Rover's Return? Not quite, but still good news for Longbridge.
News in the Post today (read Duncan Tift's article here) that Shanghai Auto (SAIC) remains committed to the Longbridge site comes as welcome news given the uncertainty created in the wake of the recently announced StadCo pullout from MG TF production.
That MG TF production will finally restart in July this year also comes as some relief after lengthy delays given concerns over the quality of parts coming from China.
Let's get things in perspective, though. The TF is basically a 15-year old design with nearly all of the parts brought in from China. It is not a sustainable project beyond the very short term. And with StadCo leaving, we now basically see a screwdriver operation with very few linkages into the local economy and fewer benefits than we'd hoped for in terms of economic development.
That Shanghai are going ahead at all is the crucial thing, though. This keeps them interested in a site whether further production and R&D may come in time. It's here where the case needs to be made to SAIC. And there is a strong case to be made.
Indeed, despite recent plant closures, the West Midlands remains the heart of the UK car industry.
Of particular relevance, after Shanghai bought MG Rover's intellectual property rights in late 2004, it continued to develop the replacement for the R45 through its joint venture with Ricardo here in the West Midlands.
This is now well advanced and the Roewe 550 as it's called in China was unveiled at the recent Beijing motor show (for images click here). An MG version (preferably with a better looking front end) could be produced both in China and at Longbridge. The latter really could bring benefits to the area. Launch aid, within EU state aid rules, could encourage such production being brought to Longbridge. A replacement for the aged MG TF is the next priority. Ricardo could again be a key partner here.
There is also a strong case to be made for Shanghai locating its European R&D base here, especially in environmental technologies where the West Midlands has a real lead (for example see an interesting piece here on the development of electric taxis in the region).
A more imaginative vision for the old Longbridge site (featuring environmental technologies, education facilities, an eco-town...) could actually attract R&D from SAIC. Tackling climate change and reducing car pollution is a key challenge for the future. Tougher European CO2 emission targets are on the horizon and manufacturers will need to invest heavily to meet these targets. Ford realised as much when it invested ã1 billion in the UK in environmental technologies back in 2006, much of it at the time here in the West Midlands. SAIC could similarly tap into such expertise.
In the short-run, EU regulations will impose extra costs on manufacturers in Europe. Longer-run, though, they could well stimulate new technologies and processes that could give manufacturers in Europe a competitive edge as the rest of the world catches up on the need to tackle climate change. That offers an opportunity for the West Midlands, and for Longbridge, if the investment (both domestic and foreign) can be encouraged in the region. Again, there is a role for government here in stimulating and encouraging this.
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David Bailey - Prof David Bailey, Coventry University Business School
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John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
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Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
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Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
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Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
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Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
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David, i must confess a wry chuckle when you mention China and tackling climate change in the same article. I don't think concern for the environment has been a high concern in China as it rushes onwards in developing.
As you say, the concerns about climate change are very real though; as we have seen. Consider the recent food riots across the developing world, which have left scores of people dead.
Least you think that climate change only affects poor countries in such a way though, think again - Wallmart in the US only announced this week that it was rationing the sale of rice in its wholesale outlets.
To this one could add some more alarming statistics (as reported by Robin McKie and Heather Stewart in the Observer on the 13th April):
"As China's middle classes become richer, their consumption of meat has risen by over 150% per head since 1980. Today, the average Chinese consumer eats over 50kg of meat a year. To feed millions of pigs on its farms, China now imports grain on a huge scale, pushing up its prices worldwide.
The rising demand for biofuel, has transformed the landscape of America's cornbelt, with the corn crop in Iowa stretching forever - but none of it is for food. As the demand for biofuel rises, more farmers will pile in to plant corn for biofuel - and further worsen world grain shortages.
As the 2nd largest grain exporter after the US, Australia usually harvests around 25 million tonnes a year - but, because of a five-year drought, thought to have been caused by climate change, it managed just 9.8 million tonnes in 2006."
- such stuff kind of puts our worries in a different perspective - and really reiterates the urgency of developing sustainable technologies and economies.
Don't let this slide again, is what I say.
The Council, Advantage West Midlands, The Government: get involved! Let's all get involved. Long term patient finance (15-20 years) in partnership with SAIC, if necessary: actually become shareholders in it. Headhunt the best in the market to jointly run it with the Chinese. Yes, the taxpayer (local or national) can invest in the best and appoint the best, just like we have in Northern Rock.
Go into the marketplace for finance with confidence and trust in our local economy. Don't wait for London and the London finance houses, who will always tell you that regional industries are a footnote in history.
Let's make the car industry something we can be proud of in the West Midlands.
I think our economy needs regional pride - a sense that each area contributes something unique to the bigger British economic picture. It used to be the case that you could identify that with ease in the older industrial regional set-ups.
Somerset's famous for....well, nowadays, Cheese and Cider - it used to be famous for shoes and boots, as well, upto a few years ago. Is that where we're going with MG Rover and the car industry in the West Midlands, a bit of history?
Local, thriving, well-supported economies with local circuits of capital should be our aim.
That's where Gordon Brown and Alistair darling should be taking the economic and industrial policy of this country. Let globalisation and globalised markets fade shame-facedly into the past - look where it's got us. A brand new start is required.
You're right David. R&D in Longbridge is central to this. We know that it takes a lot of money to get a car model to the market; but if that kind of money can't be raised in the finance markets or bond issues (and, of course that's always a question of confidence) if necessary the council, Advantage West Midlands and the Government can invest directly in the Research and Development aspect of this. The intellectual property which could come out of this could be very valuable indeed.
The 'free' market place is not very good at time, patience and money. We should believe in ourselves as a regional economy and make it so!
As George Harrison sang:
But its gonna take money
A whole lotta spending money
Its gonna take plenty of money
To do it right child
Its gonna take time
A whole lot of precious time
Its gonna take patience and time'
To get it right!
Alex hit the nail on the head. Do we really need more cars?