Ford move a blow to British industry

By Thomas Abraham

LONDON, APRIL 30. The British motor industry suffered a new blow after Ford indicated that it was stopping large-scale car manufacturing in Britain and would lay off workers at its main assembly unit at Dagenham outside London.

Ford's decision to end car manufacture at Dagenham comes at a time when the Blair Government is desperately trying to cope with the fall out of BMW's decision to sell the loss- making Rover car company. A venture capital company which is negotiating to buy Rover has said that it will convert Rover from a volume car manufacturer to a specialist manufacturer of sports cars, which means that up to 20,000 jobs may be lost.

The low productivity of these plants, the high value of the pound and a general overcapacity among car manufacturers in Europe have been blamed for the job losses. But it has become a political issue as well with the Opposition Conservative party blaming the Government for not doing enough to protect British jobs. The Prime Minister, Mr. Tony Blair, recently met Ford's chief executive, Mr. Jacques Nasser and his officials are reportedly in touch with other executives.

With local government elections due in early May and a general election expected in a year's time, the Blair administration is trying to limit the damage caused by job losses in the manufacturing industry. The Government has been helped by falling unemployment and a steadily growing economy. But the new jobs tend to be created in the service industry rather than in the manufacturing sector. This has political implications for the Labour party as many of its core supporters are in the area affected by manufacturing job cuts. The party is already coping with increasing disillusionment from its traditional supporters, and if the Government is seen to be doing nothing to prevent these job losses, it will further erode its core vote.

The problems at Ford and Rover are only the latest disasters to hit an industry which, at one time, boasted of world class manufacturers like Austin and Morris as well as luxury brands like Rolls Royce and Bentley. But underinvestment and declining labour productivity left British manufacturers unable to compete with more efficient producers like the Japanese car companies. Today, the few remaining British names are all foreign owned - Rolls Royce and Bentley are owned by Volkswagen while Jaguar and Aston Martin are owned by Ford.

At the root of the problems faced by the car manufacturers in Britain is the high value of the pound relative to the euro, which make exports to continental Europe, Britain's main market, uncompetitive.

Manufacturers in general have complained about the effect the rising pound has had on exports to Europe.If Britain had joined the single European currency, its manufacturing industry would arguably be under less strain.

While the British car industry is in a state of decline, its potential for revival has been demonstrated by the Japanese manufacturers who have set up plants in Britain. Nissan, for example, runs Europe's most productive car manufacturing plant at Sunderland, in north-east England.

Honda and Toyota have successful manufacturing bases in Britain. But even the efficient Japanese manufacturers are being hit by the high value of the pound.

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Section  : International
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