The Gray Monk

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April 11, 2005

The last person leaving please turn out the lights ...

The news that Britain's last British-owned motor car manufacturer is to go into receivership is a devastating, but not entirely unexpected, blow to what little remains of our once great manufacturing heritage. But, the question should be asked, why has it come to this? Why has the Rover company, which has manufactured cars for a hundred years, become unable to sustain its economic commitments?

The answer is, I suspect, a complex one, and it goes back to the nationalisation of "key" industries in the late 1940's. This was supposed to enable the then Labour government to provide, via the taxpayers' underwriting of all major industries, "full employement" and "sustainable growth". Yeah, right; so they put civil servants in charge of all the key industries and stiffled all innovation, all development of anything which might require a decision outside of the "rules". Look at the industries they targetted, and then look at where these are now.

The railways, the coal mining industry, the health services, the aviation industry, shipbuilding; all taken into state ownership and all provided with subsidies - in the case of the car industry, something of the order of £6 million a day by the early 1980's, yet so badly handled and mismanaged that it promoted two very dangerous and damaging things. Of course, strictly speaking, the car manufacturing industry was never actually officially nationalised. GM owned the Vauxhall marque, Rover was independent until the late 50's when the giant Austin/Morris group acquired it, absorbing it into the British Motor Corporation. By then, of course, the original driving "captains" Mr Austin and Mr Morris, were no longer in control of that, the power having passed to their Boards - stuffed with accountants and "wunderkindt" management graduates. This is where the slide into oblivion really begins.

First the "Generalist" management culture which, by its incompetence and slavish obedience to sets of "rules" and fiscal measurements, lost contact with the actual production force - and promoted the rise of miltant trades unionism by generating and fostering the "Them and Us" culture. Second, and perhaps more importantly, it cut off all innovation and regeneration. It blocked the modernisation that every industrial plant and nation was busy undertaking so that British Shipbuilding, as an example, was still taking two to four years to build a small freighter in the 1970's by the traditional means of rivetted plating, while the Scandanaivian and Far Eastern shipyards were taking six months and building innovative ships in covered halls and drydocks, twice the size of anything we could do.

None of this was helped by the refusal to rationalise or to even operate in a joined up way. For whatever reason, the civil servants pulling the strings - and their political masters - decreed that the nationalised factories had to stay in operations and often in competition with each other. Look at the British Motor Corporation (later British Leyland) which included the marques of Austin, Rover, Morris, Leyland, and Triumph. Where it would have made sense to rationalise this and all operate under one marketing and planning strategy and umbrella, they were encouraged to compete, while cutting each others' throats, they successfully destroyed themselves - ably aided and abetted by militant unionists who disrupted production so frequently with wildcat stikes that it's a wonder they actually produced anything. It was also hastened by a lack of money for devloping new technology or new engines - the last true example of that was the original "Mini" launched in 1960!

The Unions must take a large part of the responsibility, as well, with constant demands for ever more say over employment levels, conditions, and working practices; the inept management soon found that they were no longer in charge.
High labour costs, disrupted working through continuous labour militancy, and the industrial base soon began to degrade dramatically. This problem was exacerbated by the political interference in the running of businesses and in the civil service insistence on dictating how and in what way the now rising levels of subsidy were to be spent. The result, by the late 70's, was plain to see, factories producing goods at huge cost that no-one wanted and which were shoddy and unreliable at best. Tax levels spiralling out of control and rampant inflation, and suddenly things weren't working.

Since the demise of British Leyland and the steady breakup of the Rover group, which included Land Rover, Range Rover, and the Mini marques, there has been a story of some success but massive failure. The Rover company was first rescued by some astute finaciers and engineers who salvaged the best bits of BL and managed, through shrewd deals with people like Honda, to trade design for technology, and they revived the Rover marque. Then they moved on, and now we have once again, management by "bottom line". The first indication of this was under the BMW partnership, when suddenly the bean counters decided to shed almost two thirds of their dealerships around the country. Surprise, surprise, their sales plummetted!

As a Rover owner, I suddenly found I was being "invited" to take my car to a garage I had never dealt with, in a town I did not live in, for service and spares. Naturally, I did what I suspect a lot of Rover owners did - I stayed with the people I had bought through and whose services I trusted. That went for my purchase of my next car as well. So, cutting the outlets to maximise "cost effectiveness" and profit, backfired - sales dropped by 25%. Oh what a surprise! Then, with losses mounting, BMW, who had bought the company only to get hold of the Mini marque, sold off Land Rover and Range Rover and dumped the rest.

Again, the Rover marque was saved by a management buy-out, this time financed by a holding company, but the management now was all financial and so the decline has continued, ably aided by the "management" company directors paying themselves huge salaries while the company lurched deeper and deeper into debt! Production has improved, designs have improved, the reliability has improved, but they have further reduced the number of outlets - and surprise, surprise, sales have continued to fall! Ironically, the company has been building good, reliable cars for the last 15 years at least, it has a good reputation among most of those of us who have stayed loyal, and yet their illjudged marketing strategies coupled with their inability to compete against the French, German, Japanese, and American giants will now see this last British-owned car manufacturer dissappear from the scene. Alongside the Rover name, no doubt will go the other great name in sports cars - MG. Ironically this last name was recently revived by Rover to provide a sporty alternative to their "family" saloon range, and it has enjoyed some success; MG sales are still growing!

A sad reflection on the state of the nation which gave the world the industrial revolution, yet has had that legacy stolen from it by incompetent politicians and bureaucrats who thought that they could "manage" industry better without any regard to the market pressures, economic balances, and labour costs that have such a huge impact on it. Had we been able to modernise, rationalise, and adjust our industries in the early 60's with management and unions working in partnership to secure the best deal for industry, commerce, and the nation, without fostering an adverserial confrontation on every aspect, we would still have a British-owned and innovative manufacturing base. Sadly, this was never on the agendas of the various left-wing politicians and trades unionists whose only focus was "class war" and equally the managers whose only focus was on creaming off everything they could for themselves.

Between the two cultures we have become the all-time losers. Our last British owned car maufacturer is about to follow the same path as Cammell Laird, Swan Hunter, Harland and Wolff, Blackburn Aviation, De Havilland, Short, Gloster, Bristol and all those other pioneering companies now dead and buried by their boards of directors and their militant trades unionists, ably supported by the burgeoning civil service bureaucracy. I wonder when they will come to the realisation that, with everyone employed by the only employer left standing - the civil service - there is little point in paying any of them as it will be only them paying taxes, to pay themselves.

As I said at the outset, the demise of Rover is a complex story, but it starts with nationalisation and the concept that bigger is better and "internal competition" could be a tool for growth! It proved in the end that neither is particularly healthy, and it also proved that the folly of allowing differnt parts of the same company to undercut each other is lunacy! The saga has probably ended in the sort of bureaucratic impasse civil servants specialise in. You have only to read the accounts of the DTI delegation's approach to the SAIK delegation - who wanted the money and guarantees up front; and the DTI, we'll let you have it when you have signed and taken over! As usual, the rule book ruled in all situations, and there was no intention to even try to find a way to get around this problem. Never send a person to negotiate unless they have the full authority to make their own rules!

Well, this should bite the Labour government, but I suspect it won't. Teflon Tony will have an excuse, and his mindless horde of tribal voters will see he gets back into power to sell off some more of the silver. We shall have to wait and see.

Posted by The Gray Monk at April 11, 2005 11:54 AM

Comments

Posted by: Tim at April 12, 2005 01:43 AM

Posted by: Tim at April 12, 2005 01:43 AM

Posted by: skipjack at April 13, 2005 09:37 AM

Posted by: Michael C Feltham at April 27, 2005 10:27 PM