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Sunday, 7 May, 2000, 10:05 GMT 11:05 UK
Car firms face bleak future
car workers
Consolidation and a fall in sales are threatening jobs
By the BBC's Rodney Smith

I am glad I am not a Longbridge, nor a Dagenham worker; their lives must be miserable as they contemplate a future of little or no employment.

But the entrepreneurial among them might be wise to take whatever is on offer in redundancy pay and look for a new way of making a living, because the international motor industry could be facing very trying times.

Most motor industry observers agree that there is overcapacity in the motor industry, especially in Europe.

Recent mergers and purchases have not yet produced the thinning out of factories that is to come.

What BMW and Ford are doing may just be the start of a wider trend.

Not so long ago, during the last significant motor industry recession in the early 1990s, manufacturers like Volkswagen had to resort to a three-day week to keep factories from closing.

Usually aggressive unions accepted lower pay in return for jobs.

There was some inventive behaviour on all sides to keep production flowing at low levels.

It paid off for most, and the motor industry enjoyed its biggest ever boom as the decade and century closed.

Exceptions included East Asian manufacturers slow to adapt; Nissan, rescued by Renault, Samsung Daewoo and Hyundai in South Korea.

Repeat performance

Well now, time to read the runes again.

They don't look good.

Demand is slipping everywhere. British buyers are accused of waiting for lower prices. Quite right too.

Japanese buyers are just not interested. Car sales there fell almost 0.5% last month - not disastrous, but not good either in an economy where consumer demand is supposed to be recovering.

The same is true in Germany - Euroland's biggest market and one which is supposed to be picking up in all areas.

Sales are down 15% in the first quarter, with Ford being the worst affected.

Do you think the German consumer, faced with higher interest rates, and the prospect of even dearer money to support the euro, is going to go on a car spending spree over the summer?

I don't.

So Ford and Rover workers should take the money and run before their colleagues elsewhere in the industry start clamouring for a slice of the cake.

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