Well without dragging this topic too far off topic:
No manufacturing in any part of EU including the new entrants after Brussels has enforced all the red tape regulations.
No technical jobs. Example. My brother is the MD of a major US engineering company. He has 2,000 (repeat 2,000) engineers working for him in India. They are all employed through a contractor. The charge is $10 per hour all in. He is based in Chicago. He says if he could even find 2,000 engineers in US the cost would be at least ten times that amount when salary/health care/pensions were all added up.
No service jobs either. Example. If you own a firm of accountants you can sign a deal today whereby you scan and transmit all relevant documents to India, they will do all the work including UK statutory accounts and tax comps and charge an agreed 25% of what you charge your client. They send the completed work back you print it out on your letterhead and your client is none the wiser.
Hard times ahead.
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I hate to say it but I agree with Thommo (not because it's Thommo but because it is a sad fact). Even though under Japanese Management, the UK Car Plants are some of the most efficient (with best quality) in the world (Nissan Sunderland / Toyota Burnaston / Honda Swindon) but cost will be a factor. I was looking at a BBC website article about auto factory labour costs and although it did not mention UK rates West Germany was 26 euros and hour with a list of countris down to Slovak republic at 3.3 euros an hour. I think any new future factories will be built in eastern europe and BIC (Brazil / India / China) countries.
Having said that Honda have just announced they will be building the diesel engine in Swindon now which is excellent news. The Japanese do think long term though and will understand that there is more to just cost to consider when closing factories so I do not envisage the Japs closing any factories in the UK.
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There is an old and probably apocryphal story that goes as follows:
Henry Ford. This machine will automate car making so I will need less workers. It doesn't go on strike ask for higher wages take tea breaks or need a health plan.
Employee. How many cars does it buy?
At the end of the day if we have no jobs and no money we can't buy anything. Maybe the Japanese are sufficiently long sighted to see this but everyone else? Who knows?
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Isn't the idea that we all just become property developers, which makes all property highly sought after and expensive, and then people in the third world do and make everything for us without us having to concern ourselves with how it all works.
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Henry Ford. This machine will automate car making so I will need less workers. It doesn't go on strike ask for higher wages take tea breaks or need a health plan. Employee. How many cars does it buy?
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Henry Ford. Don't be silly, machines don't need cars. However they still generate wealth that other people can spend on cars. And those former workers can re-train as nurses or teachers.
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There is no real British motor industry - just foreign owned manufacturers building cars here. But then I suppose if Ford and Vauxhall have long been accepted as part of the British motor indusry then perhaps Toyota, Nissan etc, should be.
In the Thatcher era, 'inward investment' was seen as a good thing but it was just a passing phase in what could better be described as 'portable investment'.
Am I right in assuming that there is no 'proper' British car make left, large or small, that is British owned, British designed, and built here with all major components including engine etc. made in-house. TVR might be the closest but isn't that Russian owned?
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Am I right in assuming that there is no 'proper' British car make left, large or small, that is British owned, British designed, and built here with all major components including engine etc. made in-house. TVR might be the closest but isn't that Russian owned?
Yep TVR are now the play thing of a russion bloke but Morgan are still totally british and totally set in their ways!
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Even though under Japanese Management, the UK Car Plants are some of the most efficient (with best quality) in the world>>
Which is precisely why they are some of the most efficient in the world.
In fact Nissan was often quoted as at the very least equalling Japanese plants quality and, in many cases, bettering it.
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Yes, Thommo, I know the Indian accountancy service you are talking about. Having used it (twice), it was RUBBISH, both times. The staff may well be fully qualified, but have no practical experience of British bookkeeping, IME
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The British car industry is still producing many, many thousands of cars, but the majority are built in comparatively recent plants in contrast to the Ryton factory, which is around 60 or more years old.
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PS
Europe is producing more cars than the market will take.
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A lot of people have too much of a fixation with labour costs and don't really understand the economics of the car industry. Its far too early to be writing the obituary for European car production.
First of all, employment within the sector will fall in Europe. But that's mainly because of a move toward more automated and capital intensive production.
Secondly, car production in China is pretty small beer at the moment and is likely to remain so for at least a couple of decades. Costs of car production in China are actually relatively high - their supply chain logistics are very poor. CSM Worldwide (a motor industry consultancy with a base in China) produced a report late last year detailing car production costs in China and they weren't much lower than in the US...Labour is only a small part of the equation when you are dealing with highly automated plants only employing a couple of thousand workers. Remember that Japan has just about the highest paid car workers in the world, but also amongst the lowest per-vehicle production costs.
Thirdly, don't overlook trading tarifs. Hyundai are thought of as a low cost Korean manufacturer, but their most popular US-market model (Sonata)is built in Alabama with over 80% local content. The US-market Toytota Camry is now considered an 'American' car - built in the US, it has over 95% local content. All this to dodge US import tarifs and thus remain competitive.
Finally, labour costs are likely to rise in countries like India and China as these countries become more affluent; their price competitiveness is only going to decline over the next few years. This will be especially true if China allows the Renminbi to float - which would probably destory Chinese competitiveness at a stroke. Not only that, but labour unrest is likely to spread, especially if labour shortages grow (as is the case in the industrial sector in southern China). Currently 'free' trade unions are banned in China - how long will that sitation last?
The UK has its own problems related to car manufacture. But these are more to do with poor infrastructure and relative isolation from Europe than wage rates (which only really have a big impact on sub-£10k A/B cars). If I were looking to locate a car plant in Europe I'd be looking for somewhere with good transportation infrastructure, close to major markets, a well educated workforce and membership (or intended membership) of the Euro - the UK wouldn't be high on my list.
I think the prospects for Western Europe are actually relatively good. Although we tend to think mostly about the actual vehicle assembly, a lot of the jobs and most of the technology is in the component supply. Currently the 'developed' countries have a bit of a stranglehold on this. Even the Koreans (who have been in the car making game for quite a while now) still buy in or licence Japanese components (mainly from Mitsubishi) for most of their cars.
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Alastair,
THE service?
If you get a copy of Accountancy magazine (I get one free as part of my membership of ICAEW) you will find adverts from some 100+ adverts from Indian firms.
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My understanding from reading about the chinese motor plants is that nobody there including VW is actually making money from building cars there. It is all a fight for future market share. Happy to be proved wrong if someone has accurate figures.
What always baffles me is the fact that some simple things seem to be still manufactured in the UK (eg Addis kitchen bins) whereas laptops are now screwed together in China...
Services that can be done remotely are prone to being done at a distance so the accountancy thing is not difficult to believe...however alot of other stuff is still face to face or close to market....eg healthcare, marketing, design, etc
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My understanding from reading about the chinese motor plants is that nobody there including VW is actually making money from building cars there. It is all a fight for future market share. Happy to be proved wrong if someone has accurate figures. What always baffles me is the fact that some simple things seem to be still manufactured in the UK (eg Addis kitchen bins) whereas laptops are now screwed together in China... Services that can be done remotely are prone to being done at a distance so the accountancy thing is not difficult to believe...however alot of other stuff is still face to face or close to market....eg healthcare, marketing, design, etc
Yes, the Chinese are not going to be able to cut our hair remotely or give someone a pedicure. The way to reduce face-to-face service costs is to bring in low-cost labour from overseas (which is what the government and CBI are keen on).
I am all for exporting accountacy and legal work overseas though - hopefully this might reduce the extortionate costs that the UK faces from these 'closed shop' professions and open them up to some genuine competition of the sort that the manufacturing sector has faced for decades.
As regards stuff made in China, its a fact that about 70% of the value of Chinese exports is originally imported to China. For example, if you think about a laptop then the casing and the assembly work will be Chinese, but it will probably contain high-tech components imported from Japan and the US. Thus the (say) £500 Chinese export laptop actually represents £150 of Chinese added value and £350 worth of non-Chinese components.
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>>whereas laptops are now screwed together in China...>>
Taiwan actually. In fact Taiwan produces most of the original and OEM laptops bought throughout the world; that also applies to about 65 per cent of the digital cameras produced, including those for the big Japanese brand names.
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I think you're very right to point out the tariffs as a barrier to cheap imports from china -- The chinese can lobby as much as they like for tariff reductions, but the EU and US are alwyas generally going to win the fight because they "own" the WTO.
Don't think the chinese will stop supressing unions or informal organised labour of any sort. Remember their society is super tightly controlled, to the point that the state infiltrates the factories with 'spies'. Also I doubt they will float the renminbi, as it stands they have huge foreign currency reserves, and as a centrally planned economy, they can cheekily use the foreign reserves to pay for imports, while benefiting from the set value of the renminbi. Most other countries are too locked into monetary system to play the system like this.
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(Refers to Aprilla's 1st post)
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The UK owned car industry does appear to be extinct.
However, we once thought that the UK motorcycle industry was dead and buried.
Triumph motorcycles have proved that it is possible for a British owned company to design, build and sell in a world market.
I don't see it happening in the car market though - unfortunately.
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