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Abstract
When one looks at the landscape of the European automobile industry before and after the economic crisis of the 1970s, the major difference lies in Great Britain. Everywhere else, the ‘national champions’ also went through periods of crisis but managed to maintain or restore control over their national markets with the support of their governments and main stakeholders. In Britain, not only did the nationalised British Leyland (BL) lose half of its market share and did not manage to recover, despite substantial injections of capital from the State, but the British government also subsidised the establishment of a new domestic competitor, the Japanese carmaker Nissan, followed in the 1990s by Honda and Toyota. This article exploits new archive material to advance a new explanation that connects these two ‘exceptional’ outcomes of the 1970s crisis on the British motor industry. It shows that the key to understanding this otherwise contradictory industrial policy lies in the shifting of political support from the ailing BL to its main suppliers.
Notes
1. Altshuler, Anderson, Jones, Roos and Womack, The Future; Freyssenet, Mair, Simizu and Volpato, One Best Way?
2. Freyssenet et al., One Best Way?
3. Durcan, McCarthy and Redman, Strikes in Post-war Britain; Adeney, The Motor Makers.
4. Lewchuck, American Technology; Tylecote and Vertova, Technology and Institutions.
5. Church, The Rise; Whisler 1999; Foreman-Peck, Bowden and McKinley, The British Motor Industry; Williams, Haslam and Williams, Cars.
6. Bowden, Foreman-Peck and Richardson, “The Post-war Productivity.”
7. Dunnet, The Decline; Wilks, Industrial Policy.
8. Edwardes, Back From the Brink.
9. Williams, Williams and Haslam, The Breakdown.
10. Tolliday, “Competition.”
11. Pilkington, “Learning From Joint Venture.”
12. Freyssenet et al., One Best Way?
13. Wilks, Industrial Policy.
14. Dobbin, The Sociology, 2.
15. Fligstein, The Architecture and The Transformation.
16. Fligstein, The Transformation.
17. Cowling (“The Internationalization”) also stressed the important role played by the internationalisation strategies of the main British suppliers (Lucas, GKN, Associated Engineering) in the process of British de-industrialisation. Coffey and Thornley (Globalisation) have recently developed further this hypothesis, emphasising the destabilising effects from European integration on Britain.
18. Durcan et al., Strikes in Post-war Britain; Bhaskar, The Future; Adeney, The Motor Makers.
19. Williams et al., The Breakdown; Williams et al., Cars; Church, The Rise.
20. Dunnet, The Decline; Wilks Citation1988.
21. Whisler, The British Motor Industry, 112–113.
22. Dunnet, The Decline, 144.
23. Dunnet, The Decline, 181–182; Adeney, The Motor Maker, 290–291.
24. Whisler, The British Motor Industry.
25. Tolliday, “Competition,” 66.
26. Tolliday, “Competition,” 72.
27. Dunnet, The Decline, 140.
28. Tolliday, “Competition,” 65; Williams et al., Cars.
29. Adeney, The Motor Makers, 281–283; Dunnet, The Decline, 134–135; Foreman-Peck et al., The British Motor Industry; Whisler, The British Motor Industry.
30. Lewchuck, American Technology.
31. Church, The Rise.
32. Bowden et al., “The Post-war Productivity.”
33. Church, “Deconstructing Nuffield.”
34. Bowden et al., The Post-war Productivity.
35. On which, see also Tylecote and Vertova, “Technology and Institutions.”
36. Williams et al., Cars and The Breakdown.
37. Tolliday, “Competition.”
38. Tolliday, “Competition,” 67.
39. Tolliday, “Competition,” 67.
40. Dunnet, The Decline, 15.
41. Trade and Industry Sub-Committee, “The Vehicle Industry,” para. 85.
42. Dunnet, The Decline, 93.
43. Dunnet, The Decline, 96.
44. Dunnet, The Decline, 95.
45. Dunnet, The Decline, 101, 113–114.
46. Dunnet, The Decline, 188.
47. Tylecote and Vertova, “Technology and Institutions.”
48. Bowden et al., “The Post-war Productivity,” 2001; Whisler, The British Motor Industry.
49. Edwardes, Back From the Brink; Wilks, Industrial Policy.
50. Willman and Winch, Innovation, 173–190.
51. Tolliday, “Competition,” 73.
52. Williams et al., The Breakdown; Wilks, Industrial Policy; Whisler, The British Motor Industry.
53. Wilks, Industrial Policy, 207.
54. Tolliday, “Competition,” 72.
55. Edwardes, Back From the Brink.
56. Whisler, The British Motor Industry, 193; Wilks, Industrial Policy, 208.
57. Tolliday, “The Decline,” 104.
58. Tolliday, “Competition,” 67.
59. Whisler, The British Motor Industry.
60. Church, The Rise.
61. Whisler, The British Motor Industry, 11, 92, 134.
62. Tylecote and Vertova, “Technology and Institutions,” 890.
63. Williams et al., The Breakdown.
64. Willman and Winch, Innovation.
65. Pilkington, “Learning From Joint Venture,” 108.
66. Catalan, “Strategic Policy Revisited”; Berta, Conflitto Industriale; Loubet, Histoire; Loubet, Hatzfeld and Loubet, Citation2004; Freyssenet “Un Ou Plusieurs” and “Renault”; Heller, “The Rebirth.”
67. Gamble and Walkland, The British Party System; Wilks, Industrial Policy.
68. See also Elger and Smith, Global Japanization?
69. Wilks, Industrial Policy.
70. Whisler has estimated the government total investment in BL at around 3 billion pounds at the time of the sale of the company in 1988 to British Aerospace for 150 million pounds (The British Motor Industry, 411). The cost of running down the company was estimated in 1981 at between 0,5 and 1 billion pounds (Wilks, Industrial Policy, 217).
71. I.K.C. Ellison, Secretary of state’s comment for his meeting with Sir Michael Edwardes on 14 July, July 1980, The National Archives: FV 22/223.
72. Edwardes, Back From the Brink, 243–244.
73. Wilks, Industrial Policy, 216.
74. Wilks, Industrial Policy, 307.
75. Cusumano, The Japanese Automobile Industry; Altshuler et al., The Future; Freyssnet et al., One Best Way.
76. Established in April 1981 the VRA fixed at 1,69 million of cars the quota for Japanese imports. See also Walker, “Voluntary Export.”
77. Altshuler et al., The Future.
78. Perrucci, Japanese Auto Transplants; Kenney and Florida, Beyond Mass Production.
79. This is clearly stated by Robert Lutz, Chairman of Ford of Europe, during a confidential meeting with Sir Peter Carey, the permanent Secretary of State of DTI: “Mr Lutz made the point that the damage done to European car manufacturers by Japanese competition was far greater than the market penetration figures at first sight suggested. The real problem was that profit margins had been destroyed. Ford, he said, made most money in the markets where Japanese imports were most restricted”: Robin Mountfield, Note on a meeting with Mr. Lutz of 1/12/1980, 19 December 1980, The National Archives: FV 22/124.
80. DoT. Brief for Minister for trade’s meeting with members of Keidanren: 12/10/1981, October 1981, The National Archives: BD 93/4; Japan to Seek Rise in Imports, The New York Times, 18 June 1981.
81. Seidenfuss and Kathawal, “Voluntary Export”; Abe, Japan and the European Union.
82. The Motor Vehicle Division was created in 1975. It employed one under-secretary, three assistant secretaries and one director engineering, plus staff (Wilks, Industrial Policy, 194–196).
83. According to Tolliday this was due mainly to three reasons: the high prices of British cars in comparison to continental Europe, the strong pound related to the discovery of the North Sea Oil, and the will of both the American multinational to reduce their dependency on British factories (“The Decline,” 94–99).
84. R. Mountfield, Commenting on Mr. Owen minute and possible reactions from EU commission and EU partners, July 26, 1980, The National Archives: FV 22/133.
85. As it has been rightly put by Wilks, “One of the great vacuums within industrial Policy is the reluctance to debate and to evaluate the implications of Britain as home and host for multinationals” (Industrial Policy, 235).
86. Tolliday, “The Diffusion”; Mair, “From British Leyland”; Dunnet, The Decline, 19.
87. Tolliday, “The Diffusion.”
88. Cowling, “The Internationalization.”
89. Monopolies and Mergers Commision (MMC) 1982, 5.
90. Dunnet, The Decline, 171.
91. Whisler, The British Motor Industry.
92. Adeney, The Motor Makers, 320.
93. From D. Lea to L. Murray, 20 May 1981, The Modern Records Centre: MSS.292D/617/3; Tebbit N. Progress report, 3 April 1981, The National Archives: BD 93/43; R. Mountfield to J. Bowder, 10 September 1982, The National Archives: FV 22/95.
94. Publicly available reports of the MMC 1982, 5.
95. Publicly available reports of the MMC 1992, 49.
96. Publicly available reports of the MMC 1992, 53.
97. Publicly available reports of the MMC 1982, 6.
98. This argument appeared already as the principal reason to not close down BLMC in 1977, when the National Enterprise Board seriously considered this option (Dunnet, The Decline, 157).
99. The CILG is the liaison group between the main representatives of the component industry and the Motor Vehicle Division of the Department of Industry: The National Archives: ED 3/588 PART A, FV 22/132.
100. R. Mountfield to J. Bowder, September 10, 1982, The National Archives: FV 22/95.
101. R. Mountfield to N. Lamont, BL: Purchase of components, October 12, 1982, The National Archives: FV 22/95.
102. Ibid.
103. IC(B)4 to DoI, Public purchasing policy, November 9, 1982; R. Mountfield to N. Lamont, BL: Purchase of components; Norman Lamont to S.o.S., October 21, 1982, The National Archives: FV 22/95.
104. Ibid.
105. DoI, Note of a meeting with BL in room 1101 - 27/10/1982. Preparation of the BL 1983 Corporate Plan, November 2, 1982, The National Archives: FV 22/95.
106. The economic importance of the component industry and its relative good health were not, probably, the only reasons of the unconditional support of the government to the strategy of the CILG. The West-Midlands are well-known swing regions in the balance between Tories and Labours – they were notably decisive in first installing and then removing the Conservatives from power in 1970 and 1974 General Elections (Taylor, “The Changing Geography”). Their economy depended on the auto suppliers, and their interests were represented in the parliament by the very influential all party Motor Industry Group. See also Donnelly et al., “The West Midlands.”
107. John Nott to Prime Minister, Possible Japanese investment in the motor industry, 13 August 1980, The National Archives: FV 22/133.
108. The meeting took place in London the 31st of July 1980. Lord Trenchard, R. Bullock, A. Mueller, J. Cammel, R. Hope and J. Mills represented the DoI, and M. Okuma, Y. Mihara (Okuma’s secretary), S. Higuchi and O. Botnar (director of Datsun UK) represented Nissan: DoI, Record of meeting between Nissan Motor Limited and UK Department of Industry held on 31 July 1980 in London, 8 August 1980, The National Archives: FV 22/133.
109. J. Mills to Lord Trenchard, Nissan, 30 July 1980, The National Archives: FV 22/133.
110. DoI, Record of meeting between Nissan Motor Limited and UK Department of Industry held on 31 July 1980 in London, 8 August 1980, The National Archives: FV 22/133.
111. J. Cammel to M. Okuma, 2 August 1980, The National Archives: FV 22/133.
112. N.C. Owen to R. Mountfield, Nissan: Draft brief for Mr OKuma's visit, 25 July 25, 1980, The National Archives: FV 22/133.
113. Alan Whiting to J. Cammel and J. Bowder, Comments on the note "possible Japanese investment in the UK motor industry", 10 September 1980, The National Archives: FV 22/133.
114. Talbot was the British subsidiary of Chrysler. It was rescued from bankruptcy by the government’s intervention in 1975–1976 and then sold by Chrysler to Peugeot Citroên (PSA) in 1978 (Wilks, Industrial Policy, 251–260).
115. Bowder J., Possible Japanese Investment in the UK Motor Industry, 23 September 1980, The National Archives: FV 22/133.
116. Idem.
117. This data is based on the accounts of Nissan Europe NV between 1990 and 2000. While the term ‘absorbed’ would be wrong to describe the Alliance Renault-Nissan as a whole, it is correct to describe the almost complete integration of the European facilities of Nissan, both in production and in distribution, by Renault.
118. Pardi, “La révolution.”
119. For Honda the data is based on the accounts of Honda Motor Europe (North), (Limited) and (South) between 1992 and 2005. For Toyota the calculation is more difficult since Toyota did not have integrated European account for its European operations up to 2005. This data is therefore the result of the author’s calculation based on the account of the Toyota subsidiaries in Europe (production and distribution).
120. Flynn, Andrea, McAlinden and Smith, “The U.S.–Japan.”
121. Klier and Rubenstein, “Whose Part is it?”
122. Coffey, The Myth.
123. Brady and Lorenz, The End of the Road.
124. Magee, Comment, 99; Stevens and Fujimoto, “Nissan,” 104.
125. Adeney, The Motor Makers, 317.
126. Tolliday, “The Decline,” 85.
127. The Tory ex-Prime Minister Edward Heath, who led the parliamentary revolt of the West-Midlands backbenchers, said to the press that “the Tory backbenchers were firmly opposed to the idea of seeing BL under American control” (Tolliday, “The Decline,” 86).
128. Tolliday, “The Decline,” 86.
129. Whisler, The British Motor Industry, 392.
130. From J.M. Snowdon (ARG) to DoI, 19 August 1982, The National Archives: FV 22/134.
131. From R. Mountfield to J. Bowder, 16 February 1983, The National Archives: FV 22/134.
132. Idem.
133. Idem.
134. From J.M. Snowdon (Managing Director BL) to R. Mountfield, 2 February 1983, The National Archives: FV 22/134.
135. Idem.
136. From H. Cortazzi (Ambassador to Japan) to R. Mountfield, 21 January 1983, The National Archives: FV 22/134.
137. From Sir A. Bide to P. Jenkin, 16 February 1983, The National Archives: FV 22/134.
138. From J.M. Snowdon (Managing Director BL) to R. Mountfield, 2 March 1983, The National Archives: FV 22/134.
139. Idem.
140. From Austin Rover Group to DoI, 14 February 1983, The National Archives: FV 22/134.
141. From J.M. Bowder to N.J. Carver (BL), 15 June 1983, The National Archives: FV 22/134.
142. Whisler, The British Motor Industry, 392.
143. From Thornton, 11 March 1983, The National Archives: FV 22/134.
144. “Mr Harold Musgrove, chairman of Austin Rover, and Mr Noboru Okamura, chairman of Honda, in London yesterday signed an outline agreement for extending the collaboration between the two companies,” The Financial Times, 18 June 1985.
145. “Honda to Build Engine Plant,” The Times, 29 April 1987.
146. Williams et al., Cars, 153.
147. Austin Rover did start pilot production of few thousands Ballade (8089) and Legend (4353) between 1985 and 1987. Mass production however was never achieved due to the unsolved problem of the 80% local content until the start of engine production in 1989.
148. From Thornton, 11 March 1983, The National Archives: FV 22/134.
149. Williams et al., The Breakdown; Tolliday, “Competition.”
150. Adeney, The Motor Makers,
151. Whisler, The British Motor Industry.
152. Pilkington, “Learning from Joint Venture.