On Monday 25 April British Prime Minister Tony Blair met Ford's Detroit- based chief executive Jack Nasser to seek assurances that the car giant would not close the plant at Dagenham. On Friday 28 April the venture capitalist Alchemy Partners’ chief executive John Moulton announced that his bid for the Rover plant at Longbridge was off, leaving owners BMW threatening closure.
Anyone surprised at Labour's general indifference to the threatened closure of Longbridge hasn't been listening. Under former minister Peter Mandelson the Department of Trade and Industry developed policies that favour service over manufacturing, design over production and a 'wired world' over 'built-to-last' industries.
The author of the policy, one Charlie Leadbeater, who popularised the theory known as POST FORDISM, wrote the DTI policy showcased in the white paper ‘Our Competitive Future: Building the knowledge driven economy’ (December 1998). The knowledge-driven economy is about communications, small enterprises and dot com companies, but old- fashioned manufacturing does not get a look in.
DTI advisor Charles Leadbeater’s recent book fleshes out the points hinted at in his report. In it he talks about a future of weightless companies without workers. The ‘new economy will reward celebrities and stars, gamblers and entrepreneurs, but it will offer less, at the moment, for a very large swathe of people who would have had stable jobs under the old order’ (p64). That means the 9500 Longbridge workers. The book is called Living on Thin Air.
For more than a decade Leadbeater has been dismissing manual workers as victims of ‘the decay of the old social-democratic order of Fordism’ (in Marxism Today, Oct 1988). As economic guru to Prime Minister Blair and his then Trade and Industry minister, Peter Mandelson, Leadbetter got to write the nation’s industrial policy. Not surprisingly, industry got the message, and started dismissing workers themselves. Since Blair was elected 250 000 manufacturing jobs have gone, according to a report by the General Municipal and Boilermakers’ Union. For all the talk of entrepreneurs and risk-taking, the DTI policy puts a brave face on Britain’s industrial decline, where manufacturing has been reduced to one fifth of the economy.
Resignation to the loss of the car industry is ingrained in the government. In 1999 148,900 passenger cars were made in the UK, but as many as 2,261,000 new registrations in 1998 show that British industry has a tiny fraction of the UK Market (Economic Trends, April 2000). The Department of the Environment predicts ‘increasing car ownership’ due to ‘higher individual incomes’ (National Road Traffic Forecasts (Great Britain) 1997). But rather than see this as an opportunity, the government can only see a problem, passing a Road Traffic Reduction Act in 1997. The government has tried to keep Ford Executive Ian McAllister on side, but the signal to car manufacturers was clear.
The Prime Minister’s signal to the British Venture Capital Association was even clearer, when he berated a ‘certain snobbery’ against their entrepreneurial talents at the BVCA meeting on 6 July 1999. Amongst BVCA members is John Moulton’s Alchemy Partners, whose slogan is a promise to ‘turn base metal into gold’.
Alchemy got the message and opened negotiations with German company Bayerische Motoren Werke AG (BMW) for the Rover plant that had cost them £2.85 billion in the six years since they bought it. Alchemy announced a plan to downsize Rover into a smaller luxury car business, selling off surplus plant and machinery. Former Rover executive John Towers made a hasty counter-bid with the support of the trade unions but precious little capital, promising to keep high-volume car production at Longbridge. Until Friday, BMW refused to consider Tower’s optimistically named ‘Phoenix’ bid seriously.
The bid threw the new DTI minister Stephen Byers, who fell out with his department by openly backing Towers. Byers seemed unaware that his own department was briefing John Moulton each evening on how to handle press criticisms of his parasitic bid the following day. DTI officials accused the minister of ‘playing politics’, and advised him to leave the result to the markets.
Unfortunately for Blair, Byers and the DTI, all that glisters is not gold, and the alchemy failed to work. Dazzled by the venture capitalist’s marble foyer, they failed to realise that Moulton is a mutt, a former executive of Parker Pens and Hornby Model Railways, adept at restructuring the Fatty Arbuckle restaurant chain or Four Seasons’ Health Care, but out of his depth in the world of industry.
BMW’s reputation as an old-world company lost amongst its big competitors disguised the fact that they were dumping hidden liabilities many times greater than any profits onto Alchemy. In fact BMW were offering Alchemy £500 million to take Rover off their hands. But this was less even than the £600 million owed in pensions, before redundancies, compensation to dealers and clear-up costs were taken into account. Amongst criminals, dumping a company with hidden debts is a con called the ‘long firm’. The basic ingredient for the long firm is a mark naive enough to think that he is making a killing.
For the workers at Longbridge the future offers little. The union’s craven support for John Tower’s Phoenix bid is effectively a resignation to redundancies, with no serious prospect of success in return. For the government the belated support for Towers is sheer cynicism.
www.heartfield.demon.co.uk -- Jim heartfield