Political fix history

Car factory repair and public money

Linwood, the dawn Linwood, the dawn
When Northern Rock wobbled, Nulabour rushed in to stabilize things. That the Rock was not shaken by some unforeseen seismic event but was the victim of its own stupidity counted for very little. What shook Nulabour into life was the location of the Rock headquarters, the North East of England. Geordie Land is like a stick of seaside rock with Nulabour all the way through; both Tony Blair and Peter Mandelson had safe seats up there it had to be saved, it was a political fix.

It was irrational and counterproductive, the Rock should have been allowed to go broke. So an opportunity to send a sharp lesson to the UK banking sector was missed. Thus UK banks carried on and on doing the same old tricks. For some bankers the last year or so has only been a bit of a problem, for the UK taxpayer who is now picking up the tab it's going to be a nightmare. This sort of thing has happened before.

Harold Macmillan's government had put immense pressure on the Rootes' Group to build the Linwood factory in Scotland knowing that the local authority for Ryton in Warwickshire had refused planning permission to extend the existing works. Rootes had a grant for Linwood but in reality it was never going to be enough.

The factory opened in 1963 and soon became famous for all the wrong reasons, the cars had niggling faults and production was hindered by strikes. The number of people employed was according to some records 8000, others suggest the figure was 6000. Even so, 12 trade unions, one subdivided into 3 sections, were present on the site. Despite the vast sums of money spent on this green field site it was a disaster and was demolished 30 years later.
Longbridge, the sunset Longbridge, the sunset
So this Scottish move resulted in Rootes' grand failure and its sale to Chrysler. In turn Chrysler passed the poisoned chalice to Peugeot and, after their turn at the wheel, production was moved to the Continent and that was that, the end of the line. Looking back it is now clear that Rootes was unable to resist government pressure, as were the other UK companies forced into amalgamation. They became British Leyland and failure followed this arrangement too. The effects of this intervention by the government were felt across the UK and not just in the motor industry, in a way not understood at the time and not heeded now. So Nulabour rushed in to save MG Rover, the dying embers of British Leyland.

BMW took over British Leyland, by then passing itself off as MG Rover, after a valiant try at getting MG Rover going in the right direction they were forced to pass responsibility for Longbridge to Phoenix. The rest, as they say, is history. So what have we learnt? Nothing it would seem, as Lord Mandelson looks all set to do it again.

Mandelson as Business Secretary, now there's a thing. Unless he has had a secret life it would appear he has never worked in a business, all his life on public record has been in politics and he's not very good at that. There is a huge difference between working in a business and his latest ministerial role working for UK business. He is also supposed to be fantastically clever but, despite the lessons of history, the UK could well be on the verge of giving £400 million of taxpayers' money to the new owners of Vauxhall.

Mandy is buying, or he thinks and hopes he is buying, job security at the Vauxhall factories: Luton and Ellesmere Port. There are about 5,500 jobs in total at these plants, the same numbers we have seen at Linwood and Longbridge, a sort of critical mass. But then others have the same idea of buying into a new deal. General Motors, owners of Vauxhall and Opel of Germany, with factories also in Belgium and Spain, sold up to a Canadian company called Magna. The money for this adventure comes from a variety of sources including the Russian banking sector. As Mandy has rich Russian friends this role as power broker might be right up his street, or on the other hand it might not.
Vauxhall, same again? Vauxhall, same again?
So far the numbers of jobs that might go is around 10,000. Plant closures in Spain and Belgium are very likely and with jobs lost in Germany too, it's hard to see how the UK will not also suffer. So a scramble for EU governments to 'do something' was inevitable. As might be expected the Germans are looking the best so far, it was Angela Merkel's government who selected Magna from the list of bidders for Opel. Now ”brass neck” was the term used by Mandelson to describe the actions of the Phoenix Four in respect of their management of MG Rover but now, after years of singing the praises of the EU Mandy says:
“European regulators must ensure the takeover of Opel does not favour workers in German plants.” Belgium also wants the EU to probe Germany's role in the Opel sale. This is so funny, Mandy must know that being part of the EU is all about 'deals', what is the point of it otherwise? Mandy goes on: "I think it is important to say that the European Commission should not accept anything that looks like a political fix or any linkage between aid and retention of jobs in any specific plant or country." So Mandy the great fixer turns his back on his old trade, who would have thought it possible?

Tony Woodley, joint General Secretary of Unite has been thinking aloud; Woodley started work for Vauxhall in the 1960s before becoming a full time union official. He has seen it all and read the history of UK car manufacture, his gloomy prediction is that Vauxhall will go in the end. However, if Mandy has his way with our money this will not be until after a general election.