British car industry gets the lead out

After withering for decades, British car manufacturing is returning to something resembling the good old days – albeit with foreign owners and vastly changed work practices

It’s not uncertain anymore: there is a renaissance in UK automotive manufacturing

IN THE MID-1970s, the image of the British car industry was one of endless strikes, and nationalisation forced on Whitehall by the threat of impending collapse.

Despite all of the difficulties, the British still managed then to make more money selling their cars abroad than they did paying for those that are imported.

The record was soon lost. Surprisingly, perhaps, the UK went back into the black in March; partly because UK drivers are buying fewer new models, but mostly because of a resurgence in car-making.

Six months ago, workers at Vauxhall’s Ellesmere Port believed that they were in trouble. Last week, the Cheshire plant celebrated the news from parent company General Motors that it will build the next generation of Astras.

Success has not come easily. Long-held work practices will wither. In future, Ellesmere will operate 24-hours, seven-days-a-week, 51 weeks a year. Closures over Christmas and summer will be no more. Working hours will rise from 37 to 41, yet the changes have been accepted overwhelmingly by workers and their union, UNITE.

Workers have agreed to a two-year pay pause, though a shift premium will be paid to those on the graveyard shift, while pay rises of 1 per cent above RPI inflation will be paid afterwards.

The business will safeguard 2,000 jobs at Ellesmere and multiples more in the ever-expanding supply-chain that now exists to fuel a foreign-owned, but nevertheless successful, industry.

Describing the news as “fantastic”, 48-year-old Paul Hannon, working at Ellesmere for 16 years, said: “It will take me to retirement so I am made up.”

Nearly half a million cars were built in the United Kingdom in the first four months of this year, with more than 400,000 going for export. Japanese manufacturers, Toyota, Nissan and Honda are all adding jobs at their plants, with 500 to come at Honda’s Swindon plant as it moves production away from its home base.

The Indian-owned Jaguar Land Rover is building an engine plant in Wolverhampton, along with taking on 4,000 new staff over the last 18 months and another 1,000 to follow.

Last September, BMW announced that £500 million will be invested at its Oxford plant to build the next generation of the Mini, following its successful revival.

Meanwhile, Nissan’s Sunderland plant – once a poster-child of Margaret Thatcher – is to continue building the Qashqai, having already produced one million of them.

Back in 1986, it began life with 450 workers. Today, 5,400 are employed, while 350 will be added this year to build Nissan’s electric car, the Leaf, from next year.

Life is good, too in the luxury car market, with Rolls Royce – now owned by BMW – selling 3,500 models last year, with increasing numbers going to China.

The Volkswagen-owned Bentley brand, on the other hand, recorded its best year in four last year, selling more cars in China than the UK for the first time.

Since late 2010, £4.5 billion of extra investment has been announced by manufacturers of all types, offering a clear path for the next decade, says the Society of Motor Manufacturers’ and Traders. “It’s not uncertain anymore: there is a renaissance in UK automotive manufacturing,” says the SMMT’s chief executive, Mr Paul Everitt.

The resilience of the industry has been shown by the fact that no plants closed over the past three years, despite an international fall in sales.

There are signals, meanwhile, that the British success could complicate relations with Germany, since the Ellesmere Port decision could endanger the survival of a General Motors-owned plant there.

Indeed, the German workers complain that they are in danger of losing out because General Motors – which is trying to curb losses in its European arm – are picking off workers one-by-one.

Already, German trades union leader Rainer Einenken, who represents the Opel workers at the now-threatened Bochum factory, said the Ellesmere deal is “declaration of war” against Bochum.

Despite the healthy state of the British industry, there are issues, since supply-chain problems exist for engine manufacture, despite a focus by Mandelson and his successor, Liberal Democrats’ Vince Cable.

“The component supply sector is still wobbly – it’s much easier to manufacture components in eastern Europe or even further afield, so that part of the automotive industry still has a long way to go to find a long-term strategy for itself,” industry analyst Ian Fletcher said.

Talks, once secret, but now revealed, have been held between British ministers and the German Bosch automotive parts maker about it setting up in Britain.

Nevertheless, the Society of Motor Manufacturers and Traders point to the existence of 2,350 UK automotive parts companies, employing 82,000 people.

“It is estimated that every job in UK vehicle assembly supports 7.5 elsewhere in the economy. Of all UK suppliers, over 70 per cent manufacture their products in the UK,” it says.

However, while a new generation of British car workers look more confidently to the future, their predecessors live with the consequences of past failures.

Last week, it was learned that former MG Rover workers are to get compensation of just £3 each after a seven-year battle for redundancy payments.

The company was bought by businessman John Towers and three others – who became known as the Phoenix Four – for just £10 in May 2000.

Early high hopes soon faded, while fury erupted when it was discovered that the four partners had paid themselves £42 million, leading BMW to describe them as “the unacceptable face of capitalism”.

For now, the workers can but appeal to the Phoenix Four to make a donation to the compensation fund. In a final insult, the cost of postage will be deducted from the £3.