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Wednesday, December 2, 1998 Published at 18:04 GMT


Business: The Economy

Our two-speed car industry

A long road back for Rover

UK industry is home to some of the most efficient carmakers in Europe, as well as some of the worst.

Observers need look no further than the Midlands to see just how stark the contrast is in the performance of these manufacturing lynchpins of the British economy.

In Birmingham, a deal has finally been struck by Rover and its unions to ward off the prospect of closure of the Longbridge plant, threatened by parent company BMW after a string of losses stemming from a poor productivity record.

The same week, just 20 miles away in Coventry, the Ryton Peugeot plant is announced as the French carmaker's choice above all its European factories to meet a big increase in demand for its new 206 model.

Peugeot says Ryton deserves the boost in capacity which will see it take on almost 1,000 new workers because of an unmatched productivity and quality record.

Best and worst


[ image: Nissan Sunderland: Industry leader]
Nissan Sunderland: Industry leader
This contrast in fortunes is reflected across the country and is the result of sharp divisions in productivity between different companies in the same industry.

Productivity is a measure of how efficiently a company makes its goods or services and is usually measured as output per worker.

A survey in August by the Economist Intelligence Unit showed Sunderland's Nissan plant was the most productive of any in Europe or North America, producing 98 cars per worker each year. However, Rover's Longbridge ranked as one of Europe's worst, managing to turn out just 33 cars per worker annually.

Meanwhile, a report by the consultancy McKinsey showed that UK productivity is the worst in the Group of Seven industrialised nations.

It seems that working arrangements on the factory floor and the level of investment in new plant and equipment is crucial to the productivity performance.


[ image: Ford UK lags its sister plants]
Ford UK lags its sister plants
Sir Alex Trotman, chairman of Ford, said his company's UK plants were "at least 20%" less productive than the group average among its factories all round the world.

He cited outdated working practices leading to excessive labour costs, and costly plant and equipment.

At its most basic, this means high overtime payments and old machinery.

The UK government is concerned by the glaring disparities between companies and has urged those at the bottom of the scale to update and adopt industry's best practices.

No level playing field

To be fair to the worst performers, it hasn't exactly been a level playing field in the car industry.

Rover has a long history in British car making and has struggled to leave behind the infrastructure of previous decades along with working arrangements hard-won by the workers in more militant times.

But Nissan is a new kid on the block, with greenfields sites incorporating the latest technology and no industrial baggage preventing the latest flexible working conditions.

Importantly, Nissan and other carmakers received government grants to entice them to set up in the UK. No such hand outs for Rover and other existing manufacturers.

So it was no surprise that the beleaguered chairman of BMW, Bernd Pischetsrieder, said he would be asking the UK Government for financial help to save Rover.

It remains to be seen whether this help will come and whether Rover's 'new deal' can help lift it from the bottom of the productivity league to sit along side the likes of Nissan and Peugeot.



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The Economy Contents


Relevant Stories

01 Dec 98 | The Economy
Midlands scores big job gain

02 Dec 98 | The Company File
Rover loses 2,500 jobs, and its chief

23 Oct 98 | The Economy
Productivity: Mind the gap!

21 Aug 98 | The Company File
Sunderland Nissan 1, Other Carmakers 0





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Ford UK

Nissan Europe


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