some iconic British brands. They show the strength of an open society that welcomes money and people from abroad.
Compare this with France, which retained government stakes in car companies, focused on ownership, and failed to tackle union intransigence. Labour costs rose compared with rivals, as governments pumped in cash and told bosses how to run businesses. The result of such meddling and protectionism is employment still falling in the sector and – for the first time in almost 50 years – more efficient British workers making more cars than their French counterparts.
Britain is a base for more manufacturers than any other European country – as well as eight of the eleven Formula One teams, a cluster of innovation that ripples through the industry. But this is not to negate the need for fine-tuned government support, including tax credits for research and development, on which all parties are unusually united.
Foreign firms came to Britain for flexible workforces. Although car plants remain largely unionised, foreign owners imported a consensual style of management across operations. ‘They have decided to meet the challenge of globalisation by working with their staff, not against them,’ said one union source. I was struck visiting the Mini factory in Cowley to learn everyone received bonuses – and by one shop floor staffer saying her previous NHS job felt more like working on a production line.
The other key attraction was entry to the European Union – which underlines the extreme risks of withdrawal. The motor sector employs 770,000 workers, many in the Midlands and the North, and earns more than £10 billion a year for the Exchequer. Given additional tariffs on trade with Europe if Britain pulled out, plus risk of delays to delicate supply chains, it is little wonder most automotive firms back continued membership.
Yet the industry does not just focus on Europe. It skillfully adapted to shifting global markets by developing products trading on British heritage that appeal to the new global rich; think of all those Bentleys and Range Rovers. It also took a lead in reducing carbon emissions within an industry not noted for environmental sensitivity, highlighting the crucial role of ‘green growth’ – shown most visibly by thousands of electric Leafs pouring from Nissan production lines.
This unlikely triumph, with exports doubling in a decade, shows how globalisation can work to Britain’s advantage. The country’s car-building renaissance has created a smart industrial model, an engine for growth a million miles from the spluttering vintage variety that once collapsed so disastrously.
This post is an edited version of an article Ian wrote for The Guardian.
- Guest Blogger: Ian Birrell. Newspaper Columnist and Foreign Correspondent