Globalisation is good. Ask a carmaker
Published by The Guardian (3rd February, 2015)
The resurgence of the British motor industry is among the most remarkable economic stories of recent times. It boomed after the birth of mass motoring, then crashed in spectacular style thanks to industrial strife in the 70s before being salvaged by foreign owners picking through the wreckage. Today three new cars each minute roll off hi-tech production lines in places such as Solihull and Sunderland – and we should take stock of this sector’s astonishing success.
This remains an industry laden with national symbolism. Think of the swinging 60s, those stylish Minis and E-Type Jaguars. A decade later it seemed in terminal decline, so shackled by strikes and short-termism that it served as a showcase for a stagnating economy.
Things could not be more different now. The country’s carmakers motored through the downturn, and the latest figures show an export-led boom with soaring sales, rising employment and significant investment in new plants and products.
This industry offers signposts on the road to prosperity – although now ones to be followed rather than avoided. And above all, it shows the positive power of globalisation as a dynamic force that can strengthen economies, create good jobs, unleash innovation, increase skills and improve productivity. The car plants and specialist engineering firms dotted around Britain are a rebuke to those who argue that global capital is inevitably engaged in a race to the bottom.
When foreign firms arrived to buy up brands such as Rover, there was hostile talk of betrayal and sellout on both left and right. Yet carmakers from Germany, India, Japan and the United States invested heavily – £7bn in the past two years alone – and pursued long-term strategies to revive iconic British brands. This shows the strength of an open society that welcomes money and people from abroad.
Contrast this with France, which retained government stakes in car companies, focused on ownership, and failed to tackle union intransigence. Labour costs rose compared with rivals, as governments pumped in cash and told bosses how to run businesses. When Renault tried to open a plant in Turkey, its chief executive was summoned by the French president and forced to promise that future jobs would go to French workers. The result of such meddling and protectionism is that employment is still falling in the sector; and the latest figures show that, for the first time in almost 50 years, British workers make more cars than the French.
Britain is the base for more manufacturers than any other European country: seven major carmakers, eight premium producers, nine bus builders and dozens of niche manufacturers – as well as eight of the 11 Formula One teams, a cluster of innovation that ripples through the industry. This is not to deny the need for fine-tuned government support, including tax credits for research and development, on which all parties are united – if only the National Health Service could be so fortunate.
Foreign firms came to Britain for flexible workforces. And though car plants remain largely unionised, foreign owners have imported a consensual style of management across their operations. “They have decided to meet the challenge of globalisation by working with their staff, not against them,” said one union source. I was struck visiting the Mini factory in Cowley, Oxford, to learn that everyone received bonuses – and by one shop-floor staffer saying that her previous NHS job felt more like working on a production line.
A key attraction for foreign investors was Britain’s EU membership – which underlines the extreme risks of withdrawal. The motor sector employs 770,000 workers, many in the Midlands and north, and earns more than £10bn a year for the exchequer. Given additional tariffs on trade with Europe if Britain pulled out, plus the risk of delays to delicate supply chains, it is little wonder almost all automotive firms back continued membership.
Yet the sector’s focus is not just Europe. It skilfully adapted to shifting global markets by developing products trading on British heritage that appeal to the new global rich; think of all those Bentleys and Range Rovers. It also took a lead in reducing carbon emissions in an industry not noted for environmental sensitivity – highlighting the crucial role of “green growth”, most obviously in the electric Leafs pouring from Nissan production lines.
This unlikely triumph, with exports doubling in a decade, shows how globalisation can work to Britain’s advantage, particularly when harnessed to quiet political pragmatism. The country’s car-building renaissance has created a smart industrial model, an engine for growth a million miles from the spluttering vintage variety that collapsed so disastrously.