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  1. Politics
1 May 2000

Industry is not a dirty word

The financial establishment looks down its nose at manufacturing. Instead, we should look to Germany

By Peter Kilfoyle

One hundred and sixty-five years ago, de Tocqueville wrote of Manchester at the height of the industrial revolution: “It is from the midst of this putrid sewer that the greatest river of human industry springs up and carries fertility to the whole world. From this foul drain, pure gold flows forth. Here it is that humanity achieves for itself both perfection and brutalisation, that civilisation produces its wonders, and that civilised man becomes again almost a savage.”

Some of the elemental traits of the industrial revolution remain, particularly a tendency to dehumanise. For what could be more brutalising than to be discarded after a lifetime of devoted duty to a stern, unyielding taskmaster, by a major-domo of manufacturing like Jac “Black Hat” Nasser?

It appears that the latter, in his stewardship of the Ford Motor Company, has decreed that there is “overcapacity” for volume car production in Europe. Inevitably, the last major car plant for Ford in the United Kingdom – Dagenham – has become the sacrificial lamb to Ford’s further profits in Europe.

This devastating news comes hard on the heels of the threat to Longbridge. In both cases, it seems to be a case of “when” rather than “if”. The fallout will be huge, both economically and politically. The real question is why these massive redundancies are contemplated, and what can be done about them.

One thing is certain: there has been a steady fall in our manufacturing base over many years. I recall being in a mid-Lancashire hotel in the late 1980s, with Neil Kinnock, John Smith and Henry McLeish. We were meeting captains of industry in the north-west, and lamenting the massive job losses in the sector under Margaret Thatcher. Now, the erosion is continuing under Labour, and its causes merit urgent examination. Much of the answer lies with the financial establishment’s indifference towards manufacturing, as set out in Will Hutton’s book The State We’re In.

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But there are other reasons. Globalisation, and the reduction in trade barriers, has meant that corporations will transfer production to wherever the labour costs are lowest, other considerations being equal. I recall Fisher-Bendix moving its plant – after being bailed out by the British taxpayer – to Spain nearly 30 years ago, exporting “British” jobs. The phenomenon has gathered pace within the European Union. It is no coincidence that, as Ford runs down production in the UK, it expands in Spain and Belgium.

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The current reason given is that the strength of the British pound is the crucial determinant in the current round of investment decisions. Frankly, I doubt the overreaching importance of this. The value of the pound can just as easily fall as rise during the often long lead-in times for major investment. Other factors appear far more important, like skills, labour relations, employment law, productivity and quality.

The former Ford plant at Halewood in Liverpool showed the quality, productivity and skills necessary for the new “Baby Jaguar”. It beat off European and American competition, and secured the new investment. Why was that the case for Halewood, and not the case for Dagenham or Longbridge?

First, it is a much younger plant than the other two, close to port facilities for shipping to North American niche markets. Second, the government has a stake in the necessary redevelopment of the plant, and the new adjacent outsourcing business park. Third, the marketing men thought it prudent to maintain a British base for a British mark. Most meaningful, however, was a compact between management and trade unions to turn the plant around, and make it a success – enlightened self-interest.

Yet for every success like the Ford Halewood plant, sadly there are far more closures. Even those that stay open shed jobs, as ever more efficient technology is brought to bear. There is also a regional dimension – more and more jobs are relocated to the south and east of the country, no doubt with an eye on ever more important European markets. This, in turn, starves the regions, and imposes huge strains on services and land prices in the overcrowded south-east.

While we observe this inexorable loss of jobs and the gridlock in London, there is a growing perception that, at best, government is helpless in intervening in these seismic changes. It is said that Dagenham workers will easily find other jobs in London. In Longbridge, however, 3,000 redundancies would mean up to 15,000 more among suppliers and distributors. The knock-on effect to the local economy in the West Midlands (and beyond) would be huge.

But government is not helpless – ministers will appear so, and chant mantras about the market – but we elect governments to face challenges just like these. We can look to our European partners for ideas and inspiration. In the same market and under the same rules, it is inconceivable that the French, the Germans, or the Italians would allow such a catastrophic collapse in the strategically important manufacturing sector.

What the UK needs is the political will to develop a proactive strategy focused on key sectors of manufacturing. Even a cursory look at the DTI’s website shows how nebulous the departmental approach is – particularly towards the car industry – despite its seven automotive industry teams. (The automotive industry website is far more instructive, revealing the nationwide spread of automotive factors and distributors, with relatively few in London and the south-east.)

Surely any modern government sees this strategic need for core manufacturing industries like car production, ship building and engineering. We cannot all work in the service and financial sectors. This would fit in neatly with the government’s professed assault on unemployment and low skills. There is a correlation between the latter and the collapse of our manufacturing base. The Chancellor is sitting on a £22bn windfall from mobile phone licenses. Is it not time for a New Deal for manufacturing, using some of this to finance a manufacturing renaissance, within the rules of the single European market?

If a United Germany can do it for eastern Germany, can we not do it for our industrial heartlands?

Peter Kilfoyle is Labour MP Liverpool, Walton