December 8, 2009
POLITICS/BUSINESS: Government Motors, British Style
Claire Berlinski on the pathetic British history with nationalized car companies:
British Leyland was born. It held 40 percent of the UK car market and within five years lost nearly a quarter of it.
Why? The early seventies saw ever more intense competition from continental auto manufacturers, as well as the rise of the Asian car tigers. Leyland's management was inflexible and slow to adapt. The group had too many companies under its control, and they made similar, competing, outdated cars. The oil-price shock didn’t help. Neither did Leyland’s militant union. Led by Derek Robinson, an unapologetic Communist known as "Red Robbo," the union embarked on a series of ruinous disputes with management, regularly bringing production to a standstill.
Leyland's factories were overmanned, its equipment old, its cars ugly. Antique collectors with a keen sense of irony now cherish the dumpy Austin Allegro, known at the time as the Flying Pig. Available in beige, brown, and wilted-lettuce green, it leaked, and its rear windows spontaneously popped out. Its proudest design innovation was its squarish steering wheel. While Leyland was busy inventing the world's first square wheel, the Germans were building the Volkswagen Golf, a stylish, family-friendly, fuel-efficient hatchback that quickly became one of the best-selling cars in history.
The rest of the piece is less humorous and more dire in its parallels to the present day, as the British spent 13 years pouring taxpayer money down this rathole. Margaret Thatcher was right to oppose the whole project - as Berlinski summarizes the Iron Lady's thinking, "[i]f the economy was in crisis, she held, the government should waste less of the taxpayers' money, not more" - but even Lady Thatcher lacked the political strength to stop subsidizing the misbegotten venture until almost the end of her tenure in office, thanks to the voting power of the auto workers whose jobs continued to exist solely as a matter of public charity.
Perhaps we can still learn a thing or two from real-world history before we spend the next decade going down the same dead-end road.
Well put. For the time being, I won't be buying a GM until the government gets out. That's too bad too, because I really like the Caddy CTS.
Mark, I agree! I have owned GM products all my life, but will not be buying another one (even used) until the government is out of the car business. That goes for Chrysler too!!!
I'm certainly no fan of nationalizing the US auto industry, but the free-enterprise advocates always trot out the example of the auto industry in the 1970's as an argument against protectionism/nationalization, whether it be the example above or the US industry vis-a-vis the Japanese. There really can't be a worse example.
It's almost like they believe that the auto industries in these other countries were models of free enterprise, when in fact they were heavily protected and subsidized in their own markets. Did it occur to the author of the article above that Volkswagen received substantial subsidies from the German government and that the German state of Lower Saxony still owns a 20% stake in the company??
The fact of the matter is that ALL of these car industries at the time were significantly protected/subsidized in their own markets.
"I have owned GM products all my life, but will not be buying another one (even used) until the government is out of the car business. That goes for Chrysler too!!!"
Why bite off your nose to spite your face?? Focus on whether they are making a car you want to buy. Are you less likely to buy a Volkswagen now that you know they are subsidized by the German government??
Those Lincoln's are killer. Quality in every way. And for a truck the F-150 is a great ride.