Orders of the Day — Motor Vehicle Industry

Part of the debate – in the House of Commons at 12:00 am on 16 December 1975.

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Photo of Mr Patrick Duffy Mr Patrick Duffy , Sheffield, Attercliffe 12:00, 16 December 1975

As the House knows, I am the Chairman of the Trade and Industry Sub-Committee of the Expenditure Committee. For six months this year my colleagues and I conducted an investigation into the British motor vehicle industry. I warmly endorse the words of the right hon. Member for Bournemouth, West (Sir J. Eden) about the purpose of its work, the rigorous analysis that sustained its findings and the impartiality that at all times characterised our conclusions and, I believe, our recommendations. I also wish to pay tribute to the service we receive from a most able Clerk and specialist adviser.

I pay a further tribute to my colleagues on the Committee for the quality of their contributions and the enormous amount of work they undertook. They assimilated a huge amount of written evidence and attended 60 meetings and made numerous visits. I believe that we were punctilious in the fairness of our approach. We heard evidence from shop stewards at Cowley, Longbridge, Ryton, Linwood, Dagenham, Luton and Dunstable. We also visited Cowley, Dagenham, Linwood, Ellesmere Port and Dunstable, and made a point of holding discussions jointly with management and unions. In regard to formal evidence, the record will bear out that one-third more unions than management witnesses appeared before us either at Westminster or during our visits to plants.

I have looked briefly at the CPRS Report and I am delighted to see that its main conclusions closely parallel our own. It is important to remember that our Report was about the motor industry as a whole, including commercial vehicles, whereas the CPRS Report dealt only with the manufacture of cars. However, one of our main conclusions—namely, that 12 cars would be chasing 10 buyers in the next 10 years—is confirmed by the CPRS. Therefore, the implications of excess capacity are very serious.

I wish to make a brief analysis of some of the reasons for the British motor industry's present plight. In 1964 that industry was about the same size as the main European motor industries. Its new capital investment produced a new range of vehicles efficiently. Now, however, the United Kingdom industry is small scale in world and even European, terms. The stagnation, relative decline and the financial difficulties facing all but one of the major car assemblers represents an economic catastrophe which, in scale and impact, is almost without precedent in British industry.

The saving grace of the British industry has been the manufacture of commercial vehicles and components. Without those resilient and efficient sectors, our motor industry's balance of payments would barely have been in the black. I find the present situation in the industry astounding in view of the fact that, despite all our difficulties, this country is still a nation of relatively high prosperity. With its high per capita incomes and highly developed and complex industrial base, the United Kingdom is a favourable environment for a motor industry, and a car industry in particular. Although the motor car has its detractors, the fact remains that it has brought freedom of travel and greater enjoyment to many millions of people.

When the purchase of a car is such a high priority with so many people, why has the car side of our industry failed so badly? From my Sub-Committee's study of the industry, I am convinced that Government, management and labour must all share the blame. Governments have been unable to resist the use of the industry as an economic regulator. Various studies suggest that the British motor industry accounts for a key 11 to 12 per cent. of GNP, directly or indirectly. Its significance in terms of employment and our balance of payments is very great.

All this has proved too much of a temptation to Governments of both parties. The artificial booms and slumps in the market for vehicles have been engendered by changes in sales taxes and hire-purchase terms. This has made it impossible to plan investment production and capacity utilisation over even the medium term. By contrast, the West German Government have avoided a short-term policy weapon for their car industry on the ground that the longer-term possibilities of the industry are the crucial factor in the steady growth of the German economy.

Although in the last few years it seems that Government economic management has taken a more responsible view of the industry, erratic usage of capacity led to reduced investment in plant and equipment, and eventually to reduced investment in new models. To a large extent the damage had been done.

The second tranche of the blame must fall on management. Because of the rate of growth of our economy, which has been lower than that of our rivals, our exports have been essential for the survival of our motor industry. It seems that some managements have failed to grasp this nettle. I do not believe a large home market is needed when we require large exports. If the product, marketing and efficiency are right, cars can be exported at prices that cover full accounting costs of production.

British managements bemoan official interference to the point of the detriment of getting on with the job of designing, producing and selling cars. British management's preoccupation with "production" as such led to insufficient attention being paid to marketing and industrial relations.

Management failure is perhaps best exemplified by a recent incident at Cowley when the management threatened to send home the work force if a production rate of 28 cars an hour was not achieved. When the men worked at that rate they ran out of parts and components because the logistics of production—the responsibility of management—were not good enough. Poor direction from the top has contributed significantly to the industry's difficulties.

The work force cannot be free from blame. The multiplicity of unions has led to inter-union rivalry and helped to make a poor situation worse. Far too frequently the strike has been part of the negotiating procedure, sometimes even as an opening bid. The strike record of the British motor industry is a sign of the weakness of union organisation and not its strength.