The Monitor Blue Skies

Case studies: MG Rover
Lessons from Longbridge
MG Rover's collapse holds broader lessons for the government, writes Caroline Spelman
Caroline Spelman

Often when I tell people that I represent the constituency of Meriden I am met with the response, “Isn’t that where they used to build motorcycles?”

Meriden certainly does boast a proud history of motorcycle manufacturing. During the hours I spent outside Longbridge’s MG Rover factory in recent weeks, I wondered if future MPs who represent the area will be met with a similar response – “Longbridge, isn’t that where they used to build cars?” It is a pretty sobering thought.

More sobering is the fact that Britain’s manufacturers are losing jobs at the rate of 7,000 every month.

The demise of MG Rover was an absolute body blow to the West Midlands, where we have already seen the loss of one in six manufacturing jobs. The refrain from government was frequently to counter it with details of manufacturing elsewhere in the UK, but this means nothing to a worker faced with a mortgage, children, bills and looming redundancy.

MG Rover has been a totemic loss, but beyond that we have seen manufacturing jobs lost at Peugeot, Marconi and Jaguar. Needless to say, job losses have occurred throughout the supply chain, and in the case of MG Rover, the collapse of the dealerships caused widespread hardship.

Following the demise of MG Rover, the Conservatives assisted the government in setting up a taskforce to launch a recovery for the workers. In addition to this, local MEP Malcolm Harbour put together a strategy document offering ideas for retaining some elements of production at the Longbridge site.

In the meantime, various measures have been put in place for assisting redundant MG Rover workers – prioritisation for vacant manufacturing jobs and council tax relief being just two. While few would question the need to target help in such circumstances, it did raise a broader ethical question about applying these measures to MG Rover workers exclusively. Is it fair to assist MG Rover workers in this way, yet not to afford the same measures to other workers who have been made redundant from less high-profile manufacturers?

Task forces, recruitment streaming and tax holidays are realistically nothing more than sticking plasters. The government needs to find ways of treating the manufacturing wound, and a good place to start would be by cutting the red tape and bureaucracy which is systematically making UK manufacturing less and less competitive. CBI director general Sir Digby Jones himself has recently commented that “orders are falling sharply and costs are rising, both at the same time and both at rates that give us enormous cause for concern”.

Our domestic tax regime also needs revisiting. Early in Labour’s first term they set about increasing the tax burden on business, as they thought it would be less noticeable than more overt taxes on individuals. The consequence of this is that indigenous manufacturing has struggled to maintain profitability, and inward investors have found Britain a less and less appealing venue to create and sustain jobs.

We cannot carry on haemorrhaging jobs in the manufacturing sector. We now exist in a global market where jobs can be relocated from country to country with ease and speed. We need large-scale transformational change for manufacturing areas along the lines of what has been achieved in Syracuse in the USA, where the so-called ‘rust belt’ has adapted to become a centre of excellence for renewable energy technology.

The BBC recently spent a week investigating the emerging superpower that is China. The poignancy of that is particularly striking in the West Midlands, where feelings about Shanghai Automotive Industry Corporation run high. Whatever the specific factors are that led to the collapse of Rover, the broader scenario of heavy industry being lost to the emerging economies in the Far East is significant: it is a parable of modern manufacturing, and one which those within government must certainly heed.


Caroline Spelman is Conservative MP for Meriden and shadow secretary of state for local government affairs and communities
 
The Monitor Blue Skies
Also in this issue:
Editor's introduction

In the shadow of Rover

Government policy

Industry fit for the 21st century

Current Challenges

Capital ideas

The challenge for going global

Credit for research

Case studies: MG Rover

Lessons from Longbridge

Case studies: Energy

At the sharp end

Case studies: Defence sector

In defence of arms

Case studies: German manufacturing

The incentive to innovate

Next steps

Strength in numbers

Making research mainstream

Paths to recovery