It has been interesting to read the comments generated by Evan Davis' programme. They reveal some of the underlying paradigms that have caused and been caused by our industrial decline. Gavin James Bower writing in the Guardian on Monday perhaps best expresses them. There is no doubt that our industrial landscape has changed dramatically over the past 50 years and the effects on parts of our country have been dramatic. Most of the change has been seen as decline although some islands of excellence remain. Three issues dominate the discussion; foreign ownership, foreign production and innovation.
Foreign ownership of British companies is a headline issue. Rolls Royce cars is owned by BMW; Bentley by Volkswagen. The Mini is owned and produced by BMW. Tata, an Indian conglomerate, owns Jaguar and Land Rover. Kraft owns most of our confectionery production including Cadbury, and one could continue. Although emotive, this has little to do with our industrial decline. For a start, all of these examples have only occurred in the past 13 or so years. Incipient industrial decline was in full force in the 1950s. Moreover, in each of these examples, the product has continued to be made in England. The question that needs to be addressed is what caused these businesses to be unsuccessful and so become a target for take-over. Three factors have played a disproportionate role. These are the costs of manufacturing, attitudes generated by highly interventionist government policies and labour relations in a period of strident Union activity.
Rolls Royce motor cars and Bentley have teetered on the brink of failure for most of their century of existence. They were nationalised in 1971 following the financial failure of the RB211 aero-engine designed for the ill-fated TSR2. The project was just too big for the company to finance, even with several government subsidies. The motor car business was privatised in 1973 and bought by Vickers in 1980 who sold it to BMW & Volkswagen in 1998. At that time, the most serious issue was the cost of designing and building a new series of cars. For 30 years, Bentley, though produced separately, had relied almost completely on Rolls Royce design and components. Not until the 1980 Mulsanne, did Bentley begin to reassert its sporting pedigree but it was still a Rolls Silver Spirit underneath. Without massive investment Rolls Bentley could not continue. BMW and Volkswagen offered that opportunity. It is probably true that the money was available through UK investors, but it required a major quality volume manufacturer to be able to pull together design, manufacturing, marketing and sales necessary for such a premium brand.
There are those who consider that nationalising heavy industries such as coal and steel was a constructive method of avoiding the failure of smaller producers and of creating a single market for the products and labour. It allowed the creation of national wage structures which significantly contributed to raising living standards. However, it had at least two huge disadvantages. First, it allowed Union militancy on a national scale to be exercised irrespective of the profitability of the industry concerned. In the 1950s this could be considered enlightened; by the 1970s it was mad. Second, it caused industrial rigor mortis. Innovation and change was stifled and resisted despite the rapidly changing nature of global business and competition. Eventually, governments recognised that they could no longer fund huge, expensive, loss-making businesses. They needed the life blood of innovation and change.
Exactly the same approach had been applied to volume car making from the late 60s. It was too important to fail and so was nationalised. The result was an appalling period of British car making. Poor models produced by poor design by people with no responsibility for success; poor manufacturing resulting in inefficient cars with very poor reliability embarrassingly revealed in the famous expression by BL, 'the customer is our quality control!'. It was not until Jaguar was privatised in 1984 that it began to tackle its appalling reliability record and become a car of note again.
It is natural for those of us who live in the North of England to be painfully aware of the effects of changing markets. The mills and terraces are all around us as constant reminders. It is not difficult to be drawn to some imagined golden age of mill towns while ignoring the grinding poverty, appalling living conditions, short life-span, disease and exploitation that characterised it. Remember that in Bradford in 1850, the average life span was 17 years! However, there is another aspect to this. It was the entrepreneurial enterprise of Victorians that created the mills, that clothed the nations, that drew people in from the hill farms to relative affluence, that built the terraces, schools and chapels and, in some cases, began to create new urban conditions in which people could prosper. It was the industrialists that largely changed Bradford from its filth by creating urban government. The Union movement had important roots there, too. The creation of industry in the North was not an end in itself, though for many, for over 100 years, it must have seemed like it. It is well to remember that in the 1950s, we had to recruit workers in Pakistan and India to keep the mills working. English people were generally no longer prepared to tolerate the conditions and wages and the businesses were no longer sufficiently profitable to change. This trend continued as overseas economies began to develop and manufacturing moved to where workers were plentiful and less expensive. It was a natural and inevitable consequence of the employment environment and the aspirations of English people for more and more at affordable prices.
Innovation is the most important aspect in a changing industrial landscape. It allows all the skills of the people to be concentrated on finding new opportunities. However, for the political class and journalists, it is a difficult quality. They naturally want to know what is coming next but innovators need a benign environment and time to develop their ideas. We can all recognise the results when we look at successful companies and we tend not to see the unsuccessful start-ups that accompanied them. Not every new idea will succeed at first. As Evan Davis pointed out last night, innovation is at the heart of the British economy. We cannot compete with other parts of the world in unit cost of many manufactured items but we can more than compete in the development of ideas-based businesses. These will be the new success stories of this century. We have to allow it to happen accepting that, initially, it may not be in the shape we want it or where we want it. We also have to accept that those who create successful new opportunities deserve the rewards.
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