Rover and Harland & Wolff: The Government's to Blame    
    James Thurgood looks at the latest casualties of globalism    
    "IT'S YOUR FAULT." "No, it's your fault!" This seemed to be the telephone dialogue between Prime Minister Tony Blair and Joachim Milberg, head of the German car-maker BMW, as the two argued over the latter's decision last month to sell off the Rover and Land Rover firms which it had bought in 1995.

Blair was apparently incensed that the Germans had deceitfully negotiated the sell-off behind his back. They in their turn laid the blame with the British Government in its failure to sign up to the Euro.

Both sides to the argument were in fact talking nonsense. The Euro had absolutely nothing to do with the basic problems of Rover and Land Rover. At the same time, a British head of government who had not objected when the companies were bought up by BMW when the Tories were in power, and had done nothing since taking power himself to alter that state of affairs, should have understood that once British firms are taken into foreign ownership their new bosses are under no obligation to consult anyone but themselves and their shareholders as to what they do with those firms.

Britain is having to learn the simple rule that she should have learned a long, long time ago: that when you relinquish ownership of an asset you relinquish control over it. The new masters have the right to dispose of the asset as they see fit, and if you don't like this arrangement you should not have given up ownership in the first place.

Deep-rooted problems

Of course, the problems of Rover and Land Rover are rather more complex than can be sorted out by a simple argument over who owns the companies, whether in fact they are British-owned or foreign-owned. That is not denied.

The problems began, as most people know, many years ago; and they have been the topic of endless discussion by economic and industrial analysts ever since. The badly put-together conglomerate British Leyland, formed in 1968 in pursuit of the theory that bigness was essential to survival in the modern world motor market, was from the start beset by managerial and shop-floor difficulties - the latter much exacerbated by trade union militancy. Beyond these difficulties lay certain strategically ill-advised decisions concerning the conglomerate's future. Motor industry watchers seem almost unanimous that the most far-reaching of these was the decision to try to compete in the world market for mass-produced cars instead of concentrating on lines where company expertise and resources gave better promise of success. Geoffrey Owen, writing of Leyland in The Spectator of 30th October 1999, said:-

‘In 1968 Donald Stokes, the company's ebullient boss, was persuaded by Harold Wilson and Tony Benn (both of whom believed that big is beautiful) to merge with the ailing British Motor Corporation (BMC). The new entity, British Leyland, was to be Britain's national champion in cars and trucks.

‘BMC was the country's largest manufacturer of mass-market cars, but its Austin and Morris models were losing sales to Ford, and Leyland's managers had no experience of competing in this league. The outcome was calamitous. Not only did the creation of British Leyland fail to stop the rot at Austin and Morris (the lack-lustre Allegro and Marina were no match for Ford's Escort and Cortina), but it also damaged the healthier parts of the group, including Rover.’

Rover at this time still had an image for good quality and would have been well placed to compete with the rising BMW in the up-market range. The latter company, however, had embarked on a wiser development policy, to which, until recently, they remained committed. Said Owen:-

‘The German company had not deviated from its chosen strategy and - helped by a much more buoyant home market - had gone from strength to strength. Rover, by contrast... was looking increasingly vulnerable, not least because so many other manufacturers had entered the luxury end of the market.’

The larger picture

Owen's analysis here is accurate so far as it goes, but it is like so many diagnoses of the ills of the British motor industry in that it focuses on symptoms rather than causes. Foreign motor manufacturers, and the governments that sometimes influence their policy decisions, are also made up at the top of fallible people who can sometimes misread the market and make disastrous mistakes; and BMW's decision to buy Rover is turning out to look like a prime example of this. But such diagnoses seem invariably to commit the error of getting too close to specific catastrophes instead of taking a step backwards and looking at the larger panorama of the British motor industry - and indeed of British manufacturing as a whole - in the post-1945 period.

British industrial policy during this time has oscillated between two theories concerning government's approach to industry.

One, which was standard Labour philosophy until the onset of the Blair revolution, is that government must intervene wherever necessary to prop up ailing industries, sometimes with vast injections of taxpayers' money, in order to preserve jobs and thus industrial workers' votes - without any really serious attempt to tackle the underlying causes bringing on such ailments in the first place. There was always in this policy the flavour of short-termism and panic, with an eye much more to the next election rather than to ultimate national economic needs.

The opposite theory, long resident in Tory ranks but official gospel since the Thatcher takeover, is that government should abandon the policy of intervention and leave industries to sink or swim in a "free market", the view here being that if, consequently, British manufacturers sink rather than swim that is their fault; it is brutal commercial justice and not the responsibility of the nation's leaders. If then foreigners take our trade, while at the same time buying up most of what is left of our own industrial resources, good luck to them - they deserve to do so!

The deeper rationale behind this doctrine is that in the longer term the British economy will benefit: we will redirect our efforts and investment into areas where our talents are more suited to success (financial services, pop music and TV programmes, for example!); if foreign takeover of our manufacturing industry makes it become more efficient, then all well and good - let's welcome it; finally, market forces and the need to adapt to them will eventually force British industry to achieve the desired efficiency and competitiveness, and in time we might hope thus to see more of it not only successful but actually home-owned as well.

In fact, both of these concepts have been thoroughly discredited by the events of the past 20-30 years. "Market forces" have not provided the stimulus expected to regenerate British manufacturing, as forecast in Thatcherite rhetoric, and it is legitimate now to ask just how many more decades we must wait for them to do so. Foreign ownership has in certain areas been followed by improvements, but at an immense cost: decisions concerning the survival of vital industries in this country are not any longer in our own hands - as recent developments at Rover and Ford have underlined. And are we not making an error in assuming that superior foreign techniques of industrial management and organisation cannot, where they are evident, be imported without ownership having to be imported with it? Did not Japan's emergence into a major industrial power come from observing what made foreign industries work and emulating it - without any wholesale sell-out to foreign owners?

Clearly, on the other hand, a reversion to the Old Labour practice of just pumping money into declining industries, without any firm steps to grapple with the causes of the decline, is not only economically impractical but politically impractical too, since an overwhelming consensus across the political spectrum dismisses it for the failure that it is.

It all starts with government

None of this, however, dilutes the truth that, at the end of the day, the ultimate responsibility for a nation's industrial capability and fortunes lies with government. Whatever the importance of private commercial skill, initiative and enterprise, government it is that creates the environment in which these things operate, or fail to operate, to national advantage; government it is that sets the rules determining their operation; not least, government it is that alone can create the cultural and educational background making for industrial competence.

And it is here that government in Britain has singularly fallen short of requirements in the post-war period - if indeed it ever met such requirements previously.

Since as far back as the Industrial Revolution, it has been an almost uniquely British doctrine that private economic forces, left to themselves in a business free-for-all, will produce the results that are best from a national point of view. The doctrine survived for a long time because British world leadership in manufacturing gave us certain advantages that were slow to disappear. But some time before the end of the 19th century, the emergence of stiff competition in Continental Europe, particularly Germany, provided testimony to the superior benefits of government and industry working in close partnership in pursuit of a clear and firm national policy. Only in the late 20th century, however, did Britain reap the full fruits of the inadequacy of old-fashioned laissez-faire thinking, with the destruction, one after another, of her once-great manufacturing companies and the foreign takeover of so many of those that remained.

The first step towards a reversal of this process of decay and decline is for us to grasp the principle that where the economy is concerned it is at the level of government that the buck stops.

And from that first step there must come a policy, given all the full force of government intelligence and will, dedicated to industrial recovery and resurgence - just as that very policy lifted Japan from out of the rubble of World War II to the level of the world's second industrial power.

Spearhead and the British National Party have often enough reiterated the necessity of nationalism and protection as means of regenerating and then preserving Britain's manufacturing strength. In the case of the Rover crisis, this is particularly pertinent. The quality of Rover cars has in fact improved considerably over the past decade or so, but this has not been reflected in sales. If the strength of the pound has affected exports, business in the UK should have compensated, but British motorists, lacking the nationalist preferences of their German, French and Japanese counterparts and under no government pressure to change those preferences, still prefer to buy foreign models. Note here what Geoffrey Owen said about BMW benefiting from "a much more buoyant home market."

Nationalism and protection are an essential part of the policy needed for British industrial recovery. However, they are not enough on their own; they merely provide the required framework within which further measures must be taken.

Need for a change in priorities

Our whole scale of national goals and priorities has to change, and this is largely a cultural question just much as it is one of economic policy. "New Labour", just as much as the Tories, seems incapable of recognising this, let alone putting it into practice.

Education, to begin with, has to reflect the nation's will and purpose to produce more people with the required technical skills for modern industry. That is a mammoth task with British education in the state in which it exists today. A complete revolution in our educational goals must precede such a policy. Will New Labour even begin to carry out such a revolution whatever its professed good intentions in this sphere? That our present Prime Minister seems to be concentrating the bulk of his time and attention on appeasing terrorists, hectoring and bullying Serbs, persecuting retired right-wing dictators and pushing through "gay rights" legislation does not give room for much hope in this regard.

But Tony's preoccupations reflect his and his government's cultural priorities. Labour - even New Labour - has never really been efficiency-oriented in any field at all, including the field of industry. In the meantime, the Tories remain fixed in their belief that industrial regeneration is not really a government's business.

Shipbuilding going down the tubes

As well as the debacle of Rover, we have discovered, only last month, that the once great Harland & Wolff shipbuilding yards in Belfast are likely to go out of business because their one remaining lifeline, a contract to build the mammoth new cruise liner Queen Mary II, has been awarded to a French company. Tony has protested that his government has done all it possibly can within Euro rules to get Harland & Wolff the contract. It seems not to occur to him that the French give not a damn for those same Euro rules and almost certainly have given under-the-counter subsidies to their company to enable it to outbid H&W. This consideration aside, were Cunard, who made the order, a proper British company under British control instead of being based, as it now is, in Florida, the question of awarding the contract to a foreign firm should never have arisen.

From this analysis, two essential needs stand out if the downward trend in British industrial strength is to be reversed.

The first is that we in this country must rid ourselves of the idea that the fortunes of our major industrial companies are affairs that stand outside the province of government, that government is powerless to do anything about them; to the contrary, it is only from a lead given by government that other forms of action, however much they may involve entrepreneurial enterprise and initiative and shop-floor good sense and competence, can be effective.

The second need lies in the rejection of globalism and the embrace of nationalism. The aim must be a British industry, owned by British capital and producing for British consumers, who in their turn will buy British products and services. Trade overseas should revert essentially to what it used to be: an arrangement by which we buy goods we cannot produce ourselves in exchange for those in which we produce a surplus. Though this amounts to something of an oversimplification in the complex economy of today, and would allow a few exceptions to the general rule, its basic soundness of principle nevertheless still applies.

The one certainty of our times is that these commonsense rules of the game will not be recognised, least of all adopted, by any of today's mainstream political parties.

We therefore have to resign to the fact that things are going to have to get worse before there is any chance of their getting better.

    Spearhead Online