Time for car makers to show some honesty

Is it possible to take anything at face value any more? Recent events in the motor industry are reminders that commentators must be more cynical. We tend to forget that certain people in positions of responsibility are paid to lie on behalf of their employers.

The Luton factory closure is the latest example. A few months after reassuring employees about the plant’s future, Vauxhall stunned them by announcing that it will shut in 2002. Ford effectively did the same before the axe fell on Dagenham, insisting no decision had been made, when clearly it had.

BMW lied in early March by insisting that Rover’s place in the group was secure, only to reveal a few days later that it was to be sold. And chairman Schrempp expressed confidence in Daimler-Chrysler’s head of North American business, then fired him a few weeks later.

After Dagenham and Longbridge, and against uncertainty over Nissan’s Sunderland factory and Peugeot’s at Ryton, the Luton development is a serious setback for UK vehicle and component manufacturing – and for engineering in general. The comfort for the automotive sector is that it is not entirely to blame. The main – but not only – cause of the manufacturing exodus is the strength of sterling against the euro.

But the political sensitivity of the issue means that big, bad multinationals must avoid meddling in local politics, so they limit their comments to acknowledging that exchange rates are a factor. If they were truthful, they would admit that their problems are caused partly by their own past mistakes as well as exchange rates. After all, Nissan, Toyota and Honda show that, with decent products, investment, management and training, UK productivity and quality are as good as anywhere.

There were plenty of signs that General Motors would one day pull the plug on Luton – but no one spotted them. If they had, there would only have been denials anyway. The evidence can be seen in GM’s UK investments, which largely centred around plant renovations to build new models. By contrast, GM’s Opel subsidiary is building an all-new factory-within-a-factory on a brownfield site in Germany. During the 1990s, GM also built car plants in eastern Germany and Poland, an engine factory in Hungary, and created a Thai car factory whose main purpose is to despatch Zafiras to Europeans. The previous decade, GM built a huge new plant in Spain and an engine factory in Austria.

That is a lot of new capacity directed at Europe. True, more cars were needed to meet rising demand in western Europe and the newly liberalised central European markets. It also managed to increase its market share. But the company’s sales expectations were unrealistic. Lacklustre products, tougher competition and questionable quality has left GM with more capacity than customers. Luton employees are paying the price of these management mistakes and the government’s decision to stay out of the eurozone.

Richard Feast is editor-at large for Automotive World.