Ford in Deep Water

QUESTION: Which was the fattest cheque ever made out?
ANSWER: The draft for 119 million-odd pounds paid by the Ford Motor Company of Detroit to buy out the minority shareholders of Ford in the United Kingdom.

Now this is quite appropriate, because the very thing which is suggested by the name Ford is size. The group as a whole makes about one-fifth of the world’s motor cars and has factories in many countries. Biggest of the babies is Ford in England, which started in 1908 with a sales office in the West End and now employs over £100 million worth of fixed capital and other assets and more than 40,000 workers in plant capable of producing almost half a million vehicles a year. In 1959, the company’s sales ran to £233,180,000. It owns an enormous factory at Dagenham, as well as the Kelsey Hayes Wheel Plant and Briggs Motor Bodies, both of which were once independent firms supplying Ford with components. It has its own foundry—said to be the most modern in Europe—turning out cylinder blocks and heads and other castings. Fords are currently hatching an expansion programme, involving a £70 million factory at Halewood, on Merseyside.

All of this adds up to the fact that Ford is strongly placed in relation to the other motor industry giants: a little behind the British Motor Corporation, which turned out nearly 670,000 vehicles in 1959, but ahead of Vauxhalls, with their 1959 production of a quarter of a million units. These output figures were reached when the motor industry in this country was at an all time high. Since then, slump has set in. How have Ford, which did so well in the fat years, been getting by in the thin?

The company’s report for 1959 was full of high spirits and optimism, with regret expressed only to the customers who, clamouring for new cars, had to wait their turn in the queue. This will be, said the report, “… a decade of opportunity for the motor industry.” Up to the end of last year, nobody at Fords had been put on short time and nobody had been sacked, although by then the clouds had started to gather over Dagenham. The report for the first half of 1960 carried warning words about strong competition in America and the expectation of lower profits in the future. In January of this year, Fords announced that more than 16,000 of their workers would shortly start working a three day week. A spokesman forecast, “… a thin market and the outlook is not good at the moment.” The lovely new machinery, some of it installed in the post-war expansion scheme, was soon working at only half capacity. Fords are not in trouble on their own. B.M.C. have about forty thousand on short time, Vauxhall nine thousand, Standard-Triumph about seven thousand. And this is not the end of the sorry tale. The motor car recession has struck all sorts of firms, large and small, (although after the mergers of recent years there are very few small firms left), as well as the makers of components and accessories.

This means hard times for the motor car workers. Their trade unions have reported that some of them have suffered wage cuts which leave them earning ten, nine, or eight pounds a week. At the moment, a brave front is being put on it. The government spokesman in the recent House of Commons debate stressed that only seven thousand of the industry’s workers were actually redundant (a polite word for “sacked”) and mused upon the possibility of a skilled or semiskilled worker on a three or four day week in the car industry being better off than men who are putting in a full week in other industries. This argument would not survive a prolonged slump in the car world; in any case, it is poor consolation to the short-timers that, however bad their conditions may be, there are others who are in worse straits.

What is behind the car slump? At the time of the great Ford takeover, we heard a lot of false theories about the motives for industrial investment. Many people thought that the American company was taking over with the intention of deliberately allowing Ford in England to decline. Much nearer to the mark were the opinions typified by The Economist, which thought that, ” Any illusions that completion of American ownership might lead to ‘running down’ of the British operation that would make the lot of its competitors easier inside Britain must be dismissed,” and The Guardian, which said “. . . the money is being invested here in the hope of a profitable return.” These opinions are the sounder because they take account of the fact that the realisation of a profit is the motive of capitalist production, and at the same time is the end to which commodity distribution is organised. Here is the reason for the ceaseless search for easy markets. (There is some evidence that the Ford takeover was connected with the parent company’s desire to exploit more efficiently the West European market, which for cars is now expanding more rapidly than in North America. Perhaps Ford want their Cologne factory to work the European Common Market and Dagenham the European Free Trade Area. But United States law forbids such cartel arrangements as this unless they are with wholly owned subsidiaries abroad, as Ford in Germany is but Ford in England was not.) Here, too, is the reason for the plans for expansion—and for the slumps which occur when, for example, rising stocks become a threat to profitable sales.

This is something over which the administrators of capitalism have no control. Many large companies, including some in the motor car industry, have done their best to overcome the problem. They have spent a lot of money on market research, on advertising and on planning their production. But in the end, the essential anarchy of capitalist society beats them to it. When a market opens up, each interested firm must do its best to capture it, which means gearing its production to a high rate and often investing millions of pounds in development schemes. Ford, as we have seen, is sinking £70 million in new plant on Merseyside. This may click with a favourable market. On the other hand, it could sometime make Ford more vulnerable to the ravages of a recession. For there is no guarantee that, by the time the products reach the market, the demand for them will still be there. This has happened in the car industry. Ford, and the rest, put on full steam during the sunny days of 1958/9. Then, even though they foresaw that storms were ahead, they were quite powerless to avoid them. Mr. Reginald Maudling, the President of the Board of Trade, put it rather neatly in the House of Commons debate on the car depression. “We cannot,” he said, “plan or determine a steady rate of growth in sales.”

The record of the car industry offers plenty of proof of the validity of Mr. Maudling’s words. Proof, also, of the falsity of the assurances of the smug economists who were so fond of telling us that the days of boom and slump were over. For in 1956, the industry was in slump, which it had climbed out of by 1959. In 1960, slump again. Perhaps, in a few years’ time, cars will be booming once more. This is typical of capitalist industry, with the built-in compulsion to join in the trade war which dominates its every move. Martin Lindsay, the Conservative member for Solihull, had something to say on this, when the House of Commons were debating the Ford takeover: “I do not believe that there are friends and allies when it comes to a desperate trade war.” Perhaps Mr. Lindsay would not accept that capitalism must, therefore, make enemies of us all. But that, in fact, is what it does.

For it is the capitalist basis of society which is the sand in our gearbox. Fords are an example of a complex, sophisticated industrial unit, parts of which are evidence of humanity’s ability to create abundance for itself. But capitalism sends it on its way shuddering and wobbling, just like a stalling car. Time to get out and have a look at the engine?
IVAN