back to front - rover: killed by capitalism


If you want to understand the calculated destruction of Rover, read Ford Strike — The Workers' Story by John Mathews, published in 1972. There is no better analysis of the problems facing the British mass manufacturing car industry in the late 1960s and early 1970s and by foresight and prediction its almost total demise 35 years later.

In 1975 Reg Birch, lead negotiator for the Amalgamated Engineering Union, in dealing with British Leyland, MG Rover's predecessor, over the then-possible collapse of BL, described the negotiations as having been with "the Director of the British Museum". Few understood the remark but it related to an industry starved of investment and re-tooling, ruthlessly asset-stripped and squeezed for every penny in profit during its lifetime of then 70 years. Today's collapse of MG Rover continues to reflect that situation. Nothing had changed in over 30 years other than that in 1975 it was estimated that a BL collapse would have cost up to 1 million manufacturing jobs. MG Rover's closure, after its salami-like paring away at employment over the last 30 years, has resulted in a mere 25,000 job losses.

There will be much wailing, ashes scattered, teeth gnashed and sackcloth worn following the Rover collapse. Workers said for the past 12 months that the negotiations with China were solely about closure. The Chinese, better businessmen than the Phoenix Venture Holdings Gang of Four, have bought the technology and intellectual property and left the carcass of MG Rover firmly where it was born in the West Midlands.

Brown can bleat about "capitalism at its ugliest", but this is what capitalism is about. For £10 the Phoenix Four have accessed an estimated £1.3 billion in cash flow. The £500 million dowry from BMW to get Rover off its hands has vanished so completely that accountants cannot point to any significant investment during the past five years. The Chinese clearly could identify the estimated £454 million black hole in the accounts. The Phoenix Four are estimated to have squirrelled away in pensions and benefits, and probably totally legally, an estimated £40 million. This is what capitalism is about.

Victim-like, cap-in-hand approaches to Downing Street are a waste of time. In 1975 Reg Birch advised the workers at Longbridge to weld the gates together, occupy and save the industry. Instead they embraced Michael Edwardes and MacGregor of later miners' strike infamy, sat back and watched while convenor Derek Robinson was sacked. Unions in vehicle manufacture need to reflect on what strategy they had or have to save the industry. John Mathews' book analysed inter-union rivalry and poaching. This has now been elevated as trade union principle in certain thinking, and is one reason why unions missed the bigger picture of merger, rationalisation, relocation and closure promoted by the employers. This strategy has resulted in reducing or exporting the industrial base. No industrial base = no membership = no trade unions.

Toyota, Nissan, Ford/Jaguar, Peugeot, Vauxhall? What future? Toyota and Nissan pioneered the no-strike sweetheart deals with the unions. Ford has gutted Jaguar. Vauxhall closed Luton. One of the original buyers for British Leyland was a Bombay conglomerate who intended closing and shipping Longbridge to India. This was ridiculed at the time but was the exact strategy the Phoenix Four were proposing, substitute China for India. What next?

British car manufacturing in the 1970s was said to be afflicted with "The English Disease" — industrial militancy. When BMW bought British Leyland after its privatisation by Thatcher, it referred to BL as "The English Patient". It is now a corpse. The death of this 100-year-old employer has been protracted. It is an unnecessary death but it is fact.