Domestic Content (Hansard, 26 April 1983)

§ Mr. Les Huckfield (Nuneaton)

I beg to move, That leave be given to bring in a Bill to make provision for a minimum domestic content or certain specified components to be included in motor vehicles made or imported into the United Kingdom. The Bill emanates from a shop stewards' conference which I attended in Coventry on 6 February, which was convened by the Ford Transport and General Workers Union branch at Dagenham. I speak as a sponsored member of that union and I seek to introduce a Bill which is in line with my trade union's policy. This is a subject on which all car shop stewards' organisations are united throughout the motor industry.

Various stories have appeared in the press recently about allegedly British made cars' success stories. If we take the examples of the Maestro, Ford Sierra and Vauxhall Cavalier, the difficulty is that all of the success stories about so-called British cars conceal the fact that gradually the whole British car industry is turning itself into an assembly-only operation.

Throughout the motor industry, whether it be British Leyland, Ford, Vauxhall or Talbot, there is a tendency for the higher-technology, higher-engineered components to come from abroad. Unfortunately, the Department of Trade's interpretation of EC regulation 802/68, article 5, is not sufficient to ensure that more than assembly is done here. One could cite the difficulties with the Honda Acclaim project in verification of that.

If this country is left only with the assembly part of car manufacture, we will be left with the least skilled and easily robotised process and the part of the car manufacturing process that is most easily switched abroad. The heart of our car industry would be gone and we would end up literally importing other countries' cars in boxes and sticking them together like Lego. The estimate by British Leyland's Longbridge shop stewards underlines their fear that if some of the press reports about future linkups are true, British Leyland could ultimately cease engine and transmission manufacture, which could mean the loss of another 50,000 jobs, most of which, unfortunately, would be in the west midlands. At Longbridge there has been a job loss of some 50 per cent. over the past two years to last December, and there has been a similar rundown at Rover in Solihull. That hits very much the component industries such as Dunlop, Hardy Spicer, Wilmott Breden and other firms in Birmingham and the west midlands.

The difficulty was underlined by a reply that. I received from the Minister for Trade yesterday to a question about the overall balance of trade in motor vehicles. The figures that I was given showed that the surplus on the component side of the industry is no longer sufficient to offset the deficit in the complete motor vehicle side of the balance of trade. Ultimately, giant car plants such as Longbridge and Cowley could end up as assembly-only operation. Evidence of that is the recent application for the NissanDatsun project to be sited in this country, because that would have been mainly an assembly-only operation. Even the most effective application of selective import controls or tariffs will not deal with the problem. Even with the successful application of tariffs and import controls or quotas, we could still end up with the problem that I have just described.

735 In my Bill, clause 1 would establish the percentage of domestic content requirement on all vehicles, whether British or foreign-made. Clause 2 would give the Secretary of State power to establish that all foreign motor vehicles should contain a United Kingdom domestic content percentage, which would be based on the number of final sales. Clause 3 would outline the way in which the domestic content could be met—in other words, through labour, parts or assembly. Clause 4 would give the Secretary of State, with regard to British motor car companies, the power to specify that certain major car component parts are wholly manufactured and assembled in this country—for example, gear boxes, transmissions, engines, cylinder heads or electrics. Clause 5 would introduce penalties on foreign companies that violate the domestic content requirement by reducing their allowable import quotas of vehicles and parts by the percentage by which the company falls short of the prescribed content ratio. In other words, in the Bill I am proposing that if the companies concerned failed to meet the specifications, their imports or sales in this country would have to be reduced by a corresponding percentage.

The Bill is similar to House of Representatives Bill No. 5133, which was introduced into the American House of Representatives by Congressman Richard Ottinger from New York and which was carried in the House of Representatives on 15 December last year. Although the Bill was ultimately watered down and at the end of the congressional session made no further progress, my information is that it will be reintroduced in this session of Congress. Congressman Ottinger estimated that his Bill could create or preserve about 800,000 jobs in the United States of America. I am not saying that the total would be exactly the same in this country, but that is the proportion that I am talking about.

No other country allows such penetration of its domestic market in one of its biggest manufacturing and exporting industries. For example, in February this year foreign cars penetrated about 56 per cent. of our domestic market. European Community-made cars penetrated about 736 41 per cent. of our domestic market. Our country is hit harder than that when one considers that last year our exports to other countries were a mere 300,000, while Japanese exports were nearly 4 million, German exports were more than 2 million and French exports were 1.5 million. We are hit not only because we have no protection for our domestic car and commercial vehicle industry but because we export fewer vehicles than the countries that I have listed.

Unfortunately, this situation is rapidly beginning to apply to the commercial vehicle industry as well. Unfortunately, there, too, the percentage of imported components, particularly higher technology and higher engineered components, is going in the same direction.

Retaliation is bound to come up in the discussion of such provisions. Australia already has a 57 per cent. tariff against our cars. Spain has a 36.7 per cent. tariff—that is without the concessions that have been made—and Japan and other countries have a host of other rules and regulations that make it difficult for us to export our cars to them. I am suggesting a mechanism not to start a trade war but to give us at least some negotiating leverage in negotiations on trade imbalances against other countries.

I am afraid that without such a Bill or a mechanism similar to it, and even with the implementation of selective import controls and a much more successfully applied tariffs or quotas policy, we would still end up with the same problem. Such a mechanism is necessary to save the British car industry. Unless we make a move soon, it could be too late.