British Motor Car Industry
Professor Buchanan once described cars as “adored” by their owners— a sharp comment on the fact that, of all the symbols of working class life in the Sixties, few are the object of such pride and care as the motor car.
Behind this rather neurotic pride, which gives the car sellers their chance, there often lies something less agreeable. Tests carried out by the Consumers’ Association regularly confirm the disappointment experienced by many owners of new cars. Here are some typical comments, from the CA magazine Which? with the price of the car: “persistent engine oil leaks” (£998) “failure of exhaust system” (£1048) “left wheel badly out of balance and slightly buckled” (£609) One British car, costing £789, had no fewer than thirty two faults on delivery three of which, said CA, were “probably serious”.
The plain fact is that, as the motor industry has developed greater combines, and as it has intensified the methods of mass production, many of its quality standards have declined in ways which cannot be compensated for by greater technical knowledge and some improved materials. Very few modern cars, for example, have the sort of chassis, bodywork or upholstery to compare with a pre-war model.
The reason is that, just like any other industry, the car firms are chasing their economic tails. They have tens of millions of pounds invested in their production lines and to get a return on this they have to see the cars streaming out of the factory. A Rootes car takes about two and a half hours to build once the basic components are gathered together; Fords of Britain makes about three thousand vehicles a day. As a rough guide, compare this to the fact that at Rolls Royce they will take between two and three months to build a car, and at Jaguar ten weeks.
The Ford Motor Company says all that needs to be said, by way of explanation of this difference:
“Quality and service problems. Industry spends vast amounts in trying to cope with these, but mass production and price competition make them inevitable to some extent.” (Notes On British Motor Industry)
What sort of industry is it, which stands behind the mass-produced dream and which can so frankly confess that quality problems are inevitable? About a million men are engaged in the manufacture, sale and service of vehicles in the U.K., about 600,000 of them in manufacture. The car industry is the top British exporting industry, sending out about £750 million worth a year and is important also on the home market; more than two thirds of the national hire purchase debt is for cars.
In the main the industry consists of five big firms—British Motor Holdings (BMH); Ford; Vauxhall; Rootes; Standard Triumph.
| BMH | 31% | Ford | 26% | Vauxhall | 13% | Rootes | 11% | Leyland | 11% | Foreign | 6.5% | Other | 1.5% |
This Big Five account for almost the entire British production of cars ; up to just over a year ago the independent Rover and Jaguar were responsible for almost three per cent of sales but now both these firms have joined one of the big combines. Mergers are now an established part of the industry ; the big firms often take over one or other of their suppliers, or of their rivals, heaping one merger upon another into a massive and intricate combine. Part of the make-up of British Motor Holdings:
British Motor Holdings: Jaguar (Guy, Daimler); British Motor Corporation.
British Motor Corporation: Austin (Vanden Plas); Pressed Steel Fisher (Fisher & Ludlow; Pressed Steel); Nuffield Organisation (Wolseley, MG, Riley, Morris).
The car industry’s work is in some part a matter of assembling components which have been produced outside, some by big concerns (electrical equipment by Lucas, propellor shafts by Hardy-Spicer) and some by small family firms (leather by Connolly Bros., cylinder head studs by M.V. Engineering). The economics of mass production force the car firms to store the very minimum of components; B.M.H. at Longbridge hold at most a day’s stock of major production items, Rootes enough trimmed and painted bodies for only one shift. This makes the industry heavily reliant on the dependability of its suppliers—and exceedingly vulnerable to labour disputes.
Strikes are another of the car firms’ big problems. Persistent labour trouble at Ford’s have caused two official inquiries into staff relations there—by Lord Cameron in 1957 and by Mr. D. T. Jack in 1963. Both investigations went over the same ground but neither did the impossible ; neither produced a solution to the problems it was investigating.
But one thing the inquiries did make clear and that was the government’s concern at the importance of the car industry to the economy of British capitalism. When Dagenham sneezes, it is said, the British economy will catch a cold. At the moment Dagenham, and all the other car towns, are exhibiting the symptoms of a prolonged sickness.
In 1966, Vauxhall’s pre-tax profits were £3,666,898-compared to £17,735,372 the year before. In the same period, Ford’s profits before tax fell from £8.9 million to £7.4 million. Most spectacular of them all B.M.H., whose accounting year is timed so that they reported on the full effects of the 1966 car slump, announced a loss of £7.52 million during the first six months of their financial year compared to a pre-tax profit of £5.785 million in the first half of the previous year.
There is an abundance of ominous figures to record the current slump in cars: new car registrations up to July 103,000 down on last year’s; production running about ten per cent lower than in 1966, when sales were in any case 87,000 lower than in 1965. Over the past couple of months sales have picked up but the car makers are not rejoicing; they may be in for their worst winter for over twenty years.
The motor industry has had many such ups and downs. What is worrying the car firms now is the abundant evidence that they are in for a long period of decline and that any further pressure on their profits will force them to cut down on the capital investment which is so important to their competitive existence. Typical of their comments amid the gloom are:
“Success in the motor industry demands a sustained and high level of investment and a vigilant control of costs. Without adequate returns, neither is possible.” (Ford’s).
“… it is imperative that the Government should take the very first opportunity of permitting our industry to find its natural level, thus allowing it to stabilise production and generate the capital so urgently needed to keep abreast of its foreign competitors.” (B.M.H.)
The government’s remedy for this situation has been the by-now classical one of easing hire purchase controls; in June they cut the minimum deposit on H.P. car sales from 40 to 30 per cent and increased the maximum repayment period from 24 to 30 months. In August there was another relaxation; deposit down to 25 per cent, repayment period up to 36 months. The car makers gave a cautious welcome to these measures, although their own suggestions are no more fundamental.
It is instructive now to remember the forecast made in Ford’s 1959 Report, which came out a couple of years before the car industry hit a slump, that the next ten years would be a “decade of opportunity for the motor industry”. Such optimism is common in all capitalism’s industries; only occasionally does one of their spokesmen put his finger on the essential problem, and reveal how hopeless all their remdeies are. In the Sunday Times of May 14 last Henry Ford II said it: “We have not yet discovered the secret of making anybody buy our products”.
IVAN