Brit car stalls

THE GUARDIAN
BRIT CAR STALLS
By Andrew Cornelius

In scenes reminiscent of the days before Sir Michael Edwardes took on "Red Robbo" and the BL unions, Britain's car industry is once again facing a battle for survival. This time, Austin Rover, Britain's sole remaining volume producer, has been brought to its knees by a strike at one of its key suppliers.

Lucas, whose factories makes lights and other electrical parts for Austin Rover's entire range. The Lucas strike could hardly have come at a worse time for the 11,000 Austin Rover workers who were laid off yesterday. This morning, Austin Rover's unions are due to begin their annual pay negotiations, the first to be conducted since Mr Graham Day was appointed chairman of Rover, the parent company.

Those who survived the cutbacks of the Edwardes regime are already reeling from the appointment of Mr Day, the tough-talking Canadian appointed by Mrs Thatcher to run what remains of the former BL empire. "This is a rough, tough old industry." he said, "there is no respite at all. I cannot guarantee I will have a job in six months from now, and I tell the workforce the same."

Since taking control. Day has implemented a far-reaching audit of the Rover group. Fresh from his privatisation of the viable parts of the British shipbuilding industry and drastic cutback of the rest, Day has now been charged with the responsibility of getting Austin Rover and the rest of the former BL businesses, like trucks and buses, off the taxpayer's back. Austin Rover is, if anything, a bigger problem now than it was when Sir Michael was charged with sorting out BL's problems in the late 1970s.

The group is tooled up to build 650,000 cars a year, and capable of selling a maximum of 450,000 according to industry experts. It was also responsible for the lion's share of the Rover group's £204 million losses for the first half of this year. Then, earlier this week, Austin Rover suffered another major blow when the latest car sales figures revealed that its UK market share had fallen to less than 15 per cent in September, 6 per cent down on the comparable month in 1985.

All this is bad news for the West Midlands which still depends heavily on the motor industry, and Austin Rover in particular. Austin Rover has already warned that it will consider moving elsewhere, the £100 million of orders it places with Lucas factories in the Midlands. Lucas has taken an equally tough line, first unilaterally imposing a £3.75 pay settlement on the workers in dispute, and then warning that continued action would only lead to a loss of jobs in the long term. Union leaders claim to smell a rat, wondering whether they are being set up by a Lucas management, which has engineered a dispute to reduce its stocks, and an Austin Rover management which is determined to offer a miniscule pay rise this year.

Whatever the cause of the dispute, Austin Rover's battle-scarred Longbridge plant in Birmingham, and the Cowley works at Oxford are again in the headlines for the wrong reasons. Ford, Vauxhall, and Jaguar, which this week launched its new XJ40 car, have yet to be affected by the Lucas dispute. Nor have any problems been reported at the new Nissan car plant on Tyneside, which is being urged to obtain more of its Sunny components in Britain.

Part of the problem, Austin Rover explains, is that it has adopted a Japanese production style which reduces stocks to a minimum to save costs, but leaves no buffer if things go wrong. The worrying thing for Austin Rover's employees is that what began as a low-key pay disute at Lucas in the summer has now turned into a huge row which could ultimately reshape the British motor industry. Mr Day has promised to deliver his new corporate plan for Rover to Mrs Thatcher by Christmas.

Until then, the future for the company is in the balance. A cloud already hangs over Austin Rovers south works at Cowley which produces Maestro and Montego cars. One option would be to forge closer links with Honda, which has already collaborated closely in developing the new Rover 800 series. Ford is also watching Mr Day's actions closely. Their offer to take over Austin Rover was rejected earlier this year, but could be revived. Either option would effectively signal the end of Austin Rover as a British owned force in the industry. And on past form it is the unions - possibly those at Lucas - which are likely to get the blame.