Monday 8 June 2009

Sic Transit Gloria Mundi

LDV has gone into administration, the potential buyers having withdrawn. So what do we do about Vauxhall Motors? Never having bought one, I have no sentimental attachment to the marque, nor has my interest ever strayed in that direction. But there are difficult decisions to be made. At one time the economic planning of the UK government entailed redistributing the manufacture of cars, vans, engines, and parts from the engineering heartlands to all those districts which were alleged to have development needs.

Many of these needs were far more political than economic, with the result that too many firms for whom policies of concentration and strengthening were needed ended up weakened and scattered. Vauxhall was one, sent to Merseyside to compete with Ford on the other side of the Mersey in a race to reduce productivity and enhance labour requirements.

When there was still growth and expansion in prospect the ensuing problems were met by the globalisation of the car industry, and the UK government were happy to see any foreign investment, and therefore ownership and finance taking the strain, and the responsibility for decisions. As time went on, other countries entered the market with new plant, new models, better engineering, and much cheaper labour.

In the world there is now more car making capacity than needed, and if there is any expansion it will not occur in the UK. All we can do is to hang on to what we have, and hope maybe to be able to supply parts to any of the survivors, if any want to source from us; I suspect only if they are cheap enough. But it looks as though to do this will entail massive subsidies. So we will be subsidising foreign car makers.

If the UK government saves Vauxhall, it means supporting US and German car makers one way or another. If it does not save Vauxhall, then there will be fewer cars being made in the UK. If the people of the UK buy far fewer cars that matters less, but if pushing taxpayers money into the consumers pockets keeps the demand for cars going, again we are subsidising other countries manufactures.

Then there are oil prices. My pet theory is that these are now in a pre-chaotic state; that is unpredictable and wildly variable. So staying in the car industry may be a bad move for any government.

Where’s my train timetable?

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