The boss of Vauxhall pointed out in an interview yesterday that talk of a UK revival in car-making is fanciful
Nick Reilly deserves hearty congratulations for saying the politically unsayable. The boss of Vauxhall pointed out in an interview yesterday that talk of a revival in British car-making is fanciful. His own company, as well as most other big household names in the industry, struggled to find British producers capable of making suitable parts at scale. The result, he noted, was that UK automakers had to buy lots of foreign-made components, with all the attendant currency risk, shipping costs and much longer turnaround times. "It's not enough to have Nissan, Toyota, Vauxhall manufacturing the products," he said. "We'll never be able to compete with another country where the suppliers are surrounding the car plants."
To many, Mr Reilly's comments will seem common sense ? having to go abroad for many, or even most, of your parts is slower and more expensive. But in Westminster they are close to heresy. Compare this view of a hollowed-out industry from a senior practitioner (Mr Reilly is the president of General Motors in Europe) with the vision of a manufacturing renaissance propounded by ministers. "A new economy might be able to rise, Phoenix-like, from the ashes of the old," promised Nick Clegg in a speech made in February. "The new jobs, the new products, the new ideas that will lift us up will be born in the factories," David Cameron told the CBI last autumn.
The truth is that all parties have colluded in the wilful neglect of manufacturing industry over the past three decades. The result in many cases is that British supply chains ? where a component manufacturer makes parts for another firm to put into a finished product, whether that be a car or a vacuum cleaner ? are broken. The Manufacturers' Organisation point out that 96% of a JCB digger was made in Britain in 1979; by 2010, that proportion had fallen to 36%.
Point this out and, as Mr Reilly will soon find for himself, you get drowned in a wave of fatalism. You cannot beat cheap Chinese competition, runs the argument. Well, yes and no: German manufacturers also buy foreign parts ? but their imported proportion of what is known in the jargon as intermediate purchases is much lower: around 25% versus about 50% in the UK. Following the German example here would require British frontbenchers to do more than talk up manufacturing, or scatter a few million around. The government should direct the state-owned banks to lend more at lower rates to key sectors, and give tax relief to firms that produce and employ staff in the UK. Ministers can either choose to heed manufacturers' warnings now ? or face the prospect that there not be an equivalent of Mr Reilly in a few years' time.
Source: http://www.guardian.co.uk/commentisfree/2011/apr/25/british-manufacturing-reality-bites-editorial
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