Manufacturing is our best route to recovery. (From Kidderminster Shuttle)

Manufacturing is our best route to recovery.

8:46pm Wednesday 3rd October 2012 in Blogs 2013 By Malcolm Guest

Manufacturing is our best route to recovery.

In the year 2000 I was one of over 100,000 people who marched through the streets of Birmingham when BMW began the process of disposing of ‘MG Rover’ that would result in many thousands of workers losing their jobs; which then came down to BMW having to choose between two rival bids.

The one bid came from the venture capitalist and Conservative party donor Jon Moulton - as head of the private equity company ‘Alchemy’; who stated that he would cease car production at Longbridge and move the making of MG Sports cars elsewhere; which had to be rejected because of the obvious large number of jobs losses that this would result in – after all he was only interested in saving the company name.

The winning bid, costing them just £10, was a token amount due to the poor financial state of ‘MG Rover’, and came from four local businessmen who had previously worked at the company, now known as the ‘Phoenix Four’.

These people eventually took control, with the confident and enthusiastic support of the 6,500 ‘MG Rover’ workers, who at that time genuinely believed that these men were going to give them long term job security; with John Towers receiving a hero’s welcome when he re-entered the factory gate at Longbridge.

However the final outcome, after five years of these business men running the company, was that it collapsed with millions of pounds of debts. Yet the ‘Phoenix four’, consisting of John Towers, Nick Stephenson, John Edwards, Peter Beale and MD Kevin Howe, personally benefited from £42 million in remuneration for themselves, as well as   huge personal pension pots that they had built up over this five year period.

While conversely, after the company closed in 2005, the 6,500 workers were left with nothing; apart from half a months pay; no company redundancy, and then a wait of several weeks for small state payments. While today, although many of these workers have found alternative work, a lot are in lower paid, insecure, or part-time temporary employment, and still carry debts from their time with MG Rover.

However, John Towers told the redundant workers that a trust fund with assets of over £50m would quickly provide them with substantial payments, but during their long fruitless wait, some had their homes repossessed, others suffered from family break-ups, and there were even some suicides reported.

So as well as feathering their own nests and being incapable of making ‘MG Rover a solvent successful company, the redundant workers were mislead over the promised payout, as this money was held by the banks, whose priority was then the businesses who were owed money by ‘MG Rover’, not the redundant workers, and it was always highly unlikely that any of this money would really end up in a Trust Fund set up for the workers.

Yet seeing on television the large luxury houses that the ‘Phoenix Four’ live in, does not give the impression that they suffered any real financial hardship; yet after five years of the workers helping to make these four men fabulously rich, they ended up with a pitiful £3 each in compensation – so do these business men have any conscience at all? With their accumulated extreme wealth the ‘Phoenix Four’ could easily have afforded to quickly put millions of pounds into the Trust Find, but instead they continued procrastinating for years; clearly showing their true nature. So is the future of major manufacturing in Britain now dependent on foreign finance and business acumen?

The Chinese who first negotiated with the ‘Phoenix Four’ -  Shanghai Automotive Industry Corporation - were shrewd business men, who even bought the  intellectual property rights to two ‘MG Rover’ cars before any deal was finalised; the physical assets being acquired for a knock down price after the company finally collapsed.

Yet it was the Chinese carmaker ‘Nanjing Automotive’ that ultimately secured ownership of MG Rover for an unknown sum, after a three-way bidding battle spread over three months; even though Nanjing was the smallest firm bidding.

Nanjing’s intentions were clear; relocate the engine and some car production plant to China but retain some production in the UK, while developing a Research and Development technical facility in the UK; which is what it did do. Its long-term aim being to create 2,000 jobs in the UK, with cars built under the MG marquee, which would  include some sports models and involve shifting  production of small and medium-sized cars to China – where labour costs are far cheaper, and then export kits back to the UK for final assembly.

So by buying the entirety of ‘MG Rover’, they demonstrated their intention of becoming a global automotive company; even though its  much bigger Chinese car rival and bidding competitor ‘Shanghai Automotive Industry Corporation’ had already bought the intellectual property rights to the Rover 25 and 75 models during their original attempt to take over ‘MG Rover’.

Therefore what’s known about ‘Nanjing Automotive’, ‘MG Rovers’ new owners; who now occupy only a small part of the original Longbridge car site? They are China's oldest carmaker, were founded in Jiangsu in 1947, and make cars, trucks and buses with 16,000 employees. They once had a partnership with Fiat and intended to build 300,000 vehicles in 2006.

This company could see the benefits of having their R & D departments within the UK; just like Tata Motors have, the owner of Jaguar Land Rover, who are to invest around £50m in its research & development based in the Midlands over the next two years, in a vote of confidence for UK manufacturing.

So with land once used for factories - that used to provide thousands of well paid jobs in Britain - now increasingly being sold off for house building, where are the new residents likely to work. The Longbridge car factory site, which was opened in 1905, became in the late 1960s the largest car plant in the world, employing over 250,000 workers.

Unfortunately most of our major manufacturers are now foreign owned -  such as Cadburys by Kraft -  who often see that transferring production to countries with cheaper labour costs can make more money for their parent company; hence the need to support British owned companies both financially and technically.

Creating well paid worthwhile jobs in manufacturing must be a better option than allowing large swathes of natural countryside get covered over in tarmac, bricks and concrete, in order to provide work for the construction industry.

David Cameron may now lose the support of many of his core Conservative voters, who are now being ignored as they protest over large proposed housing developments on Green Belt land - are they just thought of as Nimby’s; while unused industrial sites are also now being allowed to be sold off for housing; isn’t this short sighted

The consequences of this approach to providing jobs will be increased traffic congestion, the likelihood of more flooding and increased air pollution – issues that the relaxation of planning regulations will dismiss.

UKIP is also becoming a real threat to the Conservatives for the next parliamentary elections; which has now got David Cameron hinting at offering us some form of referendum on Europe that could help control European immigration – he may need all the support he can get.

The Conservatives were forced to back away from selling off our Forests and Woodlands, so hopefully they will have to rethink their strategy that allows our precious countryside to be decimated and built on; in their desperate attempt to do something about tackling high unemployment figures.

Modern manufacturing is far cleaner and hi-tec and orders are now returning here after quality problems in China. So as long as iconic innovators such as James Dyson are involved and not flawed business men such as the ‘Phoenix Four’, it’s possible we can gradually pull ourselves out of this financial mess that was brought on by greed and selfishness.