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Britain’s motor industry is facing an existential crisis according to industry expert Professor David Bailey, responding to news that Jaguar Land Rover is shedding 4,000 jobs at its Head Office in Coventry. In an interview with the Byline Times Podcast he said that maintaining a UK presence in the sector was “a question of political will,” and that “we ignore it at our peril”, whilst arguing that the Government needs to set out a long-term strategy to protect this key element of our industrial base.
“Cars are still hugely important in terms of providing high quality jobs that pay an above average wage,” Bailey said. “It accounts for a lot of the research and development that takes place in the UK, and it accounts for a big chunk of our exports as well. It’s also a sector where productivity has advanced very quickly in recent years. We hear Andy Burnham talking about the need to reindustrialise. I think that’s going to be very, very difficult, but I don’t want to see any further deindustrialisation. We really need to hang on to what we’ve got because when it’s gone, it’s really gone.”
Britain has faced a significant decline in car production in the 21st century, commencing with the closure of MG Rover in Birmingham in 2005. That was followed followed by the demise of Ford’s engine plant in Bridgend in 2020, Honda’s factory in Swindon in 2021 and, last year, Vauxhall in Luton. Despite these setbacks, volume car making is still a major part of the economy, thanks largely to JLR who operate in the West Midlands and Liverpool, Nissan in Sunderland, and BMW who produce the Mini in Oxford. JLR currently employs 34,000 people directly in the UK, but supports as many as 200,000 other jobs.
When Professor Bailey and his colleagues at Birmingham Business School tracked workers made redundant following the closure of MG Rover, they found, “people going into much more precarious forms of work. They were in and out of many jobs. They might have had 12,15, 20 jobs since MG Rover closed, and on average, much lower wages. So the secure, unionised, well-paid jobs disappeared, and they became part of this precariat of people in and out of work and in a much more stressful position, because they didn’t know how long they would have their work for. So that's the danger of losing your manufacturing base.”
That said, the motor industry faces significant challenges, including the emergence of Chinese imports, US import tariffs, and – in JLR’s case – a cyber attack last year which halted production for five weeks. Bailey also points to the UK’s uncompetitive energy costs, and the Zero Emission Vehicle (ZEV) target, which aims to phase out the sale of cars powered by the internal combustion engine by 2035. Bailey, who has driven an electric car himself since 2014, warns with all the other pressures bearing down on manufacturers, the ZEV mandate could have the unintended consequence of supporting China’s car makers at the expense of Britain’s.
“You can't just bang the manufacturers on the head with a stick and say ‘this is what you're going to do,’” he said. “The market is made up of supply and demand, and if you can't get demand moving quickly enough, then forcing cars into the market is going to cause all sorts of problems. It means the manufacturers effectively have to subsidise EV sales, so they lose money. There's also the danger that if companies like JLR or Nissan don't hit the targets; they could be fined. Now they may be able to buy credits from pure play [ie: exclusively] electric vehicle makers, but these tend to be Chinese. So the danger there is we end up subsidising Chinese firms, and we cripple our own industry. So the whole policy, frankly, is bonkers, and it needs to be looked at. The Government is consulting on it, but it's a dog's breakfast that was inherited from the last government. That needs to change.”