Friday, 27 July 2012

Racing for growth

A trade surplus in car exports bodes well for Britain

The XF Sportsbrake is Jaguar’s new ‘Tour De Force’. The new estate can be seen running parallel to this year’s Tour De France winner Bradley Wiggins on his quest for the yellow jersey. The estate is the latest in a range of fancy new jags to be produced at the Castle Bromwich assembly centre in Birmingham, shepherding in an extra 1000 jobs.
Jaguar XF Sportbreaks
The Tour de Force Jaguar  follows Wiggins 
Jaguar Land Rover (JLR) isn’t the only one revving up their UK operations. Nissan and GM are both upping their capacity, expanding their Sunderland and Liverpool plants respectively.

This accelerating sector of the UK economy exports some 80% of its wares. This has helped rein in a whopping automobile trade deficit of £7.5bn in 2007, and even produce a small surplus of £212m today. 

This reversal in fortunes is now being touted by Britain’s Prime Minister, David Cameron, as a symbol of UK manufacturing prowess. He may like to thank India’s Tata group or Japan’s Nissan for it.

A couple of decades ago the car manufacturing industry stood for something rather different. Plagued by shoddy design coupled with a overpaid and pampered workforce, the assembly line was more likely to be run by shop stewards than managers.

If car manufacturing was a UK symbol, it was of “British Disease” typified by Triumph’s Speke plant in Liverpool, notorious for its poor quality and a combative unionised workforce.

Today Liverpool’s automobile industry is shifting into second gear. A far cry from the 1980s, JLR are expanding their Halewood plant to make room for more Range Rover Evoques. This was the same factory which made the dull Ford Escort in the 90s and was almost closed at the turn of the millennia.

Britain’s car industry owes its renewal to foreigners. Not only does the UK sell over 1 million of the 1.25 million it produces to them, the firms which have rejuvenated Britians bumbling brands hail from Germany, the US, Japan and India.

Tata and Toyota are just two of a menagerie of foreign firms which now dominate the British automobile industry. While doing wonders for operational efficiency, many have kept the British allure. BMW continues to make hay with the Mini brand, squeezing out efficient motors while maintaining some sixties charm.

Car Manufacturers’ are often said to be representative of the wider UK economy. In the early 1980s a sclerotic industry needed a total revamp much like the overburdened state. In the boom years of the later 2000s, excessive deficits in the automobile trade demonstrated how Britain had failed to keep pace, importing German motors, living on borrowed money and hiding inefficiencies behind superficial growth.

The industry now finds itself shifting from a trade deficit to a surplus as despite the shadow of the Eurozone; sales are up in key emerging markets such as China and India. UK PLC will be hoping that the car industry will once again prove to be a reliable barometer of British economic fortunes. 

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