MOTOR CYCLE INDUSTRY

HC Deb 01 December 1961 vol 650 cc890-900

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peel.]

4.0 p.m.

Mr. Maurice Edelman (Coventry, North)

I am very grateful for the opportunity of bringing to the attention of the House generally and the President of the Board of Trade in particular the question of the recession in the motor cycle industry and an industry which is concerned with motorised cycles, which is, after all, an extension of the motor cycle industry. The problem I want to discuss is not only a regional one. It is also a national one.

It is a regional one because we have recently heard that in the Midlands, where three-quarters of the industry's total labour force of nearly 35,000 men are engaged, 1,500 men are likely to be dismissed from the Raleigh works at Smethwick. In the neighbourhood of Coventry, at the Triumph Engineering factory, a redundancy list of 91 men has also just been declared to become effective on 7th December.

It is a national problem because the motor cycle industry is one of the oldest established traditional industries in the Midlands. It employs a very large number of men and has made a substantial and important contribution to the export trade. Exports have been running at the rate of about £7 million per annum. During the last year or so there has been a dramatic decline in production and sales. The decline is about 18½ per cent. Certain firms have declared that in the difficult position in which they find themselves it would be economic suicide, as one firm has put it, to continue to try to maintain the level of employment at the rate at which it has hitherto been held.

For these reasons, there is great anxiety in the Midlands as to what the future of the industry is to be. The head of one of the most important motor cycle firms in the country has said that it is increasingly vital that the industry should reduce manufacturing costs if it is to compete with Asian and East European producers and in view of the inevitable competition which would follow Britain's entry into the Common Market. In view of this and the fact that the industry is to put itself into a posture of competition by promptly sacking such a large portion of its labour force, it is understandable that the trade unions are filled with anxiety about what the coming months will bring to the industry.

When I raised this matter at Question Time recently the Minister of State, Board of Trade, replied, with special reference to the question of Britain's entry into the Common Market and the competition we are likely to find there. He said: The battle is necessarily bound to be on merits, prices, salesmanship and service."—[OFFICIAL REPORT, 28th November, 1961; Vol. 650, c. 218.] That is a megaton of a platitude because, after all, what we require and what I hope to obtain from the Minister today is not just this vague generalisation. I want to know what the Government intend to do to bring about the changes inside the industry which will enable the motor cycle and associated industries to compete not only in export markets, but even here, in our own domestic markets, where foreign imports are a serious challenge to our native product.

Following my Question I received a letter from a leading member of the motor cycle industry who has particularly asked me not to give his name, although I take full responsibility for the quotations I am about to make from his letter. I have gone into his bona fides and credentials and I believe that his testimony in relation to the industry is such as should be respected. He says: Whilst I agree with you that the present credit restrictions are a major cause of the depression"— I referred in my Question to the effect that the credit restrictions were having on consumption at home— there are other very important considerations, which, between them, add up to a pretty desperate situation. These are:

1. 1. Too many producers and far, far too many models;
2. 2. With one notable exception, failure to produce competitive machines in the light-weight classes;
3. 3. Foreign dominance in most competitive events.
4. 4. The burden of present insurance rates."

The writer goes on to define the way in which, within one associated group of firms concerned with producing that type of vehicle, there are three major firms competing against each other with a minimum amount of co-operation. Triumph and B.S.A. make almost identical programmes, the former 10 models from 199 c.c. to 649 c.c. and the latter twelve models from 123 c.c. to 499 c.c.". That, of course, is exactly the problem to be found in the motor industry, where the multiplicity of models which we are producing prevents us from reducing unit costs by having the long line of production which is characteristic of so many of our competitors and causes our own motor cars to be at a disadvantage in competition with them.

My correspondent establishes his point by saying that a firm which has standardised and rationalised its production and reduced the number of models can produce a cheap vehicle which is competitive. Unit costs are cheap and such a firm is able to hold its position in the domestic and international market.

Then he quotes the case of Ariel … who used to have an equally varied programme have now standardised on one basic model of 249 c.c. which is sold in three variations at very low prices. This is the only model in the country where production has been maintained during the winter. It becomes clear from this letter that the problem of the motor cycle industry and its associated industries is not simply a question of the purchasing power of the country. It is not merely a question of international competition which requires those qualities of salesmanship which the Minister of State referred to at Question Time. Here we have a structural flaw in the industry and it is perfectly clear that unless something is done to try to achieve that kind of rationalisation which will reduce unit costs of production, our motor cycle firms will have a hard time in the coming year; and on entering into the Common Market our difficulties are likely to be aggravated.

Turning from that—and I think that this is the common experience of most people—my correspondent says that the motor cycle industry seems to have concentrated on producing extra heavy machines which are ridden about by leather-jacketed young men and which are capable of doing 100 miles per hour. Our roads are not built for speeds of 100 miles an hour, but rather 20 miles an hour, and we need to develop a design capable of producing a lightweight vehicle of a kind which would compete with vehicles of a similar nature now being made by Italy, France and Germany.

It is significant that these very heavy vehicles—which are suitable for police work, for dispatch riders in various Government Departments, or in the services where speed is the essence of their function—are obviously both socially and practically unsuited to the kind of traffic and roads in Britain.

Of course, the shortsightedness of the industry has produced its own nemesis, because the heavy motor cycles—and I hope that the Minister will say something about them—which are so attractive to young men who want to show their capacity for speed, have become dead weight in the stock of most of the leading companies. I have no interest in promoting the affairs of the Ariel manufacturers, but it is significant to note that this firm, which has seen the problems of our time and the difficulties and nature of our roads and traffic, has gone all out to produce machines of a relatively light weight—250 c.c. This firm has not been left with vehicles on its hands.

It is perfectly clear that the industry has for some time been producing machines of largely the wrong size and capacity. I mentioned earlier that there is a strong case for Britain showing off her wares at international events at which we can establish the superiority of our engineers and the quality of our vehicles. But that, in turn, needs some sort of Government intervention and I am arguing today that it is not enough just to tell the industry, in terms of the exhortations of the Minister of State, "You must go out and sell more and develop salesmanship," and the rest of it.

The Government should get the industry to examine its own nature and ask for a certain introspection inside the industry to see whether the types of vehicles being made are capable of entering into competition with foreign products. We know, for instance, that the Japanese intend to develop and multiply the production of a very light- weight motor cycle and we must consider whether, in the changing pattern of both domestic and international traffic, we should not now produce a lightweight vehicle as suitable for people to use in this mechanised and motorised age as the ordinary basic bicycle was used thirty, forty or fifty years ago.

It is perfectly clear that while at one time the bicycle was a symbol of progress, the motorised vehicle has now taken its place. In continents like Africa and India, and in parts of the Commonwealth, there are potentially vast markets for lightweight motorised vehicles. This is, therefore, a matter not only of regional concern or for the trade unions or even for the people who live in the Midlands and who are directly employed in this industry. It is of the greatest concern to the nation as a whole.

Not only has the industry tremendous scope, but there are vast opportunities for Britain to take the initiative—for our designers and engineers—and to take a lead in tapping these vast markets. This would turn the industry, which at present seems rather moribund, into a vital and active industry which could capture world markets and be able to solve many of our domestic problems.

The motor cycle has, unhappily, come to be regarded as a sort of lethal weapon, and, indeed, it can be so, because the emphasis on high speeds, the fact that these vehicles can be put into the hands of the very young who have not the temperament to control them properly, has dramatised the less favourable aspects of motorised cycles to the disadvantage of the industry as a whole.

I think that motor cycle manufacturers must bear some blame for negelecting the social implications of the motorised cycle, just as manufacturers who keep concentrating on speed have negelected their social duties in relation to the motor car. There is a great intermediate area where manufacturers can produce lightweight vehicles which are capable of moderate speeds and of solving the traffic and circulation problems of very large numbers of people—vehicles which will also help to reduce insurance costs, which are now so very high, and which are, therefore, a handicap to the industry as a whole.

I hope that the Government will not now fob us off with a repetition of platitudes. I hope that they will say that they intend to take this matter in hand, that they will intervene and examine the state of the industry and will encourage the manufacturers to re-examine the structure of the industry as a whole and the nature of their designs.

If that happens, I think that we can hope that the threatened dismissal of 1,500 men at Smethwick and 91 at Coventry may not only be staved off, but that, once again, this great and traditional British industry may be in a flourishing condition.

4.17 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson)

The hon. Member for Coventry, North (Mr. Edelman) has made a most interesting speech arising out of his natural anxiety regarding redundancies and short-term working and declining activity in the motor-cycle and related industries.

The hon. Gentleman has traversed a wide amount of ground, and I think that much of what he has said will be read with great interest by the trade itself. He asked that I should not confine myself to platitudes. I hope that I shall not do so. I should like to start with a few of the facts which he himself would have referred to had he had time. I confirm that there are some 90 workers who will be redundant in Coventry this month.

The threat of the closures in Birmingham to which the hon. Member referred is rather on the connected side rather than on the motor cycle side, as I understand it. I understand that that move is part of rationalisation, and it illustrates the great difficulty that one is in. Here is a debate which has been raised because of anxieties that these redundancies create, and yet the very suggestion which the hon. Member makes will be almost certain in the short term to give rise to further redundancies. I think he is quite right to advocate that measures should be taken which will put this industry on a sound basis. The only point on which I would part company with him is the extent to which this is the responsibility of the Government and the extent to which the manufacturers themselves will face it.

Undoubtedly activity has declined. There was a production peak of 249,000 in 1959, which fell to 203,000 in 1960, and in the first eight months of this year it was running at 22½ per cent. lower. Of course, there have been fluctuations from year to year, and one should also bear in mind that imports also have declined by nearly half in the first eight months. I think the hon. Gentleman will agree that no Government can undertake to maintain employment at any particular level and that that would depend upon the demand.

The general demand in this country is not particularly high. The decline has naturally been mainly due to the decline in home demand. At the same time, the hon. Gentleman quite rightly drew attention to the decline in exports, which accounted for some 6,200 machines out of a decline in production of 34,500 machines in the first eight months of this year. Exports have declined from 91,700 in 1951 to 44,100 in 1960, and some of that, no doubt, was due to the change in fashion, which had not been anticipated by our own manufacturers. There was the development of the motor scooter, which went on apace in the last decade, and, latterly, the arrival in force of the Japanese on the scene with their light machines.

Certainly, there is room for a recovery in exports. Some 52 per cent. of the motor cycle output of this country was exported in 1951, as against only 22 per cent. in 1960, and far and away the larger proportion of our exports go to the Commonwealth and the United States of America—some 82 per cent. in 1960—and only 5 per cent. to the countries of the European Economic Community. Our sales to E.F.T.A. countries, which have been good markets, such at Switzerland and Sweden, have also dwindled, and manufacturers are no doubt now considering what can be done to increase their sales to countries which use languages other than English.

Mr. Edelman

This is the central point of the argument; namely, that the British motor cycle manufacturers, and I use the general term for all the motorised vehicles they make, have not adapted themselves to the requirements of the Continental market, where the moped and Vespa type of vehicle have become the fashionable vehicles and have not had the production they are requiring. It is up to the industry, I agree with the hon. Gentleman on this point, to face this, instead of taking the complacent attitude of hoping that trade will improve at home, and in the Commonwealth.

Mr. Macpherson

I think that that is what they are attempting to do.

I think it is also right to say that most of the markets are open. There are certain markets, such as the Eastern bloc markets, Italy, Morocco and Tunisia in which quotas have to be negotiated. In Yugoslavia, each transaction requires a licence; while in Spain imports are prohibited. By and large, apart from markets with balance of payments difficulties, which are apt to resort to devices such as surcharges on tariffs, prior deposits and other things—as in the case of South American countries which have balance-of-payments difficulties—all the markets are open. Some firms are already making use of licences to manufacture foreign vehicles, and I am not informed to what extent the licences will permit them to export, but, at any rate, it shows that the firms themselves are attempting to capture the leeway which has been lost, particularly in scooters and mopeds.

I notice that the hon. Gentleman did not suggest palliatives, and I am very glad indeed that he did not do so. He recommended a fundamental examination of the question.

I do not think that it would be right to stimulate home demand for the products of any particular industry irrespective of the national situation, and the overriding need at present is to avoid inflation and to keep down home demand as a whole until the right proportion is established between home and export demand for our goods. One can recognise that motor cycle users have special claims, but certainly no one industry can be picked out for special treatment or exempted from the actions which the Government are bound to take. I am glad that the hon. Member did not recommend that.

I was asked about production. By far the largest part of the motor cycle production is in the hands of two large groups—B.S.A. and Associated Motor Cycles Ltd. The Raleigh firm started mopeds some two or three years ago and other firms are starting to manufacture foreign models on licences. Scooter production is still tending to increase, but exports as a proportion of total production are only about 5 per cent., which is no doubt part of the reason why our exports have not kept up. Moped production, too, dropped by 60 per cent. last year and is again lower this year. Exports last year were 12 per cent. of total production. These are much lower than the figures even for motor cycles which, as I have said, have fallen so drastically.

We still have the major share of the home market, and I hope that that will always be the case, but we could not maintain that position if we simply limited imports, and here again I was glad that the hon. Member did not suggest that as a step which should be taken. We have been liberalising our trade in accordance with our G.A.T.T. obligations and last year we also liberalised the import of motor cycles from Japan. The increased competition is bound to eat into home sales to some extent although home sales have expanded considerably over the years.

Mr. Edelman

Is it not the case that if we enter the Common Market it will make life very hard for the British cycle manufacturers in the present state of the industry's productivity?

Mr. Macpherson

To the extent that our tariff of 22½ per cent. on motor cycles, or 20 per cent. on the heavy machines over 800 c.c., would disappear within a decade on imports from the Common Market, the competition would obviously be fierce. On the other hand, we should have a better chance of selling our motor-cycles, at any rate, and any further developments may be made along the lines which the hon. Member suggests, in the Common Market.

There will not be much between the tariffs of the Common Market and our tariffs. I believe that the tariff of the Common Market is 26 per cent.; and with the reduction by 20 per cent., it will work out at 20.8 per cent. against our tariff of 22½ per cent. There will be no great difficulty in harmonising this in respect of imports from other countries outside the European Economic Community. But of course, it is not only due to the Common Market that we have been losing in foreign markets. It has also been due to Japanese competition in such countries as Australia, for example, where we have had a considerable share of the trade.

There is no solution to this problem except along the lines which the hon. Member has advocated. The only difference between us is that he suggested that this was a matter primarily for the Government at any rate to take the first step. The Government are prepared to co-operate and to help the industry in any way they can in putting its own house in order, but we believe that it is for the industry to put its house in order.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Four o'clock.