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Last Updated: Thursday, 7 April, 2005, 22:29 GMT 23:29 UK
The politics of building cars
Analysis
By Brian Wheeler
BBC News political reporter

There can be few more powerful symbols of national pride than a country's car industry.

Longbridge workers
British Leyland was a byword for industrial strife
Perhaps that's why successive generations of politicians have battled to keep Britain's home grown car makers alive - when pure economics would probably have seen them consigned to history many times over.

Chancellor Gordon Brown has argued it is about saving jobs.

But the failure of MG Rover to reach a deal with Shanghai Automotive Industry Corporation (SAIC) could also see two historic British marques finally go into extinction, after beating the odds to stay afloat over the years.

When the UK government said it was ready to offer MG Rover a bridging loan - widely reported to be worth 100m - to keep it afloat long enough to clinch much-needed investment from China, the announcement contained echoes of the sort of industrial policy that was an article of faith to Labour governments of the past.

Industrial powerhouse

In the immediate post-war era, Britain was the world's biggest car maker, with names such as MG, Jaguar, Rover and Rolls-Royce symbolising Britain's engineering prowess and industrial might.

But by the 1960s the country had been overtaken by the US, France and Germany, who had invested their Marshall aid money wisely in new plant and machinery.

The answer - in the eyes of the Labour government, which in those days took a very hands-on approach to industrial policy - was amalgamation.

Morris Marina
Morris Marina: One of the worst ever cars built?

Tony Benn, who chaired something called the Industrial Reorganisation Committee, encouraged the two biggest companies, Leyland Motors, which owned Triumph and Rover, and British Motor Holdings, which owned Austin, Morris, MG and Jaguar, to merge.

The idea was to produce an industrial powerhouse capable of building more than a million cars a year - allowing it to take on the American-owned Ford and Vauxhall.

There was, of course, a great deal more at stake than national pride.

'Red Robbo'

The car industry was - and still is - a major employer in the crucial swing constituencies of the West Midlands - and a vital source of export earnings.

In the late 1960s, Longbridge, in the West Midlands, was the world's biggest car plant, employing about 250,000 people and British Leyland, as the newly merged giant was called, had 40% of the UK car market. (Its successor MG Rover currently has 3%).

But the merger did not go well.

The factories were over-manned and in bad need of investment and the ageing model range suffered from too much duplication.

And then there were the strikes.

Production was regularly brought to halt by mass walkouts as the unions, under the leadership of Derek Robinson, dubbed "Red Robbo" by the press, embarked on a series of ruinous disputes with management over pay and conditions.

Unthinkable

Not surprisingly, by the mid 1970s, British Leyland was facing collapse.

Harold Wilson's government was forced to bail it out with 2.4bn of public money - in a move that would now be illegal under EU state aid laws.

John DeLorean
The government ploughed millions into DeLorean
The alternative - the collapse of British Leyland with the estimated loss of one million jobs in the Midlands - was unthinkable.

It had never been the government's intention to go into the car business, but the prime minister now found himself making an annual pilgrimage to the British Leyland stand at the Earl's Court motor show, to pose for the cameras with the latest Mini or Rover.

The public were exhorted to buy British and the Union Jack was waved over Longbridge's output, even though the cars produced in that era, such as the Austin Allegro and the Morris Marina, are now widely regarded as some of the worst ever built.

DeLorean

The National Enterprise Board took control of BL in 1975, with a pledge to return it to profit by 1981, but cash meant for product development was spent on averting strikes.

Between 1978 and 1979, when he was sacked, Mr Robinson was credited with causing 523 walk-outs at Longbridge, costing an estimated 200m in lost production.

The British Leyland experience did not put Labour off the car business, however.

It ploughed millions into the DeLorean car plant - seen as a solution to crippling unemployment in Northern Ireland and described by one minister at the time as a "hammer blow" to the IRA.

The fact that the area had no history of building cars - let alone futuristic gull-wing sports cars - did not seem to deter ministers.

Final chapter?

Before the factory folded, after just 21 months, amid lurid headlines about founder John DeLorean's alleged involvement in drug smuggling, the DeLorean Motor Company had swallowed 84m in public funds.

But by this time Margaret Thatcher was in power and the idea of the government building cars - or anything else - was falling out of favour.

Derek Robinson
Derek Robinson led industrial action
Mrs Thatcher may have swept into Downing Street in a top of the range Rover, but she had little sentimentality when it came to the company that built it.

She drafted in Sir Michael Edwardes to get tough with the unions and turn Austin Rover, as it was then called, around.

Mr Edwardes came within an ace of pulling the plug on the company and then Mrs Thatcher tried unsuccessfully to sell it to Ford.

It eventually came under the control of privatised British Aerospace, which sold it to BMW. The German company offloaded it to the Tower Group, for ten pounds, placing it briefly back in British hands.

Now the last-ditch talks in China to try and secure a 1bn investment in MG Rover from SAIC have failed.

The next few days may tell whether this is the final chapter in MG Rover's turbulent history.




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