Peter Jackson column

Jan 26 2006 By Peter Jackson, The Journal

There are those who bemoan the decline of the great British car industry, of the age when we could be proud of the great marques such as Rover, MG, Austin and Morris.

But those who view the past through a rose-tinted windscreen can take heart that Britain is no longer alone, and that we might at least enjoy the spectacle of another country's automotive sector heading for the scrapheap.

I refer, of course, to the US, where this week Ford announced the closure of 14 plants and the loss of between 25,000 and 30,000 jobs.

The cuts, which represent almost a quarter of the North American workforce are at the heart of a plan to cut annual car production by 1.2 million units, or 26%, by 2008, and to reduce North American costs by US$6bn over the next five years.

This follows last year's pre-tax loss of US$1.6bn on the North American vehicle operations.

Not that Ford is the only great US name in such dire straits. Its bad news comes hard on the heels of GM's announcement that it hopes to implement a cost-cutting plan to save £4bn this year and hopes to make annual savings of US$6bn.

Last year it reached an agreement with the trades unions to put a lid on health care costs and other benefits and save itself US$1bn a year, a bitter pill for the unions to swallow, but one made urgent by analysts' warnings that GM faces bankruptcy unless costs are brought under control.

Both car giants are struggling with falling domestic sales - down by nearly a quarter last October. Significantly, in the same month, Honda saw its sales rise 4.2%, while Toyota enjoyed a 5.2% increase.

Toyota has said it expects to increase output by 10% this year, which, if achieved would see it become the world's biggest car manufacturer.

And, while Ford and GM are slashing costs in their home territory, Toyota has been investing heavily in US plants. The reasons for this include a mixture of homegrown problem for the US manufacturers - such as labour relations which would have been familiar to British Leyland in the 1970s - and Japanese strengths.

Whatever the particular reasons though, they are given much greater force by globalisation, which, as the name implies - affects everybody, as the Americans are now realising.