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May 02, 2005

The Real Reason Rover Failed.

Excellent and highly readable report on the real reason Rover failed. 20 pages of large print, takes 10 minutes to skim, but builds a convincing case that the company has been a dead man walking since BMW sold it, almost certainly doomed since BAe refused the Honda deal and sold it to BMW and traces the underlying problems back to the management of the 50s and 60s.

Surprisingly perhaps, union problems aren’t counted as the major cause, only as far as they prevented the full integration of the companies that made up BMC and then British Leyland, and management is as much at fault there.

May 2, 2005 in Business | Permalink


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Tracked on May 2, 2005 8:38:43 PM


Yes, but they overlook a vital truth: for decades in Britain the workforce selected the management and so the lousy management of Rover/BMC/Leyland should indeed be blamed, in large part, on the unions. What I mean is this: if you grew up in the 50s and 60s, what you learnt about the car industry, and Rover in particular, was that the labour force were an odious bunch of crooks, duds and layabouts whose elected leaders appeared on the wireless from time to time to tell lugubrious lies about their latest strikes. You would then think to yourself that "I might be going to do a degree on Physics or Engineering, but I am under no circs going to work afterwards in that bloody place." And nor did you; and so the new graduates that the firm hired came disproportionately from the sort of chumps who ignored that evidence. So, by repelling the best, the unions ensured that the firm hired the worst. And so the company sank. It's a wonder that it took so long.

Posted by: dearieme | May 2, 2005 5:51:27 PM

Had a friend in College who's dad owned Peninsula British Cars in Palo Alto, which ran for more than 20 years beginning in the early/mid 60's - it closed about 20-years ago. Bob said that in dealing with repair parts they had to send stuff back ALL the time, EACH and EVERY time, because parts were out-of-spec and non-functional. Manifold blot-holes didn't line-up and wiring connectors with the wrong number of wires - things just didn't fit. And then the same part would come back to them again - the Unions had decreed that it was within tolerance and they wouldn't accept the turn-back. They had such a long go-around over each and every damn part, the repair process lasted months instead of weeks and eventually drove him out of business. He (the dad) died a few years ago.

Posted by: -keith in mtn. view | May 2, 2005 8:34:15 PM

I recall a couple of excellent book on the issue of conflict and consensus in british industrial relations... beynon's 'working for ford' is a gritty account of the realities of a ford production line in the 60s, written from a perspective of the workers, while (alan ? ) fox wrote an excellent book in the early 70s on the notion of 'high trust' and 'low trust' equilibria in industrial relations, and why the uk had the low trust kind.

I think the reality is certainly that the uk suffered from lousy management, but clearly the structure of trade unionism mattered too. The fragmented and sectarian nature of british unions and persistent rent seeking contrasts sharply with the more centralised continental systems, it can be argued that capital and organised labour struck largely macroeconomic wage bargains that helped reduce sectarian wage bargaining, lowered the tendency to inflation and underpinned trainings systems.

(see marsden's 'the end of economic man' on the structure of occupational labour markets and training issues, and carlin and soskice's 'macroeconomics and the wage bargain' for examples of these arguments)

the problem now perhaps is that the political residue of these centralised systems - which were successful at the time - is a structure of vested interests that makes labour market reform difficult in some places where it is clearly necessary (germany for starters).

Posted by: rjw | May 2, 2005 11:48:51 PM