Material on the MG Rover Closure

Workers' Daily Internet Edition: Article Index :

Material on the MG Rover Closure

The Closure of MG Rover and the Need for an International Perspective
Socialist Party Condemns Scandalous Treatment of Rover Workers
Nationalise Rover Now!
Respect on MG Rover
Longbridge Plant Can Be Saved!
It Is the Independent Programme of the Working Class that Will Provide the Way Out of the Crisis
What of Deliverance from “Fear of the Future” Now?
The Workers Must Politically Activate Themselves to Lead Society Out of the Crisis
There Is No Such Thing as the “Third Way”

In this issue of WDIE, we are posting more material on the stands being taken on the closure of MG Rover. Included in the material are articles from Workers' Weekly which first appeared in 1998 and 1999.

World Socialist Website

MG Rover’s administrators, PricewaterhouseCoopers, announced on April 15 that the last British-owned volume car manufacturer would close with immediate effect.

            It means a loss of 5,000 jobs at Rover’s Longbridge plant, and 25,000 more at suppliers and distributors, mainly in the West Midlands. Workers will receive a maximum payoff of about £3,000. Once the 1,000 cars stranded on the production lines are completed, the remaining 1,000 workers will be laid off and the plant mothballed. Dealers are already sacking sales and showroom staff up and down the country.

            The workers’ pensions have gone. There is a £67 million shortfall – as of 2003, the latest date for which figures are available – in Rover’s pension fund. Yet BMW transferred a fully stocked pension fund in 2001, when they sold MG Rover to Phoenix Venture Holdings.

            Many of the redundant workers now face personal bankruptcy, as the liquidators seek to collect debts of up to £10,000 each from those who had purchased Rover cars on a delayed payment scheme.

            Owners of 300,000 Rover and MG cars sold within the last three years also face uncertainty about the value of their new-car warranties.

            The media has portrayed the end of MG Rover as the death of the British car industry. In truth, the company sold to Phoenix Venture Holdings in 2000 for the nominal sum of £10 was all that remained after the failure of the government’s decades-long attempt to maintain such a nationally based industry. A mass national car industry had ceased to exist in any real sense in the 1980s, as the Conservative government of Margaret Thatcher abandoned past efforts to preserve a “national champion” through government subsidies.

            While British auto companies were once one of the country’s major employers – in 1973 a workforce of 210,000 produced more than a million cars a year – by 2005, MG Rover employed just 6,100 workers and was turning out about 100,000 cars a year, with sales declining year on year.

            For autoworkers, it has been death by a thousand cuts. But the issues faced go far beyond the immediate fate of MG Rover or even the auto industry. The fundamental question is to understand how this catastrophe has befallen MG Rover in order to formulate an independent political response to the nationalist and pro-capitalist perspective of the trade unions, which has proved incapable of defending the jobs of workers everywhere.

The development of a global market in cars

            The crisis at MG Rover has its origins in the development of a global market and the organisation of international production.

            The “golden era” of nationally based car production only existed prior to the Second World War. Even then, the world’s largest manufacturers, US corporations such as Ford, Chrysler and General Motors, set up branches overseas so they could penetrate the European market. But production took place behind protective national tariff walls and involved models designed largely for a domestic market.

            At the end of the Second World War, the auto industry was substantially reorganised, against a background of efforts to utilise America’s economic pre-eminence to resuscitate the war-devastated economies of Europe and Japan, and thereby rescue global capitalism. In return for massive financial aid under the Marshall Plan, the US demanded free trade and an end to tariff protection so that it could expand into international markets. Over the next four decades, such tariff barriers were virtually eliminated, and US investment in the European car industry rose four and a half times during the 1950s.

            However, the Marshall Plan also resurrected the European and Japanese car industry and built up what became the major rivals to the US auto giants. The European countries most devastated by the war were able to retool their car industries with up-to-date assembly line techniques copied from the US. This reconstruction enabled the rise of such producers as Fiat in Italy, Volkswagen in Germany, Renault in France, and Toyota and Nissan in Japan.

            Britain was unable to do so with the same degree of success because its industry never received the same massive overhaul, and its technology and productive techniques were soon overtaken by its rivals. Though it had emerged from the war as the second-largest car producer, as early as 1956 it was overtaken by West Germany. Much of Britain’s car industry relied upon US companies such as Ford investing in their British and European operations.

            The native car industry in the 1950s and 1960s was the product of the merger of smaller companies – the most notable being the combination of Austin and Morris to create the British Motor Corporation (BMC) in 1952. Its major British competitor was Leyland, which took over a number of smaller companies including Rover in 1967.

            The inflationary post-war boom protected British industry from international competition. All the car companies enjoyed a sellers’ market based on easy credit terms and advertising promotion designed to stimulate demand for the latest model. BMC’s production rose to 900,000 vehicles in 1964, making it the fourth-largest car producer in the world.

            But capital investment in new plant and equipment to replace more than 40-year-old production lines was totally inadequate. By the early 1960s, it was clear that Britain’s fragmented and unevenly modernised car manufacturers were facing stiff competition in its own home market. French and German rivals and US plants in Britain could produce cars more economically on their new production lines. The loss of even a small share of the domestic market destabilised their financial position. The small car firms were the first to go. The rest sought refuge in further mergers and takeovers.

            Access to the European Economic Community (the forerunner of the European Union) was crucial for the UK auto industry’s survival. But with Britain’s membership blocked by the veto of French President General de Gaulle in 1963, this possibility was severely curtailed.

            BMC set about developing plants in Belgium, Spain and Italy that could assemble cars from kits manufactured in the UK. By 1966, 40 percent of exports were in kit form. But despite this overseas expansion, BMC’s rate of return on capital, like that of the rest of British industry, continued to decline. By the late 1960s, drastic reorganisation was needed to withstand foreign competition and the intensified sales war launched by Ford, Vauxhall (GM’s badge in the UK) and Chrysler (Rootes’s parent company).

The creation of a national champion

            Before the war, trade union organisation in the auto industry was either non-existent (unions at Cowley were not recognised until the 1950s) or weak. However, the intense competition for labour after the war and the determination of the mass of working people never to return to the hungry 1930s meant the trade unions grew rapidly in the 1950s – achieving 100 percent unionisation in the 1960s. The car industry became an arena of bitter industrial strife, as the bosses sought to contain costs at the expense of the workforce. But the trade union leadership did not reflect this militancy. Rather, these struggles only spurred on its efforts to establish peaceful industrial relations.

            In May 1968, the Labour government of Harold Wilson advanced a plan to rescue Britain’s auto industry and curb damaging strikes. It brokered a merger between Leyland and BMC, with the aim of creating a giant “national champion”, British Leyland Motor Company (BLMC), with 40 percent of the domestic market, and gave it a massive cash injection.

            While the giant combine was now the third-largest car manufacturer in the world, producing more than a million cars and components, nearly half of which were exported, it was a paper tiger.

            The management of this chaotic amalgam of companies jealously guarded its own privileges. Each of the constituent subsidiaries had its own models, sales arms, production planning departments and investment strategies. Fourteen years after the merger that had formed BMC in 1952, Austin and Morris still had separate boards of directors and kept separate accounts. The newly established BLMC produced 19 different body shells.

            BLMC was even less internationally oriented than BMC, with managers focussing on a fragmenting domestic market that was being eroded by Japanese and European imports. In effect, they made BLMC more national when every other manufacturer was becoming more international. Ford was creating an integrated pan-European network of plants, with flows of components criss-crossing national boundaries, while the major European auto manufacturers were building a sales presence in every major market.

            Without an international strategy, it proved impossible to overcome the parasitic legacy of the British car industry.

            The trade unions ensured that the price for both management inefficiency and failure and the efforts to overcome the industry’s backwardness was borne entirely by the workforce. In 1968, the engineering unions, working hand in glove with the Labour government, signed a productivity deal that granted the employers the right to use Work Study techniques and tied wages to productivity. It was to lead to thousands of redundancies in the great “shake out” in the engineering and manufacturing industries.

            The drive to increase profits in the car industry sparked increasingly bitter conflicts with the workforce over the introduction of “measured day” work, meant to end the ratcheting-up of wages under the previous piecework system. A series of strikes followed.

            Despite the constant refrain of the right wing and the media about the “British disease”, the strikes were a symptom of a far deeper malaise afflicting British capitalism. They represented a defensive reaction by the workforce to the worsening situation they had been placed in. With the lowest investment per employee of any of the European manufacturers, BLMC was unable to rationalise production and cut costs. With only enough cash to produce one new model, sales remained static and exports fell. Profits rose just 22 percent in five years – not enough to keep up with inflation, which was rising rapidly.

The collapse of the national champion

            BLMC was one of the first large corporations in Britain to collapse in the recession following the international financial crisis of 1971, the 1973 Arab-Israeli war and the quadrupling of oil prices in 1974. Over the six months to March 1974, it lost more than £16 million, despite starting the financial year with £50 million in cash reserves. In part, this was due to the three-day week, introduced by the Tory government to deal with the OPEC oil embargo imposed against Israel’s supporters in the Yom Kippur War, just as the miners were preparing a national strike in support of their pay claim. More importantly, the company was haemorrhaging cash to its bankers, forced to borrow just to pay wages. BLMC was sitting on a growing £100 million mountain of debt – nearly double the value of its shares.

            British capitalism was staring bankruptcy in the face – a massive balance of payments deficit was being financed with short-term cash flooding onto the London money markets. However, if the speculators chose to shift their money out of Britain, BLMC and scores of other major British corporations would go under, resulting in mass unemployment on an unprecedented scale. On May 21, 1974, one of BLMC’s directors sent out a letter warning the company’s workforce of the dire financial situation and outlining a series of demands for no strikes, speed-ups, cost-cutting and a “realistic review” of the production programme. Mass redundancies would clearly follow.

            In the space of six years, the Wilson government’s strategy of creating national champions had fallen into tatters. After consolidating the national producers into one giant combine, and providing a government injection of cash, the company had failed. The champion car producer was bust.

            Though an extreme example, BLMC was not unique. All the car giants in the US and Europe were struggling. There was a huge surplus of productive capital, and markets worldwide were saturated. The logic of the profit system meant that this surplus had to be liquidated, car plants closed and workers thrown out on the dole.

            Such a situation demanded an international political strategy to defend the wages and jobs of autoworkers in every country. This would have taken as its point of departure the irreconcilability of the interests of capital and labour, and the need to free the productive forces from the fetters of private ownership and put them to use to meet social need.

            Instead, the trade union leaders, emboldened by the return of the second Wilson government in February 1974, simply clamoured for a state bailout for the national industry. Labour had come to power in the aftermath of a huge anti-Tory offensive – the 1973-1974 miners’ strike bringing down the Conservative government. It was naturally anxious to preserve social peace and ensure a measure of political stability. It was therefore initially willing to proffer cash injections, but to no avail. In 1975, with BLMC staring into the abyss, the government was forced to take over the company, renaming it British Leyland (BL).

            The nationalisation of British Leyland (BL) by the Labour government of Harold Wilson in 1975 was a desperate political measure, aimed at avoiding the massive job losses and the political upheavals that would have followed a private-sector restructuring.

            It was the first of several bailouts for “lame ducks” in the beleaguered engineering sector. It was not aimed at benefiting the working class, but at rescuing a moribund sector of the national economy, largely to the benefit of the owners, and to help British capitalism remain internationally competitive. Reflecting this, the government paid shareholders well above the market value of their shares.

            Nationalisation also had the political effect of further entrenching the trade union bureaucracy within a corporatist alliance made up of the government (as a direct employer), the management and the unions. It was used by the union leaders to reinforce their claim that there was a common interest in maintaining a national car industry that was owned by the “British people”.

            Leon Trotsky drew attention to the phenomenon of state nationalisation in capitalist countries, whereby the trade unions were drawn into the management of key industries. Such a policy had nothing to do with workers’ control, he insisted, but was aimed at disciplining the working class to accept the demands of capitalist industry through the mechanism of the labour bureaucracy.

            He wrote of “the connection of the top trade union leaders with the apparatus of state capitalism, the transformation of mandated representatives of the proletariat into hostages of the bourgeois state”. He continued: “But however great this danger may be, it constitutes only a part of a general danger, more exactly, of a general sickness: that is to say, the bourgeois degeneration of the trade union apparatuses in the imperialist epoch not only in the old metropolitan centres, but also in the colonial countries. The trade union leaders are, in an overwhelming majority of cases, political agents of the bourgeoisie and its state. In nationalised industry they can become and already are becoming direct administrative agents.” (Writings of Leon Trotsky, 1938-39, Pathfinder Press, New York, p. 328)

State ownership and a national perspective

            Under state ownership, over the next eight years BL’s management was given the cash to do what British Leyland Motor Company (BLMC) could not: reequip the factories and develop new models. But their target of at least one million cars a year was unrealisable, given the national perspective for the industry’s development. Falling volumes meant that BL could not match the state’s investment with its own.

            The return to power of the Conservative government under Margaret Thatcher in 1979 marked a definitive break by the British bourgeoisie with the post-war policies of national economic regulation, and with it the concept of maintaining national “champions”. Thatcher was to implement a strategy based upon her recognition that a fundamental shift in the strategic orientation of capital was necessary.

            In an effort to offset the falling rate of profit, production was to be reorganised on a global basis. Inefficient national industries would no longer be propped up. Instead, the “lame ducks” would be sent for slaughter, and everything would be done to facilitate the free movement of capital, enabling investment where production and labour costs were lowest.

            British Leyland was to be the first target. Its chairman, Michael Edwardes, first announced a “recovery plan” based on slashing BL’s productive capacity in half and “curbing the power” of the trade unions. This was nothing less than a declaration of war on car workers, but once again the trade union leadership could be relied upon to push through a vote in favour of the recovery plan.

            Plants were closed and production concentrated at Longbridge and Cowley. Within six months, management unilaterally imposed new work practices. However, while Edwardes had promised a return to profitability in 1982, this never happened. The new models delivered only 500,000 sales, not the desired 750,000. Exports collapsed, in part because Edwardes had failed to develop a European distribution network. Without an export market, BL remained dependent on a home market where it faced increasing competition from imports and foreign transplants.

            The changes associated with globalisation had gone much further than the Edwardes plan provided for, leaving BL unable to compete. Increasingly, cars were being assembled from components produced right across the globe. US plants in Britain were sourcing their assembly lines in Europe. All the major producers had developed an international presence in every regional market, either by building their own plants, taking over local firms, establishing joint ventures, or allowing local manufacturers to build under licence. Japan was setting up car plants in Britain as an entry point to the European Community, and sourcing its components in low-wage economies.

            BL developed no such strategy. Even the projected 750,000 sales, spread across several models, would never have created a viable company that could cover the costs of retooling for new models. The downsized company was simply too small. As sales continued to slump, more and more workers were laid off.

            The demands of capitalist production ended the possibility of even a truncated version of a national champion such as BL, and the Conservative government readily abandoned it.

Rover and the free market

            In 1986, Thatcher tried to sell BL – now rebadged as Rover, the name of its more upmarket product – to Ford, but without success. Finally, in 1988, the government succeeded in selling Rover for a trifling £150 million to the aircraft and engineering conglomerate British Aerospace (BAe), another recently privatised former national champion. As with all its privatisations, the government ensured that the British taxpayer was made to pay massive rewards to Thatcher’s friends in the City of London. In the case of BL, the government took on the firm’s massive debts, gave BAe a £600 million investment dowry, and transferred a healthy pension fund.

            By this time, Rover employed only 78,000 workers, less than half the number employed when it was taken into state ownership in 1975.

            Rover’s new owners knew that it stood no chance of survival as an independent auto company. BAe sought a tie-up with an international manufacturer, and eventually formed a joint venture with Honda, which was seeking a base from which to export cars to Europe with sufficient UK content to satisfy the tariff rules of the European Community. Under a deal that confirmed Rover’s inferior status, it would produce Honda cars under a Rover body at Swindon, and give up the right to compete with Honda wherever it was active, including in the US.

            Rover only survived courtesy of the Honda connection and the prestigious Land Rover model. In 1994, BAe, which was on the brink of financial collapse because of problems with its regional jets business, sold Rover for £800 million to the German auto producer BMW. Like other small-volume European car producers at the time, such as Volvo and Saab, BMW was seeking international partners and mergers in order to remain viable. Its larger German competitor, Daimler Benz, which had a wider product range, had established plants in North America and was later to merge with Chrysler. Without the funds to establish its own transplants, BMW wanted Land Rover as a platform from which to develop a four-wheel-drive vehicle. BAe refused to sell Land Rover separately without the Rover cars division.

            Problems immediately surfaced. Honda pulled out, leaving Rover completely dependent upon BMW for funding a new model. But BMW had no experience or capacity to build efficient, small front-wheel-drive vehicles. Its own vehicles were rear-wheel-drive, and it could never achieve the necessary economies of scale for building a wide range of models with a common platform.

            BMW invested heavily in Land Rover and the development of the Rover 75 model at the Cowley plant near Oxford in 1998, but Longbridge was always vulnerable. BMW threatened to move production of the Mini or even close the Longbridge plant entirely, unless workers accepted a productivity deal.

            In November 1998, the unions agreed, and 2,500 jobs went. In March 1999, when BMW threatened to move production to Hungary, where wages were lower, the Labour government stepped in and offered a £152 million aid package in return for a £1.7 billion investment by the company to modernise Longbridge.

            Even this was not enough. In March 2000, with losses mounting to £780 million, BMW announced that, after pouring £3.4 billion into Rover since buying it in 1994, it was pulling out.

            This caught the Labour government on the hop. A deal to sell Rover to venture capital group Alchemy fell through. Alchemy had said it would rebrand the Rover cars as MG (the 1960s sports badge), downsize production, and focus on sports cars – with a loss of 5,000 jobs at Longbridge. BMW sold Land Rover and Rover’s design facilities at Gaydon to Ford for £1.8 billion and kept the Mini production plant at Cowley.

            After a huge campaign by the trade unions, and with the backing of the Labour government, BMW agreed to sell Longbridge – after transferring production of the Rover 75 to the Longbridge plant – for a token £10 to Phoenix Venture Holdings, a group of former Rover managers, who insisted that Rover could be saved as a volume car producer. BMW gave Phoenix a £500 million cash injection, paid off £500 million of Rover’s debts, and bequeathed them a stockpile of 65,000 finished cars, worth £533 million if they could be sold.

Asset stripping under Phoenix

            This bargain basement sale did not mean that MG Rover was a going concern. While the unions claimed Longbridge had been “saved”, MG Rover under Phoenix was never viable. None of the essential problems had been resolved.

            Fundamentally, Rover still needed to become part of a larger international concern. Peter Cooke, motor industry professor at Nottingham Business School, said of the Phoenix management, “From the first, they went out and trampled the world talking to everyone, looking for a partner. With a three- or four-product line-up, you need to amortise development costs over a million units. Phoenix, in contrast, was talking some 250,000 sales a year.”

            Rover needed a minimum sale of 180,000 cars a year just to break even. Instead, sales slumped to 145,000 in 2002, 116,000 in 2003 and 110,000 in 2004, by which time its share of the car market had fallen to less than four percent, down from 13.4 percent in 1990.

            Even worse, Rover was simply reproducing old models under a new body shell. New models are enormously expensive to produce – costing around $2 billion.

            Phoenix’s search for international investment partners proved largely unsuccessful. John Towers, Phoenix chief executive, tried to tie up joint ventures overseas, firstly with Tata in India and then with Brilliance in China. Neither took off.

            In 2004, Towers tried to form a “strategic alliance” with Shanghai Automotive Industry Corporation (SAIC) to develop and build a new set of models. SAIC is China’s largest car manufacturer, making cars under licence in joint ventures with GM and Volkswagen. It was the failure of this last-ditch attempt that immediately precipitated MG Rover’s collapse.

            Nevertheless, as far as the four directors of Phoenix group were personally concerned, their investment in MG Rover was lucrative. As the Financial Times noted, on the very day administrators were sent to Longbridge, the Phoenix directors did “what any ruthless entrepreneur would have done in their situation: incentivise, strip assets, take cash out early”. The Financial Times described this as “burning through someone else’s money”.

            From an initial sum of £60,000 to form Phoenix, the four owners of the group, Towers, Peter Beale, Nick Stephenson and John Edwards, soon became millionaires. They lost no opportunity to feather their own nests, paying themselves generous salaries and establishing their own £13.5 million pension fund that together has made them £40 million richer.

            The directors split MG Rover into 28 different companies, hiving off Rover’s profitable property portfolio, engine and car leasing businesses into Techtronic, one of the companies under their direct control, and selling them on at a profit. They left MG Rover an empty shell, owning nothing but debts, with some of these owed to their other companies, making them Rover’s main, and in some cases sole, creditor.

            BMW had sold Rover’s car finance firm, MGR Capital, directly to the directors, who set up a joint venture with the HBOS bank to buy a £313 million stock of car loans and leases in 2001 from BMW. According to the Financial Times, the directors are to share in a windfall profit of £6.1 million from MGR Capital when the last monthly payments are made on the loans this year or early next.

            The directors transferred Studley Castle, a 28-bedroom mansion set in 30 acres of Warwickshire countryside, to a Phoenix company, and let it out as a conference centre. That, and the sale of most of the Longbridge property between 2002 and 2004, netted them £75 million. The 403-acre site of the Longbridge plant was sold for a bargain £57 million. The car parts business was sold to Caterpillar Logistics (UK) for £100 million. Their actions even prompted BMW to call the Phoenix four “the unacceptable face of capitalism”.

Statement by the Socialist Equality Party (Britain)
28 April 2005

The events leading up to the Shanghai Automotive Industry Corporation (SAIC) pulling out of the deal to buy MG Rover have demonstrated the full extent to which the British company was unviable and had been gutted by its directors.

            SAIC was keen to acquire Rover technology to enable it to produce cars in its own right. To this end, it paid £67 million to MG Rover in October 2004. According to the Economist, this gave SAIC the intellectual property rights in the Rover 25, the Rover 75 and the Rover 45 models, including the design details of a new model under development, and the right to use the Rover brand in China. SAIC also obtained the production equipment for making the K-series engines.

            But SAIC pulled out when it realised that Rover was in deep financial trouble, despite pressure from Chancellor of the Exchequer, Gordon Brown, when he was in China last February, and Prime Minister Tony Blair, and offers of small-scale aid and sweeteners from the British government.

            By last year, Rover’s losses had reached £250 million. Administrators Pricewaterhouse Coopers (PwC) have made clear that it now has barely any assets left. John Moulton, managing partner of Alchemy, said of the documents circulated by PWC, “It took me two minutes to read it. The prospectus says they can deliver the MG brand, but makes no reference to the Rover name at all. I have never seen anything like this in a company of this size. There just is hardly anything there.”

            There have been allegations that some £500 million of cash and assets are unaccounted for. Questions have also been asked about the pension fund investment strategy, which led to the fund – in surplus when BMW transferred it to Phoenix in 2001 – having a £67 million deficit in 2003.

Rover’s collapse

            When it became clear that Rover would collapse in the run-up to the general election on May 5, the Labour government first responded by seeking to conceal this from the electorate. When this fiction proved impossible to maintain, it sought to minimise the political fallout.

            The documentary record and statements by sources close to SAIC make clear that the government knew for months that there was no possibility of a deal being struck with the Chinese company and had pretended otherwise purely for public consumption.

            In a March 29 letter to the Department of Trade and Industry (DTI), SAIC made clear that it would not take on any financial risk. This effectively meant that it would not buy Rover unless the company had no pension fund deficit and was guaranteed bank finance and unless the government agreed to underwrite its solvency for a number of years.

            A similar message was repeated in letters on April 4 and April 5. A source close to the proceedings was quoted as saying, “It became a case of which part of the word ‘no’ don’t you understand.”

            SAIC would not buy the company because it knew that it was either on the brink of insolvency or was already insolvent. A SAIC company source told Scotland on Sunday that company officials had informed Trade Secretary Patricia Hewitt that they were not interested in a joint venture three months ago: “No company in the world would go into a joint venture with a partner who could be insolvent within weeks.”

            On April 17, the Observer cited another source close to SAIC stating that the company had received a report from accountants Ernst & Young in March concluding that MG Rover was effectively insolvent. “The fact that there was no bank debt connected to the group was ‘sinister,’ said the source.”

            This raises two questions: Firstly, if the Rover directors knew that the sale of assets and the scale of company debts meant that MG Rover was insolvent, they would be guilty of trading illegally.

            Secondly, if that is the case – and SAIC strongly suspected as much when it looked at the books – then the government either must or should have known the same thing.

            But right up to the company’s final hours, the government continued to claim that negotiations with SAIC were ongoing. Ministers were despatched to China, and the DTI even offered £6.5 million to pay Rover’s wages for one week, intimating that more might be forthcoming. Blair himself insisted that a £100 million rescue package be put together in a last-ditch attempt to secure a deal with SAIC, against the advice of civil servants and ministers that this was a wrong strategy and possibly constituted the illegal use of taxpayers’ money.

            Labour’s posturing was echoed by the Transport and General Workers Union (TGWU), which appeared together with the government on platforms insisting that the only hope for MG Rover was to secure the Chinese deal.

            The TGWU was well aware of what had been going on at Rover. As early as November 2003, it had held meetings with management to raise concerns over excessive executive pay, a reported pension’s deficit of £73 million, and reports that a £13 million trust fund had been set up for directors.

            In March 2004, it had called for two independent directors to be appointed to the board, because the group’s directors had shown “morally unacceptable behaviour” in setting aside millions for their pension funds. Amidst allegations of asset stripping, TGWU General Secretary Tony Woodley nevertheless told the BBC that he thought the directors had done “an extremely good job in difficult circumstances” since they took over, despite their recent “bad behaviour”.

            On the ground, the bureaucracy continued to do everything it could to ensure the company closed without any serious protest or opposition that would politically embarrass the government. This was a major concern for the bureaucracy in the run-up to the general election and indeed, for the bourgeoisie itself. A report in the Independent newspaper noted that riot police had been held in reserve, should trouble erupt following the plant’s closure.

            It was only when SAIC publicly and bluntly stated that it was not interested in Rover as a going concern that the government was forced to end its cynical charade.

            The government, continuing to feign indignation and surprise, has sought to deflect criticism from itself onto the Phoenix directors. It has announced an inquiry by the Financial Reporting Review Panel into whether the accounts were prepared properly. Even this limited investigation, which was not set up to deal with allegations of financial irregularities, will not be completed until after the election.

            The death of Rover cannot be attributed merely to bad management or asset stripping. Within a fiercely competitive global marketplace, the company was unviable. The Phoenix directors merely delivered the coup de grace to the company, while the Blair government turned a blind eye.

            While there is as yet nothing to indicate that any of the actions take by Towers and his fellow directors are impermissible under company law, a number of points should be made.

            From the standpoint of capital, the main issue is whether or not what Phoenix did was legal. However, for the working class, this is a secondary, although not insignificant, question. Legal or not, what has taken place at MG Rover is nothing short of the looting by a self-interested bourgeois clique of social assets built up by generations of tax payers and workers. And far from being the “unacceptable face of capitalism”, this is increasingly the real face of capitalism. Such actions go on all the time, in companies far larger than MG Rover, and aided and abetted by legions of well-paid financial and legal advisors. When the chairman of the House of Commons Trade and Industry Select Committee, Peter Beale, accused the Phoenix directors of performing a “financial sleight of hand”, one of the four defended their conduct, saying that it was “a perfectly normal, almost textbook way of running companies”.

            That such behaviour is so widespread is an expression of the degree to which today’s corporate bosses are not only incapable of developing the productive forces, but are not even committed to doing so. The central aim of the bourgeoisie all over the world is their immediate self-enrichment in the form of massive pay packets, share portfolios, pension packages and other remuneration, legal and illegal, even when this is at the expense not only of their own companies, but of the long-term interests of the profit system itself.

            It illustrates graphically that the interests of workers and their employers are diametrically opposed. The role of the trade unions and Labour government has been to conceal this most fundamental issue, and it has been the working class that has paid the price.

The need for an international perspective

            The collapse of MG Rover demonstrates the complete dead end of the labour bureaucracy’s failed nationalist perspective. For decades, the trade unions called on the government to help save the “last British-owned” mass-volume car producer. They put their faith in the ability and willingness of the British corporate bosses, backed up by government and bankers, to run the company in a way that would secure the future of the work force. This has been exposed as a dangerous chimera.

            Yet even now, there is a chorus from various left groups in Britain, who have responded to MG Rover’s closure with demands that it be re-nationalised.

            The Socialist Workers Party (SWP), which heads the Respect-Unity Coalition that is standing candidates in the May 5 general election, said, “The solution to the crisis is simple – Re-nationalise Rover now.” Salma Yaqoob, Respect’s candidate in Birmingham Sparkbrook and Small Heath, said, “Rover only needs to sell 180,000 cars a year to survive and at the moment in sells 110,000. If New Labour had taken control of Rover and made some investment instead of handing it over to the millionaires of the Phoenix Four, these people could still be making cars.”

            The SWP’s “simple” solution is a ridiculous perspective even on its face. After what has taken place in the past five years, there is hardly anything left to nationalise. Moreover, the idea that Blair would re-nationalise anything only spreads illusions in the possibility that the bureaucracy can be forced to the left. But even if it were possible to pressurise Labour to carry out such a measure, this would only leave a tiny company that was unviable on the world market, and which could only be kept going through pumping in millions in taxpayers’ money.

            On the most immediate level, the correct demands to be raised in order to protect MG Rover workers is for full retraining with the provision of guaranteed jobs in related industries on equivalent wages for those who wish to take them, and decent redundancy payments and guaranteed pensions for all others, to be paid for by increasing taxes on the major corporations. The books of MG Rover should be opened to a team of representatives and accountants chosen and trusted by the workforce.

            More importantly, the demand for re-nationalisation is a substitute for a political rebellion against the Labour and trade union bureaucracy and the fight to reorient the workers’ movement so that it can wage an effective struggle against job losses that are on the agenda throughout the auto industry.

            This is made patently clear by the Socialist Party, which is standing a candidate in the Birmingham Northfield constituency and which explicitly ties its demand for nationalisation to efforts to subordinate the working class to the trade unions. It states, “A vote for a Socialist Alternative candidate calling for nationalisation of the site and assets is one way to put pressure on Blair but the trade unions must also act now.” The accounts of Phoenix are also to be opened to “scrutiny by the trade unions” – as if the TGWU and Amicus will defend the interests of the workers.

            The parochialism encouraged by the labour bureaucracy and its apologists conceals the real situation confronting car workers in Britain, whose fate is inextricably bound up with that of their fellow workers overseas.

            Despite the claim that MG Rover’s collapse represents the death of the British car industry, the UK remains one of the major car producers in Europe, with nearly every major car manufacturer having a presence in the country. According to Labour Market Trends, in 2002 more than 210,000 workers were employed in motor manufacturing, producing more than 1.6 million cars and 1.8 million commercial vehicles primarily for globally operating corporations with manufacturing platforms in Britain. On top of this, a further 1.2 million people were employed in the wholesale, retail, sale and repair of motor vehicles.

            The re-nationalisation of MG Rover would do nothing to protect the hundreds of thousands of jobs that are also under threat throughout Britain, let alone those of millions of workers all over the world.

            The situation is grave. Within Britain, the French-owned Peugeot plant at Ryton near Coventry – employing 5,000 workers – has cut back production of its one remaining and ageing model. The world’s car industry has the capacity to build 80 million cars and other light vehicles a year, but is currently producing about 60 million, with most of the spare capacity in North America and Europe. This necessitates cuts and closures on a massive scale.

            In the US, the world’s premier car producer, General Motors, has just announced a record $1 billion loss for the first quarter of the year. While its European division has long been a problem, it blamed poor sales in its North American market, which accounts for 60 percent of its revenues, for going into the red. Credit ratings agencies are on the verge of cutting its credit to junk bond status, which would increase GM’s borrowing costs and possibly even push it over the edge.

            Ford, the US number-two car producer, has been hit by falling demand for its SUVs, its most profitable models. This is already having a knock-on effect, as several of its suppliers have applied for bankruptcy protection.

            The same situation is repeated in country after country, and the working class will not be able to defend itself as long as the trade union bureaucracy ensures that only the corporations have the ability to operate on a global scale. Workers must break from the straitjacket of the old nationally based trade union forms of struggle and begin to organise itself as an international class. The essential prerequisite for this is the construction of a socialist and internationalist party – represented in Britain by the Socialist Equality Party.

Socialist Party national spokesperson Dave Nellist on April 29 condemned the treatment of Rover workers since the announcement of their mass redundancy.

            Dave Nellist, who is a Socialist Party councillor in Coventry, said:

            "Former Rover employees have had insult added to injury. The news this week that car purchase loans the workers had taken out would have to be paid back in full because of the collapse of the company, and that nursery places they had paid for in advance were to be closed down, will further fuel anger against the administrators and Government.

            "An outcry has forced the government to put in emergency funds to keep the nursery open. This is no less than the workers deserve – but it’s only for a month. But the Government’s proposed new deals over the car purchase, unfortunately welcomed by union leaders like Tony Woodley, are absolutely shameful.

            "Rover employees have been told that rather than pay back their purchase loans in full they can pay them back on ‘more favourable’ terms or hand the cars back without facing claims for the balance of the loans.

            "Depending on the exact nature of their agreements, they may have been abe to hand the cars back anyway – owing nothing if they had paid half the agreement. So it’s hardly a generous offer by the administrators.

            "Given the pitiful redundancy payments the workers will get the least they should be getting is these cars for free and free childcare while they try and sort out their life.

"If the union leaders, like Tony Woodley, had taken up the demand of Socialist Party election candidates for the workers to occupy the plant and campaign for renationalisation of Rover, they would have forced a damn site more out of the government than these miserable offerings."

Text of the motion submitted by Cllr Nellist to the full meeting of Coventry council on April 19.

            "This Council: notes with dismay the level of job losses in the region's car industry in recent months including major redundancies or threatened redundancies at Jaguar, Peugeot and Rover, together with a number of smaller companies and those who are suppliers to those named; gives 100% support to those workers wishing to oppose redundancies and calls for the trade unions to develop an urgent regional and national campaign in support of manufacturing jobs; believes that the trades unions should be given immediate access to the books of Jaguar, Peugeot and Rover to see how subsidies, profits and internal transfers have affected the financial health of those businesses, and that with many thousands of jobs affected there should be no excuse of "business secrecy" hiding the facts from those most closely involved; demands an urgent investigation into the role of Rover's directors and their five-year control of the company, and an end to asset stripping or movement of production facilities without the agreement of all plants concerned; and resolves that since hundreds of millions of pounds of public money would have to come into this region to deal with the consequences of the collapse of Rover, that such public money should be invested now to retain Rover jobs, on condition that the ownership of Rover be now transferred back to the public sector and a plan drawn up, in conjunction with Rover workers themselves, for that public investment, under democratic public control, to produce a new product range that will better address the real transport needs of the whole of society."

New Worker Editorial 15/4/2005

It’s not all over at MG Rover but it soon will be unless the government takes decisive action to guarantee continued production at Longbridge. The unions are focusing the workers’ demands on trying to revive bail-out deal talks with the Chinese Shanghai Automotive Industry Corporation (SAIC) while protesting at the pitiful levels of redundancy payments currently on the table.

            Rover was losing between £20 to £25 million a month before it crashed last week. The Chinese rescue plan, which would have given SAIC 75 per cent of the holding in return for investments that would shift some production to People’s China and enable Rover to develop badly needed new models in Britain, now looks as dead as the dodo.

            A massive injection of public money to underwrite the ailing motor works could make it more attractive to SAIC, the Chinese publicly-owned motor manufacturing giant, which pulled out of  the deal when it realised that it might have pick up the £400 million bill to cover MG Rover’s pension fund liabilities. But the chances of reviving the talks with SAIC are slim now that Rover’s gone into administration, a form of bankruptcy.

            Though the unions are right to concentrate on immediate demands that might save the livelihoods of over 6,000 Midlands workers and a further 20,000 employed by Rover’s suppliers the only solution that can guarantee continued employment at the Longbridge plant is nationalisation. This is what the Labour government did in 1975 when it effectively nationalised the old British Leyland Motor Corporation to stave off bankruptcy.

            British Leyland was once a manufacturing giant owning nearly 40 manufacturing plants across the country. The process of asset-stripping and sell-out began when it was still under state-control and continued after BL was privatised by the Tories in 1988. But everyone who owned Leyland’s, down to the rump MG Rover company which is its direct successor, made fortunes except for the workers who built all the cars.

            The vultures who bought the MG Rover Group for £10 five years ago, in another “rescue” operation, milked it for around £160 million to cover their own pay and pension contributions. While there’s pressure to get them to disgorge some of their loot to help the company’s creditors, this is little comfort to the workers who have been told that the most they can expect from redundancy is £280 for each year of service up to a maximum of 12 years.

            The capitalists and their “New Labour” apologists claim that private enterprise is for the good of the country and the workers. MG Rover proves that all capitalism is good for is the capitalists themselves. They make their millions out of the labour of others and the workers just get their weekly wage to make a living and leave the factory no better off than when they first clocked in.

            Britain’s manufacturing base can only survive through massive re-investment but the capitalist class as a whole see no purpose in diverting their fortunes into this arena when there are much richer pickings to be made through speculation and overseas investment.

            Nationalising MG Rover would safeguard production and enable a new public company to resume joint-venture talks with Shanghai Automotive on a realistic basis. But nationalising the plant by itself would not solve the long-term problems of the British manufacturing. Only the nationalisation of the entire motor industry and the entire manufacturing base, including the high-tech aerospace industry can secure a future for the workers.

            The restoration of the old public sector as it existed in 1979, including the entire telecom industry would provide millions for the modernisation of our factories, the restoration of the National Health Service and the provision of a decent standard of living for every worker in a country that we are constantly told is the fourth richest in the world.

 

Save MG Rover Jobs – 08/04/2005

"If the French and Italian governments can subsidise their car industries to keep jobs – why can't the British government act to save the largest remaining car manufacturer in Britain?

            "The company was not even asking for a handout to save MG Rover – simply a £100 million loan. It is a disgrace that the government even hesitated over this.

            "Rover workers and their families deserve better.

            "The loss of 6,000 manufacturing jobs at MG Rover and a further 25,000 in related industries will have a devastating impact throughout Birmingham and the West Midlands.

            "Tony Blair's ministers were calling in the receivers even before the company knew about it.

            "If New Labour can spend £6 billion to wage war on Iraq why can't they spend a fraction of that to save jobs in Birmingham?

            "I support the call of Birmingham's top historian, Carl Chinn, and the Evening Mail to launch an immediate campaign to save car production at Longbridge."

·        Salma Yaqoob, Respect candidate Sparkbrook and Small Heath constituency

 

"I started at Longbridge in 1990. Then there were about 13,000 workers. Today there are about 6,000.

            "When BMW announced that they wanted to sell Rover in 2000 there was a huge demonstration. It wasn't just car workers who were angry – everyone knew someone who worked at Longbridge, or at one of the companies that supplied Rover.

            "We said that they should nationalise the car industry. But Labour won't do it. They don't want responsibility for anything. It's the same with housing and the NHS. Why do we have these elected people? What are they responsible for if everything is privatised?

            "It doesn't matter who we vote for, nothing changes. But we have got Respect in Birmingham. It's in its infant stage. In time we'll be standing up strong.

            "Huge profits were made out of Longbridge when it was sold off to Phoenix – a consortium led by John Towers. Since then there has been a slow process of asset stripping. Towers bought the place for £10, but he has made millions. There have been lots of redundancies – they've halved the workforce.

            "Brown has just been over to China discussing the future of the plant. Our union leader Tony Woodley says it's a good deal, but I hear the other side of it. What about all the local suppliers? Will they move to China? Lots of jobs may go. I think we'll lose either way.

            "I think people will get really angry if we find they've lied to us. I think people will want to wreck the place, because we've been loyal. If they run off with a big packet of money and we're left with no jobs, we'll get organised and do something."

·        Longbridge worker Kevin Flanagan

 

***************

 

Respect Responds to Rover Closure – 15/04/2005

Responding to the announcement of the closure of Rover Salma Yaqoob, Respect candidate in Birmingham Sparkbrook and Small Heath, said “New Labour should stop boasting about the economy and step in and save these workers from being thrown onto the dole.

            “Rover only needs to sell 180,000 cars a year to survive and at the moment in sells 110,000. If New Labour had taken control of Rover and made some investment instead of handing it over to the millionaires of the Phoenix Four these people could still be making cars.”

by Ron Dorman

Government can save Longbridge plant and re-employ ex-Rover workers using their skills (where there is a will there is a way) or workers can accept EU handouts for “re-training” (for what?) after the EU obstructed saving the Longbridge plant when it had the chance.

            The answer is public ownership where the workers employed at the plant run it and will have a stake in its success. The EU may object but people’s jobs and livelihoods are more important than EU rules.

            The vehicle building industry is very competitive but essential to our economy. There is also the need to use more energy efficient engines and environmentally friendly fuels for vehicles. But vehicle building is not a clapped industry and we need a British-owned vehicle plant!

            Britain can be in the forefront of vehicle building development at Longbridge if capital is invested in it and workforce skills fully utilised. Condemning them to EU “training” for cheap labour jobs is not an option.

            British manufacturing jobs are disappearing at a rate of 10,000 jobs per month, a “luxury” Britain cannot afford. The TGWU, Amicus and GMB are right to say manufacturing must be defended. We must start right now with Longbridge. The Chinese state company would not have considered buying the plant if it was making products that did not sell – it was other factors that killed a deal.

            As the Labour government was not opposed to a Chinese state deal let our British state take it over for the benefit of Britain.

            The Labour Party wants to win the general election to govern Britain; let them do just that – in our interests.

WORKERS' WEEKLY Vol. 28, No. 32, November 21, 1998

AS WE GO TO PRESS, all reports are pointing to the management and unions at the Rover Longbridge plant being about to sign a deal which will keep the plant open, but at a severe cost to the workers. It is being indicated that it is likely that 2,500 workers will lose their jobs on top of the 1,500 job cuts and a four-day production week that the workers have already been forced to accept. Further "radical" new "flexible working practices" are likely to be imposed with possible big wage cuts for those workers remaining. In other BMW plants in Europe, instead of workers being paid overtime, extra hours worked during busy periods are added to leave entitlements to be taken during "slack" production times. This is what is termed as "radical" and which is on the table for Rover's 39,000 workforce.

            Such is the uncertainty and fear for the future, that workers are said to be "queuing to quit". The scare has been created among the workers and in the community by the BMW monopoly that Longbridge, which employs 14,000 workers, would completely close down, with devastating effect in human terms and to the West Midlands economy. Trade and Industry Secretary Peter Mandelson has been talking about "rapid response" units for "alternative employment" for regions hit by factory closures. The same thing was said about Leyland DAF. But this "alternative employment" somehow never materialised, and no one can see how it can materialise now. Therefore, with this threat hanging over the workers' heads, any deal which keeps the plant open, no matter how draconian in terms of the burden and stress on the workers, is being painted as being a "victory". Furthermore, the government and TUC leaders are waging an insistent ideological offensive against the workers, that to make business successful in the global market, workers and unions must work in "social partnership" with the management and the monopolies and abandon their own rights and interests. So, for example, in this vein a Rover management briefing lays out: "Against a hostile competitive environment we are continuing to press for a significant contribution to cost reductions to be realised in 1999." However, the fact that the announcement that a deal has been struck has been delayed signifies that workers are not prepared to accept such a scenario without opposition, and that more arm-twisting is necessary to hammer out an agreement in this one-sided "partnership".

            How much more are the workers supposed to accept to keep this "partnership" going? It is already shocking that so many are forced to keep at work at Longbridge, for example, when suffering from injuries sustained during work. Health and safety under these conditions of stepping up competitiveness is hardly on the agenda. The Rover management shows no concern for workers who are sick and injured. They even check up on them in their own homes! At the same time, workers are sacked on the slightest pretext such as falling asleep on the night shift or leaving work a few minutes early, no matter what the problems the workers are faced with. Workers are moved around to one shift after another in the drive for "flexibility".

            And what stand does the Labour government take? Peter Mandelson is already on record as saying that the Rover workforce will have to redouble its efforts, on top of what has already been done, to increase productivity and make efficiency moves. Chancellor Gordon Brown has also said that there is absolutely no doubt that productivity is an issue. In other words, the intensification of exploitation and the squeezing of wages to increase profits is the order of the day. If productivity is the issue, say the BMW monopoly in response, the government must give us grants for modernisation. Hand us over £200-£450 million from the state treasury for new investment, despite the fact that we have just made a £130 million profit.

            The workers cannot accept that it is the drive for maximum profits of the monopolies which must take precedence over every other consideration, including the well-being of the workers and the general interests of society. At the same time, if the workers were to solely rely on their militancy with no alternative programme of their own to lead society out of the crisis, what can their fight achieve?

            The cut-backs at Longbridge are part of the anti-social offensive being waged against the working class and people in the name of being competitive in the global marketplace. The Labour Party is extremely sympathetic to the plight of the monopolies faced with falling rates of profit, and will give no public guarantees to workers or other sections of society in this situation. Everyone must fend for themselves in this "bracing" situation of cut-throat competitiveness as global recession bites and bites. The Labour Party has rejected everything "socialist" and will do everything to out-Thatcher Thatcher. This it regards as "ethical" or "prudent", or even "sexy". In this situation, they will also seek to pit worker against worker, and render them passive and fatalistic, saying that the recession is beyond their control, but all must follow the Third Way and embrace "change" for the benefit of the rich. In this situation, how much longer can the TUC leaders continue to push for "partnership" on the one hand or the workers be exhorted simply to be "militant" on the other?

            The crucial thing in this situation is that the workers must fight for and elaborate their own independent politics and programme, which points the way forward out of the crisis. Their starting point is that they have rights which must be recognised and guaranteed by society, and that it is their claims and the general interests of society that must take precedence over the claims of the monopolies and the rich that they must make their maximum profits and that the total resources of society be put at the disposal of this aim, and the rights of the workers and the well-being of society can go to hell. With the perspective that the direction and motive of the economy must be changed, the workers can go into battle in defence of their rights and interests and to defeat the anti-social offensive. It does not help the workers one bit to keep on singing dirges to how bad things are becoming under capitalism, full stop. Nor to create illusions that the issue is for Labour to change its ways. In their struggles, the workers themselves must be drawn into elaborating the programme which leads the way out of the crisis, this independent programme of the working class which will open the door to the new society, which will give rise to socialism.

            Workers' Weekly stands firmly on the side of the workers at Longbridge. It is fervently of the belief that the development of the workers' movement against the anti-social offensive and for a pro-social programme will provide the way forward for society out of the crisis. We will do everything we can to assist in providing the consciousness and organisation necessary for the victory of that movement.

Birmingham Branch, RCPB(ML)

WORKERS' WEEKLY Vol. 29, No. 4, February 6, 1999

IT IS reported that the future of Longbridge, the Rover car plant in Birmingham, is once more in the balance. Speculation is mounting that Bernd Pischetsrieder is to be sacked as chief executive of BMW, Rover’s parent. This comes only weeks after a deal was concluded between national union leaders and the Rover management that was hailed as delivering Rover workers from “fear of the future” and involved 2,500 workers losing their jobs.

            In the face of yet another pending attack on the Rover workers, when the ink is hardly dry on the last agreement, the trade union leadership has come up with a response like “Rover must come clean with its workers”. The workers already have bitter experience of what Rover is up to and the indicators are that with the news of recent days about the sacking of Bernd Pischetsrieder, that more redundancies are in the pipeline. Indeed closure of one or more of the Rover plants in the Midlands is not an impossibility. It is reported that major shareholders and management of BMW are not happy with the “ill-judged” £800 million buy out of the Rover Group and that “structural problems” have to be tackled within the company. (Birmingham Post - Business Section, 4 Feb, 1999).

            All this indicates that whether Rover “comes clean” or not the future is not very bright for the workforce and their families. At Rover Longbridge, they have already lost 2500 jobs and been forced to accept “flexible” working practices. In reality this means that the workers are at the beck and call of the owners to work when production is high, be laid off when it is low and to bank these layoff hours to be called in again when demand for cars increases. All holiday bonuses and overtime pay have been stopped, effectively cutting the wages of the workers. This working arrangement plays havoc with the family life of the workers and to quote a Longbridge worker “you can’t pay the bills with banked hours”.

            There can and there never will be guarantees for workers under the present system. The last deal was sold to them as “the only way forward” to secure jobs for the future and save the company. Well if by the “way forward” they meant more redundancies and exploitation then they were telling the truth! The point is, what do workers do when faced with this situation? All the past methods of struggle of strikes, negotiations, no matter how praiseworthy and how militantly they were carried out have never lead to a situation where workers have a cast iron guarantee that their interests will never be compromised in the pursuit of ever increasing profits. The interests of workers and capitalist owners are diametrically opposed and cannot be accommodated within a system where the means of production is social but the ownership of the wealth of that production is private. These contradictions are going to become sharper as the crisis of over production and competition between the major car companies intensifies.

            Workers have to realise that they cannot expect their demands for a livelihood, for a secure future free of economic exploitation to be delivered by the present economic system no matter how militantly they ask for it. The only interest of the present economy is to pay the rich by furnishing them with the vast profits from the sale of goods produced by the workers. If those profits are ever threatened then it is the workers that pay the price and bear the brunt of the crisis with unemployment and increasing impoverishment. In these circumstances the way forward for the workers is to organise themselves on a new basis, to articulate what sort of society it is that they want and to realise that it is their right to demand this. In short they have to take up their own independent pro-social programme to defeat the attacks being made on them and to lead society out of crisis.

WORKERS' WEEKLY Vol. 29, No. 5, February 13, 1999

ON FEBRUARY 5, the BMW Board sacked the Chairman Bernard Pischetsrieder and his deputy Wolfgang Reitzie over the handling of Rover. The new Board of BMW, chaired by Joachim Milberg, has given itself a fortnight to decide on the future of its British subsidiary Rover with increasing speculation that they will close Rover’s Longbridge plant in Birmingham.

            Only a few weeks previously BMW had signed a deal with the unions that was heralded as proving that “partnership is now the central focus of British industrial relations”. The deal was to keep the plant open but with the loss of 2,500 jobs, a demand from BMW that the government provide around £200 million in aid to investment, and the introduction of further “flexibility” which involves the loss of paid overtime and the introduction of a “banked hours” system. Now, having imposed this deal on the workers using the threat that only such a deal would “secure” the future of Longbridge and by causing contradictions with workers either not at the threatened plant or who were opposed to the deal, the BMW Board has torn up its part of this deal and is unilaterally to decide the future of Rover and whether to close Longbridge. In response to this situation unions at the plant are demanding a guarantee about the long-term future of the plant and are calling on BMW to “honour” the agreement.

            The issue that confronts the workers is how they should view the exposure of this “partnership” agreement and take steps to transform the situation. Of course, BMW should honour its commitment to the future of production at Longbridge. But there can be no illusions that they will tear up any deal if it suits them – any deal whatsoever, however many concessions the workers are forced to make. And if not in two weeks time, it will tear it up in the future, whether the government intervenes and hands over £200 million or not. So for example, in imposing this agreement under New Labour’s heralded “social partnership” just a few weeks ago, BMW tore up the previous “Landmark New Deal” imposed in 1992 by Rover under the Conservatives which was supposed to secure the future of Longbridge and secure “jobs for life” and this agreement itself was imposed by tearing up another agreement beforehand and so on. So, the workers know to their cost that such deals are not made in their interest and give them no guarantee whatsoever that their livelihoods will be secure or guaranteed.

            In this situation, workers themselves must come to terms with the reality. This reality shows that they can have no illusions that those in power have a shred of responsibility not only for their livelihoods but for the interests of society as a whole. The cost to the economy of the West Midlands is being raised. Very well. But should not the workers also raise the cost to society if the situation is allowed to continue where people’s elementary claims on society count as nothing?

            In this “partnership” which the government is overseeing, decisions are not taken by the people who live and work in the economy and in whose interests the economy should be run. Such decisions are taken in the boardrooms of increasingly larger and larger multinationals whose interests are not the interest of the workers, nor the interest of the national economies of the countries in which they operate, nor the interest of society. Their only interest is to counter the falling rate of profit at the expense of any other consideration and on behalf of the financial oligarchy they represent and to use their power to rob the state treasuries of countries in which they operate in pursuit of this aim. So how is the £200 million subsidy from the government who have suddenly become “concerned” going to change anything, going to deal with these problems when the interests of society demand that the economy is planned to meet the needs of the people.

            The reality is that it is the working class that has the answer to these problems. The outlook of the workers must become one of confronting these conditions that are bringing such disasters all over the country. It is the workers recognising that it is not only in their interest but in the interest of society that the working class should take the lead. Taking the lead means the workers themselves becoming political and not relying on MPs to do something, or entrusting this task to anyone else. It means not becoming overwhelmed or fazed by the intensity and scope of these plans of the monopoly companies and of government to extract more and more from the workers such as is happening with the Rover workers at Longbridge. Taking a lead means workers in ever increasing numbers taking a political stand and fighting with the perspective that the direction of the economy should be changed so that the economy meets the needs and serves the interests of the people. Also, it means opposing the economy being used to serve the interests of the monopolies and paying the rich. It means that it is the people that should be empowered in the political process so as to take the decisions on how their factories and communities and the national economy and society are run and where the rights of all the people are guaranteed and inviolable. What is required is the emergence of such worker politicians whose primary concern is that the working class can lead society out of the crisis and create new arrangements to unite the working class around its own independent programme that will provide such a way out of the crisis.

WORKERS' WEEKLY Vol. 29, No. 6, February 20, 1999

ONE OF THE MOST IMPORTANT political questions facing Rover workers at Longbridge is how they have been urged by union leaders and others to follow the “Third Way” of Tony Blair which calls on workers to stake their future in the “social partnership” between government, employers and unions to make their company BMW/Rover “successful in the global market”. But the hard reality of what is happening to the workers at Rover’s Longbridge plant is revealing that such a path as the “Third Way” and “social partnership” is a dangerous illusion that is pushed by the government. Put another way, the “Third Way” is in reality part of the ideological offensive in the present conditions of crisis and globalisation to justify the unjustifiable to the workers.

            This reality shows that there is no such thing as Tony Blair’s “Third Way” and “social partnership” either with BMW, or with a government that represents the interests of these monopolies, or with the financial oligarchy who own them and that the union leaders cannot deliver what they claim. For this reason, when this “social partnership” deal became exposed, with BMW clearly ignoring even this deal and any concern over the fate of the British car industry in favour of maximising its profits, the government was forced to step in and express its “concern” and try and desperately salvage its “Third Way” ideology at Longbridge. It has been trying to do this by claiming that the balance of such a deal can be brought back in favour of the workers and this is what is behind the lightning visit by Stephen Byers, the Trade and Industry Minister, to Longbridge itself and Tony Blair’s unprecedented U-turn on the question of providing government aid to any proposed investment by BMW in Longbridge which clearly breaks the government’s previously held Thatcherite stand not to intervene in “bailing out” manufacturing industry.

            For such a large and key section of the workers to draw the necessary conclusions as to the whole plan of New Labour to divert the working class with its “Third Way” and “social partnership” would be a significant step for the whole working class movement and a major blow for New Labour’s plan to divert the working class along this path. It would open new possibilities for the workers to confront the reality they are faced with and put forward their own solutions to the crisis in the car industry, the economy and society.

            The issue that confronts the Rover workers is that there is an alternative way and that this is the way of the working class leading society out of the crisis. It is the way of the workers demanding that society stop paying tribute to the financial oligarchy and that society and production are geared to meet the needs of the people. The workers elaborating their own programme and their own ideology is key to defeating this ideological offensive of New Labour backed up by the trade union leaders and others that there is a “Third Way”, which is such a roadblock to the workers in fighting to defend their interests and the interests of society.