By on August 7, 2008

Apparantly, not a lot of other people did, either.With the odds of at least one of The Big 2.8 filing for Chapter 11 rising, the analogists are crawling out of the woodwork. While the multiple and varied demises of the [now deceased] British Motor Industry make for interesting reading and some neat analogies, the truth is that such any such comparison is apples to oranges, or, more accurately, chalk and cheese. The first major point of divergence is the level of failure.  Relatively speaking, the boys from Detroit haven't even BEGUN to fail.

Beginning with a forced merger in 1967, the various companies that made up the "native" British auto industry went through a government takeover/bailout, a sale to a "private" holder, and a forced sale to private investors. In between, there were a handful of profitable years (mostly in the mid 80s, thank you Honda-san) and two and a half brands "escaping." Land Rover and MINI came out through BMW, with the former being sold on to Ford, who had bought up Jaguar (that ended well). 

By comparison, while they have had terrible years, and shed market share with few upticks, the worst The 2.8 have seen is Chrysler receiving federal loan guarantees (c. 1980). By that time, BLM had been nationalized. They were using their second bail-out package to right the ship. There are rumblings of break-ups and aid going Detroit's way, but nothing concrete as yet. And remember: whatever handouts Detroit secures will require Congressional approval (think the Alabama or California Reps will vote for them?).

Bad as the last five or six years have been, it should be remembered that these bad times came after an obscenely profitable decade for Detroit. The British industries downward spiral began at the end of their heyday through the swinging ‘60s. The problem was, that despite having two of the most revolutionary (and popular) cars in the world (the original Mini and the 1200 series) they made virtually no profit.  Simply put, they under-priced their sales darlings. 

This is ineptitude stunning beyond words. Auto writers have been blasting Motown for fusty short-sightedness for decades. But no one ever accused them of not knowing what their profit was. According to most accounts, the boys at Ford England figured out that BMC was losing ₤30 on every ₤500 Mini they sold. BMC was merged with a smaller truck-centric coalition of brands (Leyland) because they failed to make hay while the sun shined.

The other false analogy is one of scale. While the numbers varied, the British car market is/was roughly 10 to 12 percent of the size of the US market. Sales volumes that sound impressive on one side of the pond, sound like rounding errors on the other.

The eternal dilemma for any automaker is utilizing all their capacity. The eternal dilemma for BLC was that they would get money for new product and new lines and then fail to reach their sales targets, which meant no new development without more government money.  

The 2.8 have some of the under-use issues on a plant-by-plant basis. But they have always made enough profit on their "hot" products to fund new products. They have traditionally strung out development and pinched pennies as a matter of choice. not necessity.

Thee other major difference: BLC's export reliance.  Even when they held 30 percent of the British market (about 450k cars), BLC still needed to move over 200k cars to rationalize their capacity. This was/is common for much of Europe's fragmented market. It is almost entirely foreign to the 2.8 (who have subsidiaries for that). 

Depending on exports for profits is a bad idea in several ways. An export-lead company is much more vulnerable to changes in the economy, from trade barriers to currency fluctuations. More importantly, exporting is conducive to irrational optimism combined with utter ignorance. 

Smaller markets can be abandoned with little pain (until eventually you've left them all). Bigger export markets allow managers to float ridiculous sales numbers; 200k cars is a tiny part of the US market, without facing up to the actual difficulties of marketing. Lord knows the Japanese have had problems understanding the US market, and much of their staff rotates through a US posting.

The home-centered versus export-centered strategy for survival points toward yet another analogy, and gives The 2.8 hope that some of them can still prosper.  The British car industry was preceded into extinction by the (even more export-dependent) British motorcycle industry. None of these once-famous names exists as a "real" company any longer. Harley Davidson, on the other hand, came back from the brink and is thriving by selling mostly in the U.S. market.

The Big 2.8 are in big trouble. But pay no attention to their bleatings about their foreign affairs. As BL's history proves, their salvation, if it comes, lies at home.

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45 Comments on “Guaranteed Trouble...”


  • avatar
    NickR

    Isn’t Triumph (the motorbikes) still around? I don’t follow bikes at all, so I don’t know the story.

  • avatar
    KatiePuckrik

    I’m starting to get a little fed up of this constant slagging off of the UK car industry.

    Nissan are investing more money and more cars in Nissan UK.

    The Chinese have ramped up production again in Longbridge.

    Toyota have invested millions at their Deeside plant.

    GM’s have secured the Ellesmere Port plant until 2016.

    Honda UK makes cars for export to the US and Japan.

    Aston Martin is now British.

    Yet no-one reports these points!

    Now I know what the next question is going to be:

    “Katie, all of these companies are owned by Foreigners (with the exception of Aston Martin*)! So the UK doesn’t have an INHERENTLY British company…”

    Think about this laterally. NO-ONE has an INHERENT auto industry. All American, German, French, Italian and Japanese car makers are traded on the stock market which means ANYONE can buy a stake in them! Lots of private equity groups owns shares in car makers.

    Also, why doesn’t anyone slag off the Swedish car industry? Their companies got bought out, so what’s left? One super car maker and that’s it!

    The Jaguar XF was designed, engineered AND built in the UK; because it’s owned by Tata, is it logical that it is an Indian car….?

    If it is logical, then some of the best cars made in the world are built by private equity firms (e.g Ford GT, 10% is owned by the Tracinda group).

    * = Although an Arab private equity firm, a Texan and Ford own stakes in Aston Martin, Prodrive (a UK company) are the registered owners.

  • avatar

    NickR : Isn’t Triumph (the motorbikes) still around?

    Yes, in a manner of speaking. They went completely bankrupt in the late 70s/early 80s, and a man named John Bloor bought all the intellectual property. After a few years to come up with new designs, they restarted production. I’ve got a 2007 Bonneville, a very nice bike. They have a factory in Hinkley, UK, and another in Thailand.

  • avatar
    ktm

    Katie, no one is slagging the UK auto industry, but rather merely discussing its history and analogies made to the Detroit 2.8. If reading the UK auto industry history bothers you so, then I would suggest reading Thomas and Friends.

  • avatar
    rochskier

    NickR-

    Yes, Triumph rose from the ashes in 1991 with a totally modernized plant and business model. They had a major fire in ’98 or ’99, but they seem to have recovered from that as well.

    They are still making excellent bikes. A year or two ago the Triumph Daytona 675 was considered class-leading among sportbikes in the 600cc displacement range. No one believed they could out-light the Japanese bikes, but they managed it for at least one model year.

    Since then, I think the Honda CBR600RR has upped the ante slightly, but the Daytona is still an excellent bike.

    There are also a couple Triumph Speed Triples where I work, and they are every inch the 130+ hp streetfighting monsters the buff books claim.

  • avatar
    AndrewDederer

    Triumph has come back a bit. But they are a very small niche machine. Granted, they are more functional than any of the Indian revivals ever got. As an “ordinary” motorcycle maker, they’re history.

    Katie: I know there are still quite a few makers in the UK. The point is, the big indigenous one is pretty much dead (Aston and Jag are neat, but they fall into “rounding error” territory in the global view).

    More importantly, it took 20+ years for that amalgomation to die, during which it sucked in billions. The prospect of seeing something like that here scares me half to death(and I’m probably the most left-wing of this site’s editors). Have you read the history of Leland etc? It wasn’t pretty, but the government reaction was scarier. I have a copy of the report the goverment made circa 83′. They are much less nice than this site was. But the only conclusion they had to offer was more aid or some sort of market protection. Scary stuff, the practically gave it to BAE soon after.

  • avatar
    sitting@home

    In between, there were a handful of profitable years (mostly in the mid 80s, thank you Honda-san)

    Some of the 80′s era Honda rebadges were horrible; the Triumph Acclaim (rebadged Civic) was a sad, sad end to that marque.

    Katie, my quick and easy test for the nationality of a manufacturer is to see the location of headquarters listed on wikipedia (and only Jaguar and A-M fits the bill in the companies you name). The problem with any foreign run corporation is they are impervious to public and political influence (good or bad). See how Peugeot simply pulled manufacturing to a lower cost country without any fear of backlash. Toyota could easily do the same (in both the UK and the US) if market conditions favored it, while a true domestic manufacturer could not.

  • avatar
    Dynamic88

    See how Peugeot simply pulled manufacturing to a lower cost country without any fear of backlash. Toyota could easily do the same (in both the UK and the US) if market conditions favored it, while a true domestic manufacturer could not.

    So I’m just imagining that the D3 make cars in Mexico?

  • avatar
    Pch101

    Good article, but there are some parallels between the British industry of the 60′s and the US industry of today. There were too many rental/ fleet sales, a general unwillingness to counter the competition, and insufficient attention paid to product quality.

    The English of yesteryear and the Americans of today have failed to recognize the virtues of their transplanted rivals. What’s ironic, of course, is that Britain’s transplants were American companies, the same American companies that are in trouble now.

  • avatar
    jurisb

    nice analogy with british car industry. the same similarity is to both , british and American externasl debts, the size. By the way I am now for 4 months in Lackland AFB, if some car guru wants to meet me and have a chat by a tea, you are welcome, if you are near San Antonio vicinity. See you!

  • avatar
    Ingvar

    The Problems for BMC started even earlier, in the early 50′s, with the merger of Austin/Morris. Two former rivals, who in to the 70′s maintained their own and separate dealerships.

    Austin/Morris in the late to mid-50′s had over 50% of the global market, simply because they were one of the few marques that exported cars around the world, when everybody else was more or less a domestic marque in their respective home country. It is THAT market share one has to compare with, and the ultimate demise through bad quality and starvation of r&d until it was chewed up and spit out again by several different competitors.

  • avatar
    Ingvar

    I can recommend this site for further reading:

    http://aronline.co.uk/

  • avatar
    Dave

    Excellent article – 100% correct about Ford stripping down the Mini – only thing is Ford went nuts trying to figure out where the profit was on the Mini, until they eventually realised that there was no profit. Don’t know how long it took Austin to realise that.

  • avatar
    wmba

    Triumph the motor cycle and Triumph (Standard-Triumph) the cars were two separate companies. Not that it matters a hill of beans today.

    BLMC made cars of such poor quality that there is no comparison at all to Detroit, whose vehicles are absolutely in another better league entirely. I lived in the UK from ’69 to ’74 and it was funny because every time it rained Minis and 1100s were stopped at the side of the motorways, with Lucas distributors mounted just behind the grille soaked into a non-working state.

    Then came the Austin Allegro and the Morris Marina, absolute crap in any way you can think of, followed by a dowdy successor of the Mini called the Metro, and the Montego.

    Honda tried to help out BLMC in the ’80s and tore their hair out trying to get the Brits to build the original Legend properly. It was just beyond that organization to do anything right.

    The last CEO of BLMC was a Canadian from round these parts. Can’t remember his name, but he was completely ineffectual, and when the final hammer came down he was knighted and paid off. Used to swan around these parts in a Range Rover 10 years ago, but haven’t seen him in years.

    DO NOT GIVE your car companies any cash grants like the Brits did with BLMC! Loan guarantees with strings attached a la Chrysler under Lido, not so bad, but repayment schedules MUST be in place. Otherwise, the money goes down a
    sinkhole.

  • avatar
    blowfish

    Austin/Morris in the late to mid-50’s had over 50% of the global market, simply because they were one of the few marques that exported cars around the world

    Little did we forget, British sold cars tot heir captive buyers. Namely the Colonial market, she has Hong Kong, South Africa, Rhodesia , Gibraltar etc. It can soak up a lot of crappy products not by choice but Gov contracts.

    Remember growing up in HK during the 60s it has nothng but made in Old Blghty so it accounts for a lot of export dollars.
    When I visit HK in 89 alot of Gov Vehicles were Daimler vans. So as buses were switched to other foreign makes.
    We used to have Albion, Daimler ( UK) , AC , Guy for privately own public busues. That account for a fair bit of cons too.

    Aston Martin cannot be considered as UK owned.
    Is foreign money anyways.

    The Birtish Labour Gov & PM Harry Wilson helped to put more nails into their car manufacturer coffins anyways.

    British bikes had very useless piston rings, you need to heat the sparkplug up inside the house’s heater run out real fast screw it back on & try to start them.
    Electric start were mutual exclusive to bikes then. Even though Electric motors was discovered by Michael Faraday of England.

    Is surprisingly why they dont charge enough for the Minis. After all Chartered Accountants were originally from Britain too.

  • avatar
    paradigm_shift

    @ Katie “I’m starting to get a little fed up of this constant slagging off of the UK car industry.”

    But obviously you’re not so bothered about the constant slagging off of Detroit’s woes documented on this website on a daily basis.

    It’s the same deal with how annoyed you seemed to get when everyone called the Jaguar X-Type a tarted up Mondeo in drag. It just is. You’re entitled to your opinion on any topic, but getting fed up over it is pointless.

    Detroit’s largest woes are at home, not in their exports, and that’s why the quarter losses are so stunning. GM and Ford seem to get it right in all markets except the only that truly matters, their own. Chrysler has no external market to speak of, which in turn speaks volumes about how quickly they are circling the bowl…

  • avatar
    Stephan Wilkinson

    Didn’t intransigent unions have a lot to do with the collapse of the British car industry in the 1970s?

  • avatar
    DrBrian

    don’t toyota,nissan et all just assemble the cars over here?

    I know most of the engines and gearboxes come in boxes whole from other countries and anything interesting comes from Japan.

  • avatar
    Nicodemus

    The demise of the British car industry, specifically Leyland did not happen in the 1970′s.

    The company had recovered from it’s ills with the partnership with Honda and was actually in pretty good shape prior to the BMW takeover, when they were screwed over royally.

    Honda were expecting to be handed to keys to the Rover Group by BAe, but were guzzumped at the last minute.

    By the way, the Legend/Rover 800 was largely Rover’s design.

  • avatar
    westhighgoalie

    Nick r… Yes Triumph Motorcycles are now selling in the United States, and if you look at their budget (which is tiny in comparison to Honda or Suzuki) they are actually doing very well. Small, but still growing steadily, in fact, I am going to be purchasing a new motorcycle soon, (when Winter sales deals hit… I live in the Snow Belt… NH… uh! by February I have seen 5 MONTHS of snow! Every thing is white!!! … Would drive me to drink… If I was old enough)

    I digress, I am going to cross shop Triumph along with Honda, Suzuki, Kawasaki, and Star. Triumph is seriously the exception to the rule when it comes to British Motorcycles. But damn! can they market a unique product!

    And that’s part of their success!

  • avatar
    KatiePuckrik

    paradigm_shift

    But obviously you’re not so bothered about the constant slagging off of Detroit’s woes documented on this website on a daily basis.

    Huh?

    The criticism there is directed at the management of Detroit. I don’t pretend that the US auto industry doesn’t exist by saying things like “The now deceased US car industry” because it’s still there (albeit, not in a form most people would like).

    The UK car industry is alive and well yet most people deny its existence.

    One only has to look at the “TTAC nominations for the best cars of 2008″ thread and see the amount of drooling over the Jaguar XF. That was designed, engineered and built in the UK.

    I’ve also heard many people on TTAC take pride in the fact that foreign companies will be the US’s car industry. So why is it wrong when I take pride that Toyota, Honda, Nissan and GM invest in the UK?

    Detroit’s largest woes are at home, not in their exports, and that’s why the quarter losses are so stunning. GM and Ford seem to get it right in all markets except the only that truly matters….

    In 2007, GM Europe lost $215 million.

    P.S. Does anyone call the Lexus ES a “tarted up Camry”? Or the Acura TSX a “European cast off”?

  • avatar
    Ingvar

    So, tell me Katie, what UK OWNED company is the biggest car maker? Last time I checked it was TVR, who made a thousand cars a year. Everybody else, every single company bigger than that has been scrapped or sold off to foreign countries and companies.

    To make a comparison, it would be like GM, Ford and Chrysler was sold off to China, India and Indonesia, and the biggest US owned companies would be Saleen and Mosler.

    The Rise and Fall of the UK Car industry, Austin/BMC/Leyland, The Rootes Group, even Vauxhall (The last UK designed Vauxhall was the Viva of The 70′s) is the tale of the biggest fuckup in car making history, until today. The comparison between that clusterfuck and todays Detroit 2.8 is not only valid, it is crucial in understanding what’s happening. Either you learn from history, or you don’t. And those who don’t will learn the hard way.

    And yes, a Lexus ES is nothing but a tarted up Camry.

  • avatar
    KatiePuckrik

    “So, tell me Katie, what UK OWNED company is the biggest car maker? Last time I checked it was TVR…”

    TVR was taken over by a Russian millionaire. Also, Aston Martin, Morgan and Noble are UK owned. It doesn’t matter how big they are. The fact is they’re still around. And as I pointed out in my previous posts NO-ONE has an inherently German, American, Japanese, Italian, French, Korean etc car company because they are all traded on the stock exchange! If I take your idea of “ownership” to its logical conclusion, then private equity and pension groups build some of the best cars in the world! Daimler own 7% of Tata. Does that mean Tata cars are engineered to German standards? Of course not. Ownership mean little to nothing in the greater scheme of things.

    “To make a comparison, it would be like GM, Ford and Chrysler was sold off to China, India and Indonesia, and the biggest US owned companies would be Saleen and Mosler.”

    This is NOT the point of my posts. The point is to remind everyone that the UK DOES have a car industry and it is being investing in by foreign companies. I get annoyed when people use terms like “Deceased UK car industry” when it is alive and well. It’s just people seem to miss salient pieces of information like this.

    “The last UK designed Vauxhall was the Viva of The 70’s”

    So? The UK car industry is designing, engineering and building a lot of cars for sale around the globe. For instance, Aston Martin DB9, Jaguar XF, Nissan Qashqai etc. Just because Vauxhall haven’t designed any cars recently, doesn’t mean nobody else in the UK is.

    P.S. For ANYONE who wants to talk about the UK unions “destroying” the UK car industry, may I remind them of something which disappeared (quite conveniently, in my opinion) from history:

    Many of the “strikes” performed by the unions, were actually protests against the government and the executives running the companies because the unions felt the companies were being mismanaged and, thus, jeopardised their job security. Due to an inherent right wing slant in the UK media, it was easier to demonise Derek Robinson, than look at the executives. Have the UAW performed any such actions or only when their benefits are threatened…..?

    Also, MG Rover continued through the 80′s and deep into the 90′s without any industrial action (due to the fact that Magaret Thatcher decimated the unions) and yet MG Rover continued their steady decline. What was to blame then?

    P.P.S This is the last thing I will have to say on the UK car industry in this thread. I will not reply to any more posts…..honest! ^_^

  • avatar
    Ingvar

    Well, I said: last time I checked. And last time I checked TVR was not sold. But then again, it only proves my point.

    And the point, which you seem to miss, is that it doesn’t matter that there is a living (foreign owned) car production in England today, but that there existed several giant domestic owned car makers, who, like GM, once in their lifetime ruled the world supreme. And that their downfall started as early as the early 50′s, and that their death watch clocks ticked until the late 70′s. And that their corpses are still turning in their graves with every press release from Rabid Rick.

    My comparison is still valid. It is like GM, Ford and Chrysler was sold to the pacific. Or if BMW, VW-Audi, Mercedes where sold to Lebanon. Or if Peugeot/Citroen/Renault merged only to be flipped and stripped an defuncted. or if Fiat was sold to a Phillipine billionaire, who then scrapped everything but the Fiat 500 and Ferrari.

    The point is, once the domestic UK companies made millions of cars each year, once they were the biggest exporters of cars the world had ever seen since the Ford Model T. Once they thrived. Now they are out. The car making in Britain today is a piss in the nile comparing to the 60′s. It’s a whole industrial infrastructure made redundant. It’s a giant fuck-up. And some people ought to learn, sooner than later…

  • avatar
    Ingvar

    Actually, Britain in the 60′s had a relatively competitive portfolio of cars. Had things gone the right way instead of the wrong way, there’s no limit to where they could have been today.

    Triumph could have been where BMW is today. Compare the Triumph 2000 and the Triumph Dolomite Sprint against BMW 1500/2000 and BMW 2002.

    Jaguar could have been where Lexus and Porsche is today. Compare the E-Type against the 911. Or Jags range of grace and pace, the Mk II, The XJ6 and the giant Mk X.

    Rover could have been where Mercedes is today. they had the P5, P6 and the Land Rover and up and coming Range Rover. They had plans for a larger range of cars, the P8, slotted against the S-klass. They had plans for a luxury V8 mid-engined GT.

    If BMC had earned as much on the Mini as they acutally lost on every car made, they would have gained enough money to spawn six entirely new platforms, ranging from the Mini and up. Austin/Morris could have been where Volkswagen/Audi is today. Instead, they made the Allegro and Marina, because of lack of resources.

  • avatar
    Ingvar

    “Also, MG Rover continued through the 80’s and deep into the 90’s without any industrial action (due to the fact that Magaret Thatcher decimated the unions) and yet MG Rover continued their steady decline. What was to blame then? “

    Lack of resources.

    The Maestro/Montego project was started in 1976, with a proposed production start in the late 70′s, it was delayed until 1983-84, and in the meantime actually underdeveloped, with an uncompetetive styling and quality issues. It was pushed back in favour of the Metro. And that says something of a company, they they only have resources to develop one car at a time. When the Maestro/Montego finally came out, it was greeted with lacklustre sales, it never developed the market it was intended for.

    The Jaguar XJ6 (XJ40) was pushed back for an introduction in 1986, when it actually was production ready in 1979. (On again-off again, sounds familiar?) They never touched the design during that hiatus, thus, the car was several years behind compared to the competition.

    The Triumph Acclaim was a re-badged Honda Ballade. The Rover 200 was a mildly revised Honda Civic. The Rover 800/Honda Legend, well, the history of that car can not be unknown to americans, sold as the Sterling in the states. Austin/Rover gave up the development of their entire small to mid-range line-up just to concentrate on the 800. And how good was that car?

  • avatar
    Gardiner Westbound

    The similarities between the late British domestic auto industry and the Detroit-3 are atrocious products, jaded former customers and appeals to patriotism as the ship sank.

    Capitalists abhor interference, until they want great gobs of yummy free taxpayer money. It seems probable government will prop up at least two of the domestic automakers. What leap of logic makes politicians think taxpayer money will improve Wagoner and the Fords business decision making?

  • avatar
    Ronin317

    @Katie – It’s just a different version of the same sentiment still held by millions of people who simply don’t care to recognize anything with regards to things they don’t think about on a daily basis.

    What I mean by that, for example, my mother – she is a smart woman, who has grown quite lazy and really set in her ways and routines, and quite stubborn in her early 60′s. My parents and her parents always had large, comfy GM vehicles – olds, caddy…when their 2001 DeVille, which I told them not to buy off lease to begin with, bit the dust, she insisted on a new Caddy. My father listened to more reason, and drove several vehicles upon my recs, and ended up deciding on a new Accord v6 loaded up. My mother hates it, mainly because it’s not a Caddy. If the damn thing had a Caddy logo on it, she’d love it, but she complains about that “damn foreign car”. When I point out that it was built in Ohio, is a US model, and is just as American at this point than the DeVille, she kind of just shut up. Later, she mentioned something to the effect of it’s still a Honda, and that’s still a foreign company, I brought up the fact that there is an American subsidiary that could, if need be, actually be spun off and be simply American. She just kind of grumbles off…

    There’s some really deep seeded pride in the US auto brands that I don’t quite understand, considering no one in my fam worked in the industry, and my grandparents were all Italian immigrants or children of Italian immigrants.

    I see this in a lot of people, and it doesn’t seem to apply to much else, with cars being the lone exception. And it seems to definitely be ingrained in people who are from a particular country that had a successful industry during the auto-boom in a post WWII world. You know…most of these people had no problem buying Sony TVs made in Japan through the 80s and 90s, or walkmans and clothing or whatever made anywhere else, but when it came to a car, forget it. It would be insulting to them to recommend buying any foreign car at that time. Never quite understood that, never will.

  • avatar
    gcorley

    Up front I would like to state that I am British (even English), now live and work in France for a supplier, and recently worked in the Detroit area for the auto industry. I am in my fifties so I lived through most of the demise of the British auto industry.

    I think any similarity & comparison between the British & American auto industries is completely spurious and irrelevant.

    Many UK industries suffered irreparable damage during World War 2, and the UK came out of the war with huge debts (mostly to the USA for the supply of military equipment). All development stopped in the auto industry during the war years.

    The auto industry was forced to export by the UK government (through taxation), as a way of making foreign revenue. As stated in Ingvar’s link the slogan at the time was “Export or Die”

    After the war the first British cars were basically pre-war designs from the 1930s; for example MG T-series sold to American airmen returning from Europe to the US.

    A number of important car designs did follow in the 50s and early 60s such as: Jaguar XK150, E-Type (XK-E) and MkII, MG B/BGT, Triumph TR2 thru 6, Rover 2000, Austin/Morris Mini (Seven/Mini Minor), Austin-Healey 3000, etc. A number of these cars are classics now.

    These vehicles where generally fairly robust (at least mechanically – less so for the electrics!), unreliable (but before the arrival of the Japanese in the 70s most vehicles worldwide were!) and suffered chronic lack of invest & on-going development and updating.

    When the “ragbag” British mass-producers where “thrown” together into what became ultimately British Leyland (BL), they were then put on “life-support” with just enough cash to keep them alive but no more!

    It is interesting to note that the main development centers for Ford & GM in Europe were still in the UK. The Ford Cortina Mk1 was far better known than the equivalent German Ford Taunus and the Vauxhall Viva was better known than the Opel Kadett (how times change!).

    To take France as a counter example, Renault was nationalized just after WW2 and remained so until the 1996. The French state poured massive amounts of money into Renault right through to the 1990s, resulting in significant cars such as the Renault 16, 4L, 5 and Espace. Although Renault is still much maligned in the USA, it is a relatively successful OEM (the Renault-Nissan alliance is in 4th place worldwide) today with their major share in Nissan.

    It was interesting to see an article today in the French press, showing that Renault & PSA (Peugeot/Citroen) are moving more and more of their production outside France (Renault: 71%; PSA: 55%).

    Of course the British auto industry was finally put to rest by the Japanese, who came along with similar size products, but with the added advantage of reliability & lower prices. Japan was a low labor cost country at the time. How we laughed at their vehicles in the late 60s and early 70s!! But that changed!!

    The French survived better due to their higher state investment and primarily due to their greater national loyalty to home-grown manufacturers and products.

    I guess the Germans survived because they always (with some exceptions) had good products and were normally more up-market (BMW, Mercedes & Audi).

    The US auto manufacturers have (and had) one major advantage, compared with all other countries (except China). They have a massive home market to sustain them (in terms of volumes which allow lower amortization costs and higher revenues). This explains why over the years, US developed vehicles that had almost no potential to be sold elsewhere in the world (due to size, fuel consumption, handling, etc.), could still be sold for reasonable prices and large profits.

    This lack of exportable products would have killed any other OEM outside the USA!!!!

    Just as an aside, once the Chinese auto industry is fully developed they will have an even bigger advantage (massive home market) than the US manufacturers. Plus they will have the benefit of low labor costs. Watch out!

    Today of the big 2.8, GM & Ford have significant foreign investments (which make most of their profits), and even if they filed for Chapter 11 (or 7) in the US, would still exist as large Corporations through their foreign subsidiaries alone.

    Chrysler is of course the exception, and if their US operations fail they have nothing to save them, except Cerberus.

  • avatar
    tom

    @gcorley

    I think you make some good points, but I also think that you have a very Britain-centric view. Now that’s of course only natural.

    I’m German, so I naturally have a very German-centric view.

    So for example, you mentioned the Ford Cortina Mk1 and the Vauxhall Viva and claim that they are better known than their German/American counterparts. Well, from where I’m sitting, it’s exactly the opposite – frankly, I’ve never heard of those two cars while the Taunus and the Kadett are of course omnipresent in my personal view of automotive history.

    That doesn’t mean that either of us is wrong, just that it depends on your perspective.

    Also, all of Europe got struck hard by the war. But there are sill many German, French and Italian auto manufacturers out there. Of course there are various reasons for that, but ultimately it comes down to product.

    About the comparison of US and British car industries: Of course it only goes so far. I think it also has a lot to do with the fact that Britain and the US are pretty close culturally and speak the same language. So it’s much easier for an American to inform himself about the downfall of BL than about the history of Swedish automakers. Just as it’s easier for an American to read and relate to an UK car magazine compared to a German, Italian or Japanese one.

    However, that doesn’t mean that there are no similarities. And if you want to prevent the same thing from happening all over again, you better look closely at those similarities.

    One last point about the big domestic market America has. I think this is only an advantage at first glance. Of course it sounds great to have such a big market right in front of your doorstep. But it also makes you lazy. If you don’t have to export (like the Europeans do) then ultimately you won’t.

    “Where’s the point in pouring money into competing on some minor market (compared with the US) when there’s not much to gain anyway?” That kind of thinking is exactly why the US car industry is in so much trouble right now. Their Asian and European competitors had to prove themselves. They had to compete abroad or just die – and many did (see British industry). Ultimately, this kind of darwinian selection is a big benefit to their products. And now that the competition is moving in on the US, the American dinosaurs have to adjust quickly. But instead of doing that, they relied on trucks, with the same kind of reasoning that prevented them from exporting cars.
    “Where’s the fun in competing for small cars where there’s almost no money to make when we can make huge amounts with trucks where there’s hardly any competition?”

  • avatar
    geeber

    Dave: Excellent article – 100% correct about Ford stripping down the Mini – only thing is Ford went nuts trying to figure out where the profit was on the Mini, until they eventually realised that there was no profit. Don’t know how long it took Austin to realise that.

    Ford executives relayed their findings to BMC management. They were politely told to mind their own business.

    Interestingly, because Ford made money on the thoroughly conventional (but well-developed) Cortina, it could afford to update the car to maintain customer interest.

    The Mini and 1100 were far more advanced cars – they are basically the template for most modern family cars with their front-wheel-drive, transverse-engine layout – but because BMC never made any money on them, it could not afford to invest in upgrades or updates.

    KatiePuckrik: Many of the “strikes” performed by the unions, were actually protests against the government and the executives running the companies because the unions felt the companies were being mismanaged and, thus, jeopardised their job security.

    A strike against an inherently weak company under siege from competitors at home (Ford of Great Britain) and abroad (VW and the Japanese) can be a knock-out blow, whether the workers are protesting government policies or not enough break time for lunch.

    Either way, the workers were cutting off their nose to spite their face.

    KatiePuckrik: Due to an inherent right wing slant in the UK media, it was easier to demonise Derek Robinson, than look at the executives.

    With the collapse of the Soviet Union, there is credible evidence that Derek Robinson was working with the Soviets when he called those job actions; they wanted him to hurt the British economy. He was no innocent in all of this.

    gcorley: All development stopped in the auto industry during the war years.

    The same thing happened to the German and American auto industries, too (although the American-based plants of the domestic auto manufacturers obviously weren’t bombed to rubble). No new cars were produced in the U.S. from early 1942 until late 1945, and when production resumed, the cars were simply 1942 models with a few new pieces of chrome or a new grille. The British car industry was hardly unique in that regard.

    As for the Germans, one executive noted that, due to Allied bombing raids, Daimler-Benz had basically ceased to exist by 1945. There wasn’t much of anything left. VW had never really gotten off the ground prior to the war, and after the war it was treated as a “make work” project by the Americans and British to keep Germans employed as much as anything else.

    tom: So for example, you mentioned the Ford Cortina Mk1 and the Vauxhall Viva and claim that they are better known than their German/American counterparts. Well, from where I’m sitting, it’s exactly the opposite – frankly, I’ve never heard of those two cars while the Taunus and the Kadett are of course omnipresent in my personal view of automotive history.

    Here in America, we’ve heard of the Cortina, but not the Taunus. But we’ve heard of the Kadett, while the Viva is completely unknown. Largely because Ford briefly imported the Cortina as a “captive import,” while for several years Opels, including the Kadett, were sold through Buick dealers in the U.S.

    Two other reasons Americans of a certain age are quite familiar with the British auto industry:

    One, the first really successful imports were British – Jaguar, Austin, MG. They paved the way for VW’s success, and the success of the British sports cars marked the first time that Detroit directly responed to the popularity of imports (by bringing out the Chevrolet Corvette and the Ford Thunderbird.)

    Second, up until the late 1970s, low-cost diecast automobile toys largely came from Great Britain, and many of those – particularly Matchbox – were wildly popular in the U.S. All of those companies featured British models in their ranges, and it was there that many of us learned, for example, that there were Fords made in other places that were completely different from the Fords we had in the U.S.

    Actually, the demise of the British diecast toy industry is another interesting topic.

  • avatar
    Axel

    sitting@home:

    See how Peugeot simply pulled manufacturing to a lower cost country without any fear of backlash. Toyota could easily do the same (in both the UK and the US) if market conditions favored it

    If market conditions ever favor Toyota closing American factories and bugging off back to Asia, we’re in much deeper sh*t already than the loss of a few thousand factory jobs.

  • avatar
    RFortier1796

    Katie….

    “P.S. Does anyone call the Lexus ES a ‘tarted up Camry’? Or the Acura TSX a ‘European (Accord) cast off’?

    Yes. Yes on both accounts.

  • avatar
    Redbarchetta

    Actually, the demise of the British diecast toy industry is another interesting topic.

    Man I wish it wasn’t so off topic but I sure would be interested to hear about that. My daughter now plays with my Matchbox cars I collected as a kid from the 70′s and 80′s, many foreign makes never sold here.

    A little more on topic I ran into a Top Gear episode online last night that was so appropriate for this editorial. Jeremy and the boys tested out 3 British Leyland cars from the 70′s to prove they weren’t junk and ran them through a battery of test, man they were funny. Lets just say the parts literally falling off(Jeremy’s Rover lost both it’s rear doors) proved they were junk. I’m going to see if I can find a link it was hilarious funny, although Katie might not like it.

  • avatar
    Redbarchetta

    Found it: Top Gear British Leyland challenge

  • avatar
    Dynamic88

    Katie,

    You make a good point. There is still a car industry in the UK, it’s just that the HQ (for most of the makers) is somewhere else.

    Much the same is happening in the US. “US” companies are in decline, and slowly dying, while another segment of the industry is alive, well, thriving, growing, and happens to have an HQ somewhere else.

    Ingvar

    Actually, Britain in the 60’s had a relatively competitive portfolio of cars. Had things gone the right way instead of the wrong way, there’s no limit to where they could have been today.

    Triumph could have been where BMW is today. Compare the Triumph 2000 and the Triumph Dolomite Sprint against BMW 1500/2000 and BMW 2002.

    Jaguar could have been where Lexus and Porsche is today. Compare the E-Type against the 911. Or Jags range of grace and pace, the Mk II, The XJ6 and the giant Mk X.

    Rover could have been where Mercedes is today. they had the P5, P6 and the Land Rover and up and coming Range Rover. They had plans for a larger range of cars, the P8, slotted against the S-klass. They had plans for a luxury V8 mid-engined GT.

    What is meant by things going the right way? You mean if the Brit auto industry had Dr. Deming come over and show them, say in the 70s, what he’d been showing the Japanese in 1950?

    Other than following Deming’s quality philosophy, there isn’t a snowball’s chance in hell that Triumph could have been as good as BMW, Jag on par with Lexus, Rover the equal of Mercedes.

  • avatar
    JohnB

    Redbarchetta,

    Great video, thanks for posting.

    It so reminded me of my ’77 Triumph Spitfire – I actually took a hammer and beat the crap out of it before I sold it for parts – the worse car I ever owned…

  • avatar
    Ingvar

    “Other than following Deming’s quality philosophy, there isn’t a snowball’s chance in hell that Triumph could have been as good as BMW, Jag on par with Lexus, Rover the equal of Mercedes.”

    I would say that in the 60′s the british were actually on par, but that in the 70′s the competition had leapfrogged, while the british because of lacking proper funding and resources continued selling the same old product (MGB, Mini) or when they did develop, it was an inferior product (Allegro, Marina).

    The point is, in an alternative universe, without magic but with common sense, the british could actually be where the BMW, Mercedes, Lexus is today.

    60′s:
    Triumph 2000
    Rover 2000
    BMW 2000
    All more or less equal.

    70′s:
    Triumph 2500 (The same car)
    Rover 2200 (P6)(The same car)
    BMW 528 (completely new car)

    Thee Triumph-line withered and died without replacement in 1978, the Rover went upmarket with its new generation, while BMW started its successfull mid-range of benchmarking 5-series.

    It is only with the hindsight of today we see this as an unplasuable scenario. My point is, in the 60′s, things looked different and history could have gone in another direction, had things turned a better way for some. Porsche was essentially a one model brand, while Jaguar not only had the E-type, but three different lines of luxobarges as well, not counting Daimler, and that line of cars. Before the advent of the BMW 2002, Triumph had more or less cornered the market for sporty middle-executive cars with a straight-six, when BMW only had a four. The point is, things looked different then, it could have turned different as well.

  • avatar
    John Horner

    “Depending on exports for profits is a bad idea in several ways. An export-lead company is much more vulnerable to changes in the economy, from trade barriers to currency fluctuations. More importantly, exporting is conducive to irrational optimism combined with utter ignorance.”

    Hmmm, don’t tell that to Toyota, Honda or Nissan, all of which sell far more product outside of their native land then they do inside. Granted they have developed significant in-market manufacturing as they have developed. However, an export heavy strategy is not in and of itself bad. Intel, Caterpillar, John Deere, IBM, Coca-Cola, General Electric, Boeing and other major US based companies all depend upon their export market business for substantial, and in many cases for the majority, portions of the business base.

    The article completely left out the role of union-management squabbles in the decline of the UK based auto industry. Those issues played a large role in the cost and quality problems which bedeviled the UK based industry. Quality problems, in fact, had a great deal to do with the implosion of BMC and others.

    Finally, I the 2.8 have long bitched and moaned that they loose money on their smaller cars, so perhaps the parallel to the Mini drawn here is in fact better than realized.

    Any analogy falls apart if pushed to far, but to say that there are no educational parallels to be drawn between Detroit’s perils of recent years and those which tore the UK based auto industry to bits is also an overstatement. In the end the UK based makers failed because other companies built better products, more profitably and which customers found more desirable than those originating in the UK.

    P.S. Toyota and Honda have major engine manufacturing plants in the US. In 2007 Honda Ohio celebrated the production milestone of 15 million engines ( http://world.honda.com/news/2007/c070517EngineProducedatAnna/ ). Honda’s US automatic transmission factory is in Georgia. Toyota has engine factories in West Virginia and Alabama and an automatic transmission plant in West Viginia. The point is: Toyota and Honda don’t just assemble kit cars at their US factories.

  • avatar

    Redbarchetta;

    My god was that hysterical, thanks for the link.

  • avatar
    BigChiefMuffin

    I have read the famous “According to most accounts, the boys at Ford England figured out that BMC was losing ₤30 on every ₤500 Mini they sold” many times, but I think one really has to take this story with a pinch of salt.

    Someone at Ford at the time of the Mini’s release would have asked their accountants whether Ford could make something similiar at that price. The accountants would have replied “No, we would loose £30 on every £500 Mini”. However, as anyone who has ever costed up a product knows ( be it a car or a widget ), it all depends on how you allocated your overheads, and what is the expected amount and duration of the production run. Ford would probably have assumed that the car would have to recover all its costs ( development, tooling etc ) over say a 10 year run. They would have also allocated quite a lot of Ford overhead to the cost. On this basis, Ford may well have lost £30 per car.

    The thing is, the Mini ran for something like 30 years, and BMC spent bugger all on improving it for most of the run ( though funnily BMW did quite a bit of work updating it right at the end of its run, probably so as not to spoil the repuatation of its replacement before it was even launched ). But on something like a 30 year run, BMC would have written off all the development costs and depreciated the tooling to 0 years ago so that, it was probably making money on each car after the first decade or so ( I won’t pretend to have the exact figures so am just guessing ).

    Funnily enough, from what I have read, BMW seem to be in a very similiar situation with the new Mini regarding its profitability…

  • avatar
    bluecon

    The Big 2.8 are just a reflection of the USA.
    Like Granholm said Michigan will be blown away and it is going to get worse and still the fools voted for another term. This is going to spread until the housing market corrects. And that won’t happen soon.

  • avatar
    Lumbergh21

    One more car maker/country to add to the mix. Yes England was heavily damaged in WWII while the US left it unscathed, in terms of manufacturing. However, as others have already pointed out, Germany was bombed into oblivion, Italy and France were certainly hurt as well, and todays beacon of automotive business perfection, the Japanese, were also hit and hit hard by the US. Also already pointed out, the US manufacturing base was devoted entirely to war production and no new designs or cars were built until after the conclusion of the war in the Pacific. The British motor industry died of their own ineptitude just as the American motor industry would be dead if Chrysler, Ford, and GM went belly up or were sold to outside investors. While foriegn manufacturers operations in this country are big business and very important to our economy, they are still foriegn car companies.

  • avatar
    Tom-W

    Though the story is set in a missile manufacturing plant, rather than an auto plant, a hilarious send-up of British industry during the “export or die” era is a Peter Sellers / Terry Thomas movie called “I’m Alright Jack” (my understanding is that this is British slang that translates roughly to “F-You, I Got Mine!”

    The stuff about labor unions (and their mentality) is priceless.

    I know that it’s on DVD, and so is probably available on Netflix.

    Every UAW member should watch it – they see a bit of themselves and realize how self-destructive their union is to their future livelihoods (or lack thereof).

  • avatar
    OTTO SALES

    Serve the whine please! Let the whine flow..Who cared when the lights all went out in plants world wide?Some of the scribes encouraged this exodus.Lets see.. only Asians could build quality.The profit takers were seen as slave owners.
    Evil Fat cats who made a profit!
    Where are they today?Spending labors entitlement?
    Time to import Asian houses and politicians.
    Lets all read and embrace Asian ways…
    while we can…


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