By on April 22, 2013

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In the early 1980s, when Japanese car companies started conquering the automotive world, few would have predicted the survival of the British car industry. British Leyland, whose umbrella eventually included most British marques except for tiny specialists like Lotus and TVR, was busy going defunct. In the 1950s and early 1960s, export demand, particularly for sports cars, helped keep British car factories humming. By the 1980s, though, decrepit factories, continual labor unrest, abysmal quality and Lucas electrics made success virtually impossible in the face of the well engineered and reliable new Japanese cars. Now, three decades later, at a time when the continental European automobile industry is plagued by overcapacity and a dormant market (issues with the Euro, Greece and other debtor countries are probably a factor as well), the British automotive sector is in the best shape it’s been in since the 1960s.

Speaking to the 2013 Society of Automotive Engineers’ World Congress while on a trade mission to Detroit to encourage the US auto industry to consider British suppliers in supply chain decisions, Michael Fallon, the UK’s minister of state for business and energy said that the value of British automotive exports now exceeds the cost of similar imports to the UK.

“Automotive in Britain is now a success story. We’re exporting more by value than we’re importing for the first time in 30 years. We’ve had a huge turnaround.”

Part of the turnaround in the British auto industry is the fact that there is no British auto industry anymore, at least at the assembly plant level. All eight automotive plants in the U.K. are owned by foreign companies. Still, no matter who owns the companies, exports create jobs. Also, the dollar (or pound) value of British automotive exports may be enhanced by the fact that a number of those factories assemble Jaguars, Land Rovers, Bentleys and Rolls-Royces, none of which are inexpensive.

Britain not only has an overall net trade surplus when it comes to things automotive. On Fallon’s visit to Detroit, in an OpEd for the Detroit News he pointed out that his country also has a trade surplus with Michigan, with total trade between the U.K. and Michigan approaching a billion and a half dollars. Michigan exported $700 million in goods to the U.K. in 2012 and imported $740 million in return.

British companies, both U.K. owned and those owned by companies outside of Britain have made significant investments in Michigan. According to the British consulate in Detroit, BAE Systems, Lotus Engineering, Ricardo, the engine company, and other British firms employ more than 19,000 people in the Great Lakes state. Likewise, Michigan based firms like Ford, GM and the Penske Group have substantial investments in Great Britain. Though Ford is closing the Southampton Assembly Plant in response to the doldrums in the European car market, Fallon said that Ford is growing in the U.K. The Dearborn automaker just announced that it will be investing $31 million at the Bridgend engine plant to build 1.5 liter Ecoboost motors.

To give you an idea of how it was before the decline, when Britannia ruled, I’ve posted a fine BBC video on the golden age of Brit sports cars, though it needs pointing out that the video fails to mention the most influential British sports car of all time, the Lotus Elan.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks – RJS

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50 Comments on “British Auto Industry Revived Under New Ownership, Motor City Benefits...”


  • avatar
    threeer

    +1 on the fact that there is virtually NO British Auto Industry…just many foreign companies assembling vehicles in England. I shudder to think that America could one day find it’s self in the same leaky boat.

    • 0 avatar
      The Doctor

      How, exactly, has foreign ownership of car companies been detrimental to the UK auto industry? If anything, it’s been improved by removing the blind nationalism that saw good money poured after bad in pursuit of maintaining “British” car companies.

      The UK is building more cars that it did 30 years ago when British Leyland finally started disintegrating and the engineering base is stronger than it’s ever been.

      • 0 avatar
        sitting@home

        I would be worried. Peugeot packed up at a moment’s notice, Ford and GM look like they’re about to do the same. There’s nothing really keeping Nissan in the country, and as soon as the shock of a Chinese built Jaguar, Land Rover and MINI has worn off then production will almost certainly be moving there. Left wing Tony Blair did less to support his domestic car industry than Right wing George W. did for his, and Cameron’s government have shown utter disregard for anyone not a banker.

        • 0 avatar
          The Doctor

          And it would be different if the companies were UK-owned because? The French manufacturers are largely French-owned but that hasn’t stopped them from shutting down domestic factories and off-shoring production (Renault-Nissan’s new plant in Tangiers, for instance).

          All manufacturing companies have to off-shore some work to remain competitive. Dyson has all of its manufacturing done in Malaysia but it has kept all its design and R&D operations in the UK.

          As for government support, jobs that you have to pay to keep aren’t worth having in the long run.

        • 0 avatar
          mike978

          Cameron has done some things like the “patent box” which is a low tax regime for companies who file patents in the UK (after spending R&D in the UK). Helps my company – a major pharmaceutical manufacturer. One of several world class British companies – just not auto.

      • 0 avatar
        billfrombuckhead

        Japan has the highest debt per capita in the world from throwing money at it’s export industries and weakening the yen to buy market share.

        http://www.nbcnews.com/business/japan-tops-list-countries-deepest-
        debt-1C7100630

      • 0 avatar
        jeffzekas

        Countries that assemble products for other countries are referred to as “colonies”. I prefer that my nation would NOT be a colony of Japan or China!

  • avatar
    Ron

    Lord Lucas’ nickname was, appropriately enough, “The Lord of Darkness”.

  • avatar
    Flybrian

  • avatar
    billfrombuckhead

    I’m just astonished to think anyone thinks the situation of the British auto industry is good for the UK or should be emulated by the US. In the early 90′s when the Korean auto industry was a on the rocks, the Korean government prohibited foreign companies from buying Hyundai and Kia, instead bailed them out and restructured them just like the Japanese government recently bailed out and restructured it’s flat screen industry.

    Germany is one of the most unionized and socialist nations in the world and it’s the worlds most successful exporter. The state of Saxony owns a major share of VW and yet VW thrives. I wonder what world all these capitalist fundamentalists live in? It’s certainly not this one.

    • 0 avatar
      thornmark

      And just imagine how much better Germany would do w/o being so socialist and unionized. Germany has a tradition of craftsmanship that socialism/unionism hasn’t killed like it did in the UK.

      • 0 avatar
        billfrombuckhead

        Where is this capitalist wonderland you dream of? The USA never loses to more capitalist nations, just more socialist ones.

        • 0 avatar
          danio3834

          “Where is this capitalist wonderland you dream of? The USA never loses to more capitalist nations, just more socialist ones.”

          Now we should wonder what world YOU live in. Certainly not this one. The USA didn’t become the world’s largest economy because of centrally planned economic models, but beceause it was a haven from that.

          Now that centrally planned economics are largely en vogue, manufacturing is simply migrating where labor costs are low. Even if those places are communistic, they still permit a low overall cost to operate. Whether it stays that way remains to be seen.

          Foreign operators in China may be well off for the moment, but in reality have very little actual control over their businesses.

      • 0 avatar

        And just imagine how well the United States would do if US corporations invested in training employees the way German ones do instead of treating labout like a nuisance cost that has to be reduced by offshoring. Of course, when you have labour unions on management boards (socialism!) in Germany you get that instead of the kind of strikes that killed UK industry. German labour costs may be high but German workers are extremely productive and skilled labour is considered a noble undertaking compared to, say, financial engineering.

        • 0 avatar
          thornmark

          Detroit is a monument to big BIg Unions. Once the richest large city in the US, now bankrupt and essentially the poorest.

          Since the time the Wagner Act granted unions monopoly power, the US auto industry began its historic decline. It took decades for the full effect of that malignant legislation to manifest its effects. The UAW would strike one company until it had to agree to increased labor costs in excess to increases in productivity. Companies had to decontent or raise prices. There did both.

          In that environment, outsourcing, rather than a bane, actually saved union-inflicted companies like Ford by bringing down their costs. Can anyone argue that Ford would exist had they not outsourced?

          Since Detroit is seared into the national consciousness, non-union plants are the future of US auto manufacturing if it is to have a future.

          • 0 avatar

            Although nobody will disagree that the UAW’s actions were significant in the downfall of Detroit,I would not lay the blame solely there. Detroit earned huge profits in its heyday and management agreed to contracts that seem crazy to us today based on those profits somehow never ending. In addition to expensive and unproductive labour, American car manufacturers closed their eyes to new technologies, had limited respect for their customers and in the end were simply not able to match real competition, first on the price level and then in technology, from imports. At the same time people complain about the greedy UAW they forget the massive bonuses paid, for example, to GM executives. Rick Wagoner was the architect of the truly insane arrangement made with Fiat that cost the company billions yet he walked away personally with millions when he finally had to leave GM. Where unions are integrated into management, as is the case in large German companies, they tend not to behave like idiots but management also has a lot more accountability in general as well.

            My comment about offshoring was not aimed specifically at the car industry but US manufacturing in general. However, companies like Ford, Chrysler and GM have reduced costs by giving a greater role to subcontractors but many of those jobs are still in North America, admittedly not at UAW scale.

      • 0 avatar
        dan66

        What an ill informed typical daily mail type comment. Look at a book called why are the British bad at manufacturing. You will actually learn rather opening mouth in a bigoted way. The failure of companies like British Leyland was not down to militant unions, they may not have helped but down to poor senior management, the banks lack of lending in the uk compared to Germany France the usa and Japan. Then when nationalised the government kept interfering and insisted new plants were opened where unemployment was high but logistics were a nightmare. The reason jaguar land rover are now doing so well is investment in a massive scale by tata and good senior management. If you actually analyse the labour cost in producing a vehicle it comes way down the lists of overheads so the fact Germany pays workers well has minimum impact on total cost as the coat per unit is kept low by good management running efficient systems. BMC made a management decision to price mini and Austin 1100/1300 too low. Was that a workers fault? Stop reading the popular right wing press and research a little before making inane comments.

    • 0 avatar

      That would be Lower Saxony, actually. Saxony, a different province in the former East Germany, does have a car industry and produces the BMW 1-series and X1 and the Porsche Cayenne in Leipzig, while the VW Phaeton comes from Dresden.

      • 0 avatar
        wmba

        “I’m just astonished to think anyone thinks the situation of the British auto industry is good for the UK or should be emulated by the US”

        Well, how is it bad? Is it bad to have actual factories producing actual product? Is it better to have nothing? Nissan is expanding there, but Honda is on the ropes in Swindon because they have only one seller, the CRV.

        The US has all sorts of foreign vehicle assembly plants, and BMW exports most of their production from South Carolina. I have a great idea. Lets close it down because you’re astonished and put 7,000 people out of work instead. Great idea.

        If China ever does become the world’s car production center, I think it safe to assume the US manufacturers will be in the vanguard to export back to the US. Other US companies in different fields do it all the time, and seem to care little about anything other than profit.

  • avatar
    Type57SC

    I’ve heard a lot about Lucas for years, and the examples provided seem slapstick stupid/lazy engineering. On the assumption that few people are uninterested in winning and learning from mistakes on national industry scale, why did Lucas not get fixed/change?

    • 0 avatar
      Robert Gordon

      “why did Lucas not get fixed/change?”

      Because they were never actually as bad as people make out. Certainly no worse than AC Delco Remy, and streets better than anything crapped out by Marelli.

      I restore classic Lucas parts amongst other brands for the classic industry and for its time it was the best engineered, most robust stuff out there. I regularly get lucas horns, magnetos, wipers etc that are over 70 years old come through my shop…seldom are they dead.

      On the otherhand, deal with a lot of fittings where electrical problems are caused by poor earths, and bullet connects – none of which were lucas parts.

      • 0 avatar
        CJinSD

        I don’t think I’ve ever seen anyone suggest that the stuff Lucas made before WWII killed the British auto industry. I also suspect that many companies built parts then that could be serviced rather than thrown out and replaced. The problem was with the popular British imports of the ’60s and ’70s, as the growing popularity of cars from the former Axis countries exposed their relative faultiness. This isn’t to suggest that ’50s Austin-Healeys and MGs were built like Toyotas, but there were no comparably distinctive and affordable alternatives.

        • 0 avatar
          PenguinBoy

          “This isn’t to suggest that ’50s Austin-Healeys and MGs were built like Toyotas”

          Toyotas weren’t “built like Toyotas” until the mid ’80s, and there’s some evidence they stopped being built like Toyotas after the late ’90s…

      • 0 avatar
        danio3834

        “Because they were never actually as bad as people make out.”

        From my experience I tend to agree with you. Many companies aside from the British utilized Lucas electronics and I haven’t found them to be particularly bad.

        It’s not Lucas’ fault if Jaguar decided to ground their electrics to burled walnut.

    • 0 avatar
      Syke

      Something everybody forgets is that all those Lucas components that give the British cars their bad reputations are as old as the cars – 40 years, plus. So, for the last 30 years, you’ve had parts failures due to age, which (unless its trademarked Lucas) is considered normal.

      In the vintage British motorcycle parts industry, if you’re rebuilding an old Triumph, BSA or Norton you buy British (Lucas) parts. Even though they cost more than Taiwanese or Chinese parts. Because, in the long run, due to quality, the Lucas stuff is cheaper.

      I would guess that the antique British automobile field has realized the same.

      • 0 avatar
        geeber

        Lucas gained a bad reputation during the heyday of British imports to this country, not just recently. Like it or not, reputations are generally earned. There’s a reason that Lucas was known as the “Prince of Darkness” and AC-Delco wasn’t, it wasn’t because the original paying customers didn’t know any better.

  • avatar
    Robert Gordon

    It is worth noting that Leyland still survives as one of the biggest commercial vehicle manufacturers in the world, moreover it is also 100% British owned. Its now called Ashok Leyland, but still uses the same logo…

    • 0 avatar
      BrunoSaccoBenz

      I’m afraid Ashok Leyland is an Indian company based out of Chennai. The Leyland trucks you are thinking of has been a subsidiary of the U.S. company PACCAR since 1998. Yet again, there is automotive and commercial vehicle manufacturing in the U.K. but it is foreign owned.

      • 0 avatar
        Robert Gordon

        “I’m afraid Ashok Leyland is an Indian company based out of Chennai.”

        Nup, think again. I said British owned…If we’re going to use your logic then Jaguar and Land-Rover are British – and we should end the discussion there.

        However if we accept the premise that an auto company is the nationality of wherever its owners are from then Ashok-Leyland is British.

        Ashok-Leyland is a wholly owned subsidiary of a British company, owned and run by British nationals headquartered in London.

        As it happens I don’t think of Ashok-Leyland for a moment as anything else than as an Indian maker of heavy vehicle – likewise I really don’t how Jaguar and Land-rover are now suddenly Indian. The cars are still built in English Factories by local workers and engineered by local engineers. In the 1970′s Jaguar and Land-Rover were owned by a joint venture of representatives of the Citizens of the United Kingdom of Great Britain and Northern Ireland, colloquially known as the UK Government – but they were still English then despite such disparate ownership so why aren’t they English now and counted as indigenous industry?

        • 0 avatar
          wmba

          The Hinduja brothers who own Ashok Leyland and a bunch of other companies have been on the run from Indian justice for a couple of decades. They got British passports to avoid being extradited and to allow obfuscation of their Bofors deal to supply howitzers to the Indian army at a rate of commission rather higher than the norm, ahem, or so the Indian newspapers relate. I think it fair to say they are not exactly regarded as pillars of the community and fly the British flag for convenience only.

          So you are technically correct in calling them UK citizens. Wink, wink.

  • avatar
    icemilkcoffee

    Mini and Range Rover have certainly done well. Once upon a time you could only make big money via mass volume products. But in today’s world, you could actually make more money by catering to the top 5% instead of the bottom 95%.

  • avatar

    This state of affairs is very temporary. It’s based on others’ transitory weakness rather than any long term strength

  • avatar
    krhodes1

    I find the very concept of “nationality” a bit laughable when you are talking about publicly traded multi-national companies. Especially in an incredibly low-margin business like the auto industry. FAR more money gets spread around to the local suppliers and employees than ever makes its way back to wherever the nominal headquarters may be.

    • 0 avatar

      i think that is true from your american perspective but you forget the reality of growth markets the world over. The money generated from high margin sales in those countries do find their way back to company headquarters wherever they may be.

      • 0 avatar
        krhodes1

        What high-margin sales are those? In many cases it is the same situation – the cars are locally produced, so most of the money goes to the local workers and suppliers. The only “high margin” car companies are the luxury brands, and even then what is considered high margin in the auto industry would get you laughed out of the boardroom in most industries. And even the money that makes its way back to the boardroom gets a substantial portion distributed out to the global owners via dividends in many cases.

        • 0 avatar

          hey krhodes!!

          I don’t dispute any of what you say. A lot of money has been put here in this country, some money goes to workers, lots of it goes to suppliers (who are for the most part foreign-owned), a good chunk goes to the local governments.

          Let’s think of one not supposedly high margin car. The Honda City (a Fit-based sedan). Produced in Brazil and sold here for around 27K USD, in Argentina for 23K, Chile 19K and Mexico about 16 or less. Seems like the car has a very good mark up here. Another example, a recent business mag made a survey and showed that Fiat has the largest margins in Brazil. Those numbers were triple what they made in first world markets.

          Yes,small margins compared to other industries, but for car makers emergent markets are a gold mine.

          • 0 avatar
            CJinSD

            You do realize that if returns are highest in emergent market, then it only makes sense that they’re the best places for companies to reinvest their profits? Why take money out of Brazil, where that money can make lots of money, and invest it in Italy, where they’re basically managing their own decline?

          • 0 avatar

            Hey CJ!

            Of course I realize that, and I’m not knocking it. Fiat for example has invested in a local university developing together with it a course specialized in auto design as they felt local universities were not providing enough talent. That’s a hell of an important investment for local people.

            However, I’m just pointing out that such investments are not for nothing. There’s money to be made here, and proportionally, they’re making more here than in other, more mature markets. There’s nothing wrong in that.

            As to Fiat’s case, it has been said for many years, at least here, Fiat investment here is what’s kept them afloat over much of the 90s and 00s. It works both ways.

    • 0 avatar
      Power6

      krhodes1 you said exactly what needed to be said. So many armchair economists don’t quite get that.

  • avatar

    It should also be noted that Britain is a major factor in Formula One manufacturing and eight of the 12 F1 teams are based in the UK. There is an impressive amount of money, and engineering, involved in this.

    http://blogs.fco.gov.uk/paulmadden/2013/03/19/high-tech-british-industrty-behind-the-f1-pizzazz/

  • avatar
    Tstag

    The real sucess stories of the British car industry are MINI, and Jaguar Land Rover. Britain is now modelling it’s car industry on Germany’s rather than France or America’s. As the French are learning you can’t compete in the volume markets with the low wage economies. As soon as the Chinese start making cars we want then the volume brands will suffer. Premium is the future and there is more money in it too.

    • 0 avatar
      Lampredi

      “The real sucess stories of the British car industry are MINI, and Jaguar Land Rover.”

      No, those are success stories of the German and Indian car industries, respectively.

      • 0 avatar
        bartelbe

        “No, those are success stories of the German and Indian car industries, respectively.”

        Jaguar Land Rover is run by British management, with British designers, British engineers and built by British workers in British factories. All the Indians do is provide the money, and let JLR get on with it. If only Ford had managed their ownership half as well.

        As for Mini, it is part of BMW, but so what? BMW is a global brand, with factories across the world. The reality is the British automotive industry does generate an export surplus and jobs. Many of which are in the fields of engineering, design, backroom stuff the public doesn’t see.

        There is a risk of losing some of the assembly plants. Elsemere port is the most efficient GM plant in Europe, but it may well go. However there is little risk of losing Nissian in Sunderland, and most British cars are high end/high margin these days.

        Considering the state of the rest of Europe’s car industry, Britian is doing well.

      • 0 avatar
        Japanese Buick

        Reminds me of one of the best Top Gear gags. They had a driving challenge against their German counterparts. Both teams were told to show up with a small car that best typifies their own national auto industry. Both teams showed up with MINIs.

  • avatar
    Summicron

    This thread typifies the blend of erudition & experience that make TTAC the best.


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