In 1950, Britain, still recovering from World War II and postwar austerity policies and rationing under the Labour government of Clement Attlee, had thirty-eight independent manufacturers of automobiles producing vehicles of which 75% of the cars and 60% of commercial vehicles were exported, accounting for 52% of all automotive exports worldwide. By 2005, the domestic auto industry had completely collapsed, with only a few small specialist firms remaining and all other manufacturing foreign-owned. What happened? Just about everything you can imagine: ill-conceived consolidation, internal battles within merged companies, labour strife and strikes, government “industrial policy” picking losers and emphasising exports over domestic sales, under-investment in new product design and manufacturing efficiency, and complacency in the face of market entry by competition from Japan, with Nissan opening a U.K. factory in 1986.
This video picks up the story with the first ill-conceived and incompetently executed consolidation in the industry, the 1952 merger of Morris and Austin to form the British Motor Corporation (BMC), which went on to absorb Jaguar in 1966 and Leyland Motor in 1968, becoming British Leyland. BMC was a classic case of a company competing with itself while neglecting product development and adapting to a changing domestic and export market.
British Leyland collapsed in 1975 and was partially nationalised by the Harold Wilson Labour government. It was subsequently renamed Rover Group and sold to BMW in 1986. The divested MG Rover Group finally collapsed in 2005, bringing mass market domestic auto manufacturing in Britain to an end.
The priority on exports was in large part driven by successive governments, which faced chronic balance of payments deficits and currency crises. In 1949, the pound was devalued by 30.5% and crises followed in 1961, 1964, and 1966, when exchange controls were imposed (from 1966 through 1979, tourists could not take more than GBP 65 out of the country). In 1967, another 14.3% devaluation occurred. While exports were made a priority, little effort and investment was made to develop products which appealed to buyers in foreign markets, and BMC and other British manufacturers had little success in setting up distribution channels, as compared to German and Japanese competitors. Then there was the quality problem….
Perhaps they recognized that the infrastructure to produce automobiles (ranging from education through trained workforces and state-of-the-art manufacturing facilities to tax revenues) was as worthy of consideration as mere economic efficiency?
On the other hand, that would have implied a then-level of far-sightedness in Euro & Japanese politicians which we certainly don’t see today.
That is true. Perhaps by (pre-emptively) erecting trade barriers, the Japanese & Europeans reduced the incentive for the UK to invest large sums of money in designing new cars which would have been internationally attractive but would also have required that large international market to be economically viable.
But I am unconvinced. The idea of politicians (even politicians half a century ago) thinking ahead … just seems unlikely.
Even today, in some parts of the world politicians believe it their duty to act for the benefit of their countries and the detriment of others. Rather than vice versa.
Or at least to act to the detriment of others more than the detriment of their own.
