U.K. Auto Industry May Offer Lessons For Detroit

The agony of U.S. automakers is familiar to people of a certain age in Britain. The British auto industry once employed thousands of people, before it lost its way.

Now some people point to Britain as an example of how to retool the auto industry in the United States.

The city of Coventry in central England was once known as the British Detroit. In the 1970s, the huge Ryton car plant on the city's edge employed some 30,000 workers. Nearly two-thirds of Coventry's entire population was employed in the auto industry.

But those jobs slowly disappeared as the industry declined. The British company that owned Ryton was sold to Chrysler, which then sold it to the French firm Peugeot, which finally declared that Ryton was not cost effective and closed the whole plant two years ago, moving the remaining 2,300 jobs to Slovakia.

Standing in his yard, 46-year-old Ian MacAlpine can almost see the car plant — or what's left of it — a place he worked for 26 years and where he expected to end his working life.

"It was a massive blow for me," he says of the plant's closing.

But MacAlpine and his colleagues needn't have worried so much. The company paid for him to take a training course, and within months he had a new job. Within a year of the plant closing, only 50 of the 2,300 workers were still unemployed.

'There Is A Future In Change'

In the 1970s and '80s, the British government had thrown money at the auto industry to try to keep it afloat. As time went on, though, officials decided just to let some car firms fail or be taken over by foreign companies. Rolls-Royce is now owned by a German company, Jaguar by an Indian firm, and MG Rover by a Chinese company.

"I think Britain in 1970s had many of the features of America today," says Brian Woods-Scawen, who runs an organization that combines government and private money to help retrain the newly unemployed. "And we have probably, as a country, been through this industrial transition, this industrial change, earlier."

Looking out at what used to be the Ryton car plant, he says the key is getting government and business to work together and to focus on reinventing the local economy.

"Just in front of us is going to be a national distribution center for a mail-order company," he says. "And then over to the right will be manufacturing units ... manufacturing not cars, but things like mobile phones."

Woods-Scawan remembers very clearly the bad old days of the British auto industry. All the same things were being said in its defense that are now being said in Detroit: It was too important to fail, too many jobs depended on it. He says that is simply not realistic anymore.

"There is no standing up to the forces of economic change. You can't sit there and pretend that it's not happening or somehow put a wall up and stop it happening. But there is a future in change," Woods-Scawan says. "And the jobs that can be created for the future are often better quality jobs — more secure jobs, higher skilled jobs, higher wage jobs — so I would be very optimistic if I were talking to the people of Detroit, which I've visited many times, and say this will be a difficult transition but be confident that there is a future."

A Smaller, But Thriving, Industry

The government-sponsored initiatives have helped former industrial areas reinvent themselves and also have allowed the readjusted auto industry in Britain to thrive, says David Bailey, a professor at the University of Birmingham Business School.

"The U.K. car industry is completely transformed from 30 years ago," he says. "Back in the early 1970s, it was a kind of byword for industrial-relations strife, poor quality, unreliability. It's completely different today. And you've got some major international firms ... producing in the U.K. high-quality vehicles. Productivity is as good as anywhere in the world. It's much smaller, of course, but what's left of it is hugely efficient and produces cars that usually people want to buy."

The credit crunch is certainly testing the new leaner auto industry. Just last week, Nissan laid off nearly a quarter of the workers at its plant in the north of England. But ask anyone in the British auto industry what Detroit should do nowadays, and they will tell you that it could do a lot worse than learn from the British experience.

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