Car Manufacturers (Hansard, 18 April 1990)

§ 12. Mr. Tom Clarke
To ask the Secretary of State for Trade and Industry when he will next meet the major car manufacturers; and what will be discussed.

§ Mr. Douglas Hogg
The Secretary of State and I regularly meet the major car manufacturers to discuss a variety of issues.

§ Mr. Clarke
When the Minister and his hon. Friend next meet the manufacturers, will they discuss Britain's huge £6.5 billion deficit in automotive products? Can the Minister offer any positive proposals to reduce that deficit and can he tell the House why such a huge deficit exists in such a crucial industry?

§ Mr. Hogg
It was perhaps a misfortune for the hon. Gentleman to concentrate so much on import penetration because he should know that import penetration occurred during the period of office of the last Labour Government. I will give the House the exact figures. In 1974, import penetration was 27.9 per cent., in 1979 it was 56.3 per cent., and at present it is about 57 per cent., so the process of import penetration took place under the Labour Government. Under the Conservative Government, however, there has been an extraordinary transformation in our indigenous capacity. Let us consider the past five years: in 1984 we produced about 909,000 units, in 1989 we produced 1.299 million units and by the mid-1990s we are likely to be producing about 2.2 million units.

§ Sir Dudley Smith
When my hon. Friend the Minister or my right hon. Friend the Secretary of State mext meets the major car manufacturers, will he press upon them the need to sustain and encourage the car component industry in Britain, particularly in the west midlands? Is my hon. Friend aware that although it is not how we do things here, in some countries there would be positive discrimination in favour of such an industry?

§ Mr. Hogg
I entirely agree with what my hon. Friend has said. Fortunately, we are seeing a huge increase in Britain's motor car manufacturing capacity. Inevitably, that provides a great opportunity for the automotive component industry and I am pleased to say that the industry is taking advantage of it. Whenever there is 1416 inward investment in relation to the motor industry, my right hon. Friend the Secretary of State and I stress the importance of United Kingdom sourcing.

§ Mr. Henderson
In the light of yesterday's announcement by Honda of the details of its 20 per cent. stake in Rover, at a price of £104 million, which gives the Rover division of British Aerospace a market value of more than £500 million excluding property assets and the DAF investment, will the Government still be making representations to the European Commission to the effect that the £56 million in sweeteners identified by the National Audit Office on a sale price of £150 million were none the less necessary to sell the company?

§ Mr. Hogg
The figures just read out rather painfully by the hon. Gentleman illustrate the value and importance of putting such companies into the private sector. One thing is plain. When Rover was sold to British Aerospace it was not worth the valuation suggested by the hon. Gentleman. The transformation of Rover is entirely consequent on the fact that it is operated productively and prosperously in the private sector.

§ Mr. Roger King
Will my hon. Friend take time out to meet the car manufacturers trade unions, in particular those which represent Ford workers, so that we may never again see a Dundee or Bridgend where phase 2 of the development of the Zeta engine has been deferred and transferred to German factories on the continent? Is not it a fact that the trade unions at that company still have to learn that their rhetoric during the recent Ford dispute to the effect that they had the power to stop Ford throughout Europe did more damage to them, their jobs and their futures than to anyone else?

§ Mr. Hogg
My hon. Friend makes an extremely important point. The plain truth is that while Ford remains committed to the United Kingdom, it has the capacity to put work elsewhere. It made the decision not to put the Zeta engine phase 2 at Bridgend partly because of the unreliability of supply experienced in recent years". The Labour party must realise that if it supports industrial action or inflationary wage settlements, as it always does, that policy will be paid for in lost jobs.