Magazine of Socialist Action in Australia

The mess in the car industry

Reading Time: 9 minutes

A ‘race to the bottom’ for workers’ rights and a disaster for the environment
BY THE year 2050 there will be another one billion cars in the world, on the on top of the one billion here today. Bill Mullins, Socialist Party (England & Wales) industrial organiser, former car worker and leading trade unionist in Rover Solihull, looks at the car industry today. How can we avoid the planet becoming one big polluted traffic jam?

ANOTHER BILLION cars in the world is the calculation economists have made, assuming there is no major world recession. They forecast that car ownership in countries like China, India and Brazil will begin to reach the same level as America and Europe, which is already at saturation level. As the Guardian puts it: “That adds up to a lot of greenhouse gas”.

In the USA and Western Europe about one in two people own a car at the moment. In China only 15 in every 1,000 own a car, in India it is eight in every 1,000.

If car ownership increases in Eastern Europe and parts of the developing world as well, then by the year 2050 the planet will consist of bumper-to-bumper traffic jams.

Only last week it was calculated that, for the first time in human history, more people now live in urban areas than live in the countryside.

The fear of the planet being overwhelmed in a catastrophic permanent smog of exhaust gases, pumping out from millions of vehicles, would make any thinking person say: “This can’t go on”.

There must be another way for people to get about, other than locked up in their own personal metal boxes – drivers cut off from the rest of the world, wishing to hell that the car in front would just get out of the way so they can get to their destination without being inconvenienced.

But to say to the peoples of China and India that there are already too many carbon monoxide-gushing vehicles on the planet’s roads and therefore you cannot have what the west has already got, would not get you very far.


This is the attitude of many environmentalists who cannot see beyond a capitalist system that is based on the production of things for profit.

As socialist environmentalists we would start from the position of: “How can the needs of the mass of the population be met without wrecking the whole planet at the same time?”

Only a world socialist plan of production could offer a way out of this conundrum. Capitalism as a system cannot hope to square the circle of making things for profit and at the same time meet the real needs of people across the globe.

30 years ago, the Lucas Aerospace shop stewards’ committee developed ideas for alternative products to the military equipment their members were actually making at the time.

These ideas included new methods of transport, such as a rail/bus vehicle and what were then new types of wheelchairs for the disabled.

Needless the say, the Lucas bosses completely ignored these ideas for “socially useful products”.

But the point was driven home that the needs of people could only be met by the adaptation of the skills of these workers to things other than weapons of mass destruction.

It is the same with car production. Cars are not made to meet people’s need to get from A to B. They are advertised and sold to increase car manufacturers’ profits.

A rational world based on socialism would have an integrated transport plan. This would include all forms of transport and would prioritise environmental considerations from the beginning.

With capitalism, what we have instead is an irrational use of human labour to produce millions of cars, which the advertisers strive to convince millions of people they really need.

Individually capitalist producers might recognise the damage to the planet their products do. But they are locked into a vicious cycle, where competition between manufacturers forces them to mass produce cars on a scale never before attained in human history.

They might tinker from time to time with various means of cutting down on environmentally damaging exhaust gases but it is no more than tinkering.


Meanwhile, car workers face wave after wave of attacks on their working conditions, living standards and employment security.

The world car industry is an industry without parallel. It comprises some of the biggest concentrations of capital, of plant, equipment and investment, ever seen.

The world’s biggest manufacturer, General Motors, made over nine million vehicles last year. Until recently GM employed 600,000 workers and had annual sales which, in money terms, were greater than the combined GNP of New Zealand, Portugal and Luxembourg put together.

But the whole industry is now going through greater structural changes than ever in its history. The bosses are shifting much of the industry from the west to the east.

In Europe, major car companies are shifting their production to Eastern Europe. In North America, the big car producers seek to develop production facilities in China and south-east Asia. At the same time, Japanese producers continue to forge ahead, taking more and more of the USA domestic market from the big three of GM, Ford and Daimler Chrysler.

What drives these changes and upheavals is the chase after lower and lower labour costs. Labour costs in the Czech Republic, for example, are one fifth of those in Germany. GM plants in Belgium and Germany are being closed and shifted to Poland. Ford have closed five of their 11 plants in Western Europe and shifted east.

Japanese and Korean companies are opening up in Eastern Europe as well. Toyota is opening new plants in Turkey and Russia. Hyundai and Ka, both South Korean manufacturers, are now in the Czech Republic, Slovakia, Ukraine and Turkey.

But it’s not just to Eastern Europe that production is being shifted. More and more plants are being opened in the developing world by the big manufacturers, whilst plants are being closed in Western Europe.

Bob Lutz, GM vice chair, whilst announcing jobs cuts in the Vauxhall plant in Ellesmere Port Merseyside said: “We will shift production to Korea, Thailand and Mexico”.

Thousands of workers in Western Europe, including Britain, are being thrown on the scrap heap. In the USA the big three of GM, Ford and Daimler/Chrysler have led an offensive against workers’ conditions in the production plants.

GM and Ford have sacked 30,000 workers at the same time as cutting back the pay, pension rights and health benefits of the workers, unfortunately all too often with the compliance of the auto unions. The car companies claim that the reason they are doing this is falling profits as their sales plummet. Ford sales declined 35% in the USA last year, Daimler Chrysler lost 37% and GM fell by 19.5%.

They are being pushed out of their domestic market by Japanese and Korean car makers. Toyota increased their sales in the USA by 16%, Honda’s went up by 10%, Hyundai by 6% and only Nissan has failed to cash in, when its sales fell by 19%.

Oil prices

A big factor in the loss of sales by the USA giants is the rise in the price of oil, which cut sales of SUVs (Sport Utility Vehicles or 4x4s) by 45%.

This does not mean that fewer cars are being made. World car production actually increased from 38 million to 44 million between 1997 and 2004. Production of all vehicles – cars, trucks buses etc – went from 51 million to 61 million, reflecting the continuing world-wide economic upswing.

In the car plants of Western Europe and North America a war of attrition is being waged by the manufacturers against their own workers.

In Germany VW and BMW bosses have managed to slow the rate of export of the jobs to the east by cutting workers’ wages and conditions with the backing of the trade union leaders.

In the USA, again with the connivance of the unions, and only after a certain amount of resistance from below by rank and file workers, the same cost-cutting measures have been pushed through.

Meanwhile, the Chinese car industry has been growing. China is now the fourth biggest producer at 4.5 million cars per year, compared to one million only a few years ago. Wages on average are one-tenth of the European level.

Here in Britain, the situation has been different for a number of years. The collapse of the British-owned car industry was a direct result of the de-industrialisation policies of the Tories, which were continued under New Labour.

The British-owned car industry was allowed to die, unlike in France, where the government took direct control of the industry.

Both the Tories and New Labour refused to prop up the “lame duck” of British Leyland (BL). BL was privatised under Margaret Thatcher and handed over to British Aerospace.

Before that, under the previous Labour government, Harold Wilson, with Tony Benn as his industry minister, was forced to nationalise what was then British Leyland. But no real investment followed.

At the time, for every £1,000 of investment behind BL workers, Honda was investing £16,000 per worker.

Benn was removed as the minister in charge because he became too close to the unions who were demanding proper investment.

Instead, the Labour government oversaw the closure of more and more factories. BL was nationalised mainly because of the strength of the trade unions in the 1970s.

But the key demand for workers’ control and management, raised at the time by Militant supporters in the Rover factories in Solihull and Longbridge, was ignored.

We called for the board of BL to be made up as follows: One third coming from the trade unions in BL – to represent the workers of BL directly. Union membership was nearly 100% at the time and the shop stewards’ committees were under the control of the shop floor by annual elections and the right of recall at any time.

Another third coming from the TUC, to represent the organised working class as a whole – at the time the unions had 60 or 70% of the whole working class in their ranks.

And the final third from the Labour government. Again, this was when the Labour Party was still a workers’ party, albeit with a pro-capitalist leadership.

It is easy to see how this demand would not resonate today, in quite different circumstances to the 1970s, nevertheless they were quite “revolutionary” at the time. In fact when talks were opened up with Tony Benn when he was industry minister, his response to a level of workers’ control of BL was positive. That is probably another reason why Harold Wilson sacked him.


BMW subsequently bought Rover for £800 million. The UK car industry, particularly companies like Rover, has been under-funded and under-invested for decades. Until the BMW takeover, less than 3% of turnover was reinvested in plant and equipment.

BMW claim that they have brought this up to 7%, but this was mainly in greenfield sites like the factory within a factory at Rover’s Oxford plant – which has gone on to produce the successful new mini.

The whole of the British car industry is now owned by overseas companies. The massive defeats suffered by the organised trade unions in the traditional car plants have been exploited ruthlessly by Japanese companies. “Beauty contests” for the most compliant unions were introduced by the Japanese car manufacturers before they laid a single brick.

No car worker who had any history of trade union activity was allowed to get a job in the UK assembly plants of Nissan, Toyota and Datsun.

The result has been that output of the British car industry is the same as it was 30 years ago but with one-third of the labour force. But the increase in productivity is mainly due to the much higher level of investment per worker than was the case for example in BL.

But as workers in the Peugeot plant in Coventry found out, foreign-owned plants in Britain will be the first to shut in the event of a recession. They are no more that assembly plants for components brought in from overseas.

Britain now produces as many cars as ever but the research and development facilities are concentrated in Japan.

The response of the union leaders throughout this period has ranged from complete compliance with the capitalist owners to frustrated calls for the government to introduce measures to curb sales of foreign cars in Britain.

The crisis at Peugeot Coventry revealed the weakness of the unions to stop this process.

Peugeot was able to take advantage of the lack of legal protection for British workers, compared to French workers, when it announced that it was cheaper and easier to close its British plant than its French or Belgian ones.

But the response of the union leaders was to call for a boycott of Peugeot car sales in Britain. This is yet to have any effect.

What the movement needs is basic demands that will give protection to car workers and at the same time point the way forward to a more rational use of their skills and abilities to meet the world’s need for transport.

British car industry in decline

Investment in car manufacturing in Britain:

1996 – £1,954 million
2004 – £1,110 million.

Number of employees, including component manufacturers:

1996 – 288,000
2004 – 220,000

Trade balance:

1995 – £5,527 million
2004 – £12,333 million

Number of companies involved in the car industry:

1995 – 4,109
2004 – 3,330

A socialist programme for the car industry

* Opposition to all job losses as a result of the crisis of overproduction.
* Share out the work without loss of pay.
* No transfer of work between factories without the agreement of the workers affected. Opposition to all attempts to contract out work
* For a 35-hour week without loss of pay.
* Open the books of the big monopolies. Expose the fraud of these companies whereby components are internally transferred from one country to another, taking advantage of different tax levels.
* Don’t subsidise, nationalise.
* Committees of workers to look at alternative socially useful products. Use car workers’ skills to produce ‘clean’ public transport vehicles.
* Develop more environmentally friendly cars.
* Expose the waste of built-in obsolescence.
* For a socialist plan of production, under workers’ control and management, involving the unions in the industry and the national unions as a whole, plus representatives from the community, such as environmental groups.
* For a socialist transport plan for each country and region, involving bringing in to public ownership the big car monopolies in each country.
* For a fully integrated socialist transport system to meet the needs of people throughout the globe.