Memo to the Government: Urgent Longbridge Answers Needed... it's not just a "Private Matter"
Things don't look too positive over attempts to restart MG car production at Longbridge. The announcement last week that StadCo is pulling out of producing car bodies (probably because of delays, unecrtainties and limited volumes if and when cars are ever actually made), has left other suppliers wondering what is going on and whether production is now feasible at all.
I'm sure that there have been some people at Nanjing who have been genuine in wanting to restart small scale MG car production at Longbridge. However, it is a small firm with few resources and doesn't really have much of a track record in developing and producing quality cars. It has had 3 years since it acquired MG Rover and has yet to get its act together at Longbridge. Little wonder people are growing increasingly sceptical of it really making a go of this.
Its takeover by Shanghai at the start of this year raised hopes that the bigger firm could now commit resources and bring R&D back to Longbridge. Well, the StadCo pullout has blown a big hole in that plan and urgent answers are now needed as to what is going on.
Ideally, of course, we'd like to see car manufacturing and R&D come back to Longbridge. It's just that many are wondering if this will ever happen.
There is a symbolic significance about MG production restarting at Longbridge. But it's also much more than that. Small scale assembly is one thing, and could generate manufacturing jobs in a local economy which has suffered from deindustrialisation and job losses. But the real hope here was bringing back R&D to the site.
There is a genuine and strong case to be made for Shanghai locating its global R&D base here, especially in environmental technologies where the West Midlands has a real lead (see John Cranage's blog on electric vehicles for example). Local MP Richard Burden has quite rightly been banging on about this for some time, as part of a broader redevelopment of the Longbridge site on an environmental theme (new educational facilities and an eco-town maybe as well).
So, some answers about what is going on at Shanghai and Nanjing are urgent and pressing. Nanjing occupies a big chunk of the Longbridge site and if they are not going ahead with production, as many now fear, then alternatives need to be found for this part of the site to bring local jobs and hope. And quickly.
According to Duncan Tift in today's Post, Liam Byrne (Minister for the West Midlands) and Chancellor Darling have both recently gone out to China. Unfortunately Longbridge wasn't on the discussions.
Two observations on this. Firstly, I wonder if the government and the RDA even knew that there were problems at Longbridge and that StadCo was pulling out. If not, that's yet another alarming lack of intelligence gathering on their part. Secondly, according to Tift's fascinating piece, a government spokesman said that "the situation will not be discussed. The Government takes the view that it is private matter between two companies."
I'm sorry, but that isn't good enough. Regarding this as a "private matter" is something of an abdication of responsibility. This is about jobs, about economic development, and about hope for a part of the city badly affecting by manufacturing hollowing out. Of course, intervening in this way would presuppose that we had a government industrial policy that properly backs manufacuring. We don't, unfortunately.
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David Bailey - Prof David Bailey, Coventry University Business School
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An interesting post and comment.
The news on Longbridge seems to yo-yo from day to day - today the Post seems more positive on production restarting.
I think you guys are right though on a couple of things. Stdco pulling out leaves any MG production at Longbridge as a screwdriver job - not that grfeat for the local economy. Mr Bailey is right to say we need more; another car and some R&D would be better. Also the TF is anyway pretty old now so will have to be sold at a low price.
Also, to say its a "private matter" is a bit of joke when we're talking about a Chinese state owned firm! Maybe John Clancy is right in saying that "private" discussions are needed with the Chinese on this, but discussions are anyway needed. We can't just "lleave it to the market" - the Chinese don't.
John, thanks for your comment. Yes you are right about Liam Byrne - I rate him highly. But if you read my blog carefully, my concern was over the prevailing view of government as a whole that this is a 'private matter between two companies'.
This idea that we can just leave things to the market is nonsense, especially when we're talking about a Chinese state owned firm, as Michael C notes.
I agree with the rest of the your comment: foreign investment is welcome but we need a diversity to the economy with local circuits of capital supporting local firms as well, rather than just relying on big foreign investors (where the big strategic decisions are made in Detroit, Mumbai or Shanghai). That of course also relates to my other blog on the financial crisis.
David, as you might have mentioned somewhere else, this is typical of the Government's hands-off approach to matters that should concern them.
But then this has been a long-running problem hasn't it?
Re the closure of Longbridge, an important criticism of the government (notably the former Department of Trade and Industry, DTI) was that it took so long to realise that MGR was struggling and then rushed into contingency planning that focused too much on how to deal with a collapse of the firm.
It was clear to many analysts that MGR was selling off its assets (land, parts business, finance arm and later its intellectual property rights) in an increasingly desperate attempt to continue operations.
In fact, the DTI (and by implication the Government) was not capable of recognising this, as on-going monitoring of strategic companies is not what it considered to be a relevant part of modern industrial policy.
You are right - to now go to China and "not discuss" Longbridge isn't good enough.
We need a proactive industry policy in which manufacturing is properly supported.
Looking at the way the polls are going (eg the recent Guardian poll) we might just end up with a hung parliament in 2010 - and the real prospect of a lib-lab alliance that might see a shift from the current market-led orthodoxy.
One can but hope.