How the British Car Industry Became Great Again
Economic times have been tough of late, but the British car industry shines out as one of the great industrial success stories of our time - and one of the most amazing comebacks.
It is quite a story, ranging from world dominance to almost total destruction and back to respectability again.
Britain was a leader in the car industry almost since the very beginning of the internal combustion engine, and by the 1950s Britain exported more cars than any other country in the world. It was also the second-biggest manufacturer of cars, after the US. That may be hard for people to come to grips with today, but what is even harder to understand is how quickly the industry almost threw it all away.
By the late 1960s, other countries, such as Japan and Germany, were beginning to overtake the UK in terms of efficiency and quality, and the UK car companies found themselves less competitive. Labour costs were higher than those of their competitors, but there were also far too many companies making far too many models of cars, and the result was oversupply and inefficiency. Production methods were also too labour-intensive and were becoming outdated. These companies were either unable or unwilling to put in the investment required to modernise, and soon it was clear that the industry had to change dramatically in order to survive.
Change did indeed arrive, and this was most notable in the huge amount of rationalisation of car companies that took place by 1968, when the UK government encouraged the merging of companies to form the British Leyland Motor Corporation (BLMC). BLMC was then the fourth-biggest car company in Europe, but its troubles were not behind it. The merging of companies did not result in the lowering of costs as expected because the new company still made cars under many of the old brand names, which operated more or less autonomously and in many cases produced cars that competed directly with each other. There were also engulfed by union disputes, industrial action, complex designs and unpopular models. The result was that costs stayed high and profits stayed low, and the situation only got worse when Britain entered the EC and import regulations were lifted, resulting in a flood of cheap foreign cars. By now, Japan was also producing cheap and reliable cars, and they were selling well in the UK.
Another major issue was the slowness of BLMC to adapt to the new fashion for small front-wheel-drive hatchbacks. The problems therefore escalated, and BLMC was nationalised and became British Leyland in 1975. British Leyland required huge investment and huge changes in labour relations and working practices in order to become competitive again. The government did support he company, but perhaps it was all too little too late. The decline continued and the company was renamed as the Rover Group before being sold to British Aerospace and then to BMW in 1994. BMW subsequently broke up the Rover Group and commenced the sell-off of the different marques in the group.
Curiously, it was this break-up and move into foreign ownership that sowed the seeds for the recovery of the British car industry. Jaguar and Land Rover were sold to Ford but ended up together as Jaguar Land Rover (JLR) under new Indian owners, Tata. Elsewhere, Rolls-Royce ended up in the hands of BMW and Bentley was sold to VW. BMW also retained the Mini name.
Under these new owners, car production in the UK was able to be modernised, and the much-needed investment was at last forthcoming. The result is a modern, efficient and profitable industry that makes cars people actually want to drive. We may not yet be back at the position of industry dominance enjoyed in the 1950s, but car manufacturing, sales and exports are all now at levels not seen since the 1970s, and the future is looking decidedly bright.