The government must learn the lessons of the collapse of MG Rover
Originally published by New Statesman, The Staggers blog on 31 March 2016.
Today, Lewis Goodall is a successful TV journalist. I first met him when he was a pupil at Turves Green Boys School in my Birmingham Northfield constituency, well over a decade ago. He tweeted this week about how the situation facing steelworkers in Port Talbot stirred memories of what his Dad went through when the Longbridge car plant was under threat. Lewis’ words will strike a chord with so many former Rover workers and their families. In fact they strike a chord with all of us who live and work in South Birmingham and beyond.
Days like this remind me of anguish families like mine had at Rover- my Dad worked there. As a kid was terrified- thoughts with #PortTalbot
— Lewis Goodall (@lewis_goodall) March 29, 2016
There are, of course, big differences in the circumstances surrounding Port Talbot in 2016 and those which faced Longbridge when the car plant here was threatened with closure in 2000 and when MG Rover finally went under in 2005. There was no automotive equivalent then of the collapse in steel prices we see today or of the “dumping” of Chinese steel on the global market. The long term background to what happened at Longbridge said a lot about the way much of the United Kingdom’s own motor industry had been allowed to decline in the late twentieth century. The precise events in 2000 and 2005 were however, specific to Longbridge itself and to the decisions its different owners either made or failed to make at the time.
Now is not the time to go over all that again. But this is the time to talk about some of the parallels between Longbridge and Port Talbot and steel. First, as Lewis Goodall’s tweet exemplifies, let us not forget this is about people. Car-making at Longbridge and steel at Port Talbot and elsewhere are not simply about the economies of those areas. They are about their heritage; about community identity and the prospects for the next generation. A focus on building community resilience was a vital part of the response to the collapse of MG Rover in Birmingham. It was only partially successful here – particularly once the immediate crisis had passed – and we are still living with the consequences of that. It will be no less important in Port Talbot.
There are also parallels in the kinds of government responses needed – both to intervene proactively, and to involve those “on the ground” in planning strategic responses. In other words not simply handing Ministerial decisions down to them.
When, without warning, BMW announced it was pulling out of Longbridge in 2000, it also said negotiations were already at an advanced stage with a purchaser who would immediately embark on a huge downsizing of the plant. The best case scenario looked like big job losses at Longbridge itself at a pace that would also deal mortal blow to many local suppliers whose businesses depended on Rover. When BMW’s negotiations with that purchaser broke down, the prospect of closure and the loss of 20,000 jobs across the West Midlands was real.
Longbridge and the West Midlands needed time. Time to see if there was another way that could prevent the closure of Longbridge itself. And time for the region to modernise and diversity its manufacturing base to face whatever challenges lay ahead. Government proactivity made a key difference –creating a Rover Task Force to plan that response. It involved national regional and local government agencies, and stakeholders from finance and industry, from the unions and the Universities.
As it turned out, Longbridge did not close in 2000 and five more years of car production there bought the region the time it needed to carry through the modernisation and diversification plan the Task Force initiated. Sixteen years on, we also now know more about the reality of the Phoenix consortium that took over Longbridge for the five years that followed BMW’s pull-out.
Phoenix took over on wave of public support, promising to stabilise the company and to try to identify an international partner. If a deal with such a partner could be done the long term, sustainable future of Longbridge could be secured. Even if not, time would still be bought for the West Midlands to modernise its manufacturing base and reduce the scale of job losses.
Phoenix’s crime was not that it ultimately failed to secure that deal. The time that was bought for the region to diversify meant the job losses across the region which followed when the company finally closed in 2005 were a fraction of what would have happened if closure had happened five years before. But what the Phoenix directors will never be forgiven for is the way they exploited those five years to enrich and insulate themselves from possible company failure while systematically leaving their own employees utterly exposed. When Phoenix took over, a number of us argued for the government to take a stake in the company set up to run Longbridge and/or a seat on its board. Had that happened, maybe, just maybe, Phoenix could not have got away with doing what they did.
So there are lessons here for ministers over Port Talbot and Steel. Involve local partners, don’t just hand decisions down to them from ministerial working groups. Think strategically and if time is avoidably preventing a viable future being secured, do what is necessary to buy that time. And while taking a public stake in commercial enterprises is not likely to be a solution of itself, it can help – at least on a temporary basis – to put a sustainable strategy in place and to keep it on track.
And, of course, in the case of steel there is so much more government can do. Lead efforts in the EU to deter the dumping of cheap steel from abroad, don’t undermine them. Understand that making steel, not simply processing it, can help secure the long term future of the industry and save money in the long run. Think creatively about things like business rates. And use the power of government procurement far more proactively to ensure that infrastructure investment backs rather than bypasses the UK steel industry.
It may be the people of Port Talbot, of the Black Country, of northern England and of Scotland whose jobs are on the line now but we will all suffer in the long term if the government allows our steel industry to die.
I was also interviewed on Radio 4 on Wednesday on the same issue, follow the link and listen in at 54.25: http://www.bbc.co.uk/programmes/b074vtkj
You can read more about what I have said and done in relation to Longbridge over the years on my website here: http://richardburden.com/category/motor/mgr/
