Swindon engine plant
The Government has approved BL’s corporate plan which involved further collaboration between Austin Rover and Honda, the development of a new engine to replace the “A” series, and the possibility of Honda building engines for BL at a new factory in Swindon, Mr Norman Tebbit, secretary of State for Trade and Industry, told the Commons in a statement.
During the exchanges, he added that it was important to encourage construction of the factory at Swindon. It would be difficult to see the way in which the requisite levels of UK content could be reached in the Honda-badged cars without building the engines in the UK. It was perhaps possible but it would be difficult. BL s capital requirements would be satisfied from its internal generation of cash and its borrowings.
In his statement, Mr Tebbit said: “The company submitted its corporate plan in December 1984, at the end of a year in which BL’s recovery had been slowed by continuing over-capacity and highly competitive conditions in most of BL’s markets. There has however been a significant improvement in performance in the first part of this year.
In March, the company put to us outline proposals for further collaboration between Austin Rover and the Honda Motor Company, extending the successful collaboration on the Acclaim, Rover 200 series and XX executive car project. The central element was a joint design and development programme on a further new car, embodying the best technology of both companies. It was also proposed that ARG would manufacture in the UK the Honda version of the new vehicle and Honda would manufacture in Japan for ARG. BL would also manufacture other Honda models for European sale.
Honda also said it was considering setting up its own engine manufacturing plant in Swindon to supply engines for these Honda vehicles and the Rover 213 which currently uses an imported engine. The Government welcomed these negotiations and has given its. approval in principle to these proposals which, now also agreed in principle between Honda and BL, provide for collaboration on the new model, the manufacture of certain other cars for Honda by BL and Honda’s further consideration of the engine factory at Swindon.
The Government undertook with the company an examination of both the basic corporate plan and possible variants. In the light of this, the Government has given approval to the plan as amended by BL to incorporate the substance of the collaborative proposals. One of the BL Board’s objectives is to return the business to the private sector as soon as practical. Further steps towards this objective are under consideration and I will keep the House informed of progress.”
Mr John Smith, chief Opposition spokesman on trade and industry, said the statement was full of ambiguity. There was some deliberate fudging of crucial issues. Is the Austin Rover group to develop its own British designed and manufactured engine to replace the “‘A” series engine?
Is the Austin Rover group or Honda to supply the engine for the jointly developed car?
Can we be assured that Britain will maintain, through the Austin Rover group, its own major British owned engine design and manufacturing capability?
Will the assembly of cars at Longbridge be counted against the Japanese voluntary restraint as Mr Tebbit assured us would be the case with production at Nissan?
Was one of the variants of the plan the idea emanating from the Prime Minister’s own policy-unit to buy engines from Honda?
Why does Mrs Thatcher have such little faith in British technology?
Can Mr Tebbit tell us specifcally about Honda’s plans at Swindon?
Are they to be confined to engne production for Honda vehicles or is it their intention to enter into full scale Honda manufacture?
Mr Tebbit said there was no fudging of the issues. BL was to develop an engine to replace the A series engine.
“I understand the cars produced in Britain (he went on) will have British-produced engines. The cars which are produced overseas will have Honda-produced engines. The engine plant at Swindon which is under consideration is to produce engines for the Honda badged cars and the Rover 213.
Mr Smith asked whether the Honda-badged cars produced in Britain would count against the industry’s informally agreed quota on Japanese cars on the British market. The answer is “No” because the aim is to achieve a level of British content which will qualify them as European cars and will qualify them to be sold in the EEC.
He asked about variants of the plan and referred to the influence of No 10. Mr Smith should not believe all he reads in the papers. If he really bases his questions upon speculative stories in the press he can expect to be told firmly that he must do his homework better and listen to the answers he gets.”
Mr Jeff Rooker ( Birmingham, Perry Bar, Lab) asked if the Government had given BL the necessary financial guarantees the company had asked for. The answer would reassure several hundred thousand people in the West Midlands. It was nearly 10 years since Mr Tebbit and colleagues voted against the public saving of the old BL.
Mr Tebbit said that 10 years ago another mistake was made towards creating a near disaster in BL’s affairs; hence the vote against the ill- conceived Government measure then. Between 1974 and 1979 imports increased by 28.4 per cent, but between 1979 and 1984 the tide had. been stemmed and the increase had been only 1.2 per cent.
Labour’s record had been disgraceful. The Government is not (he said) making available financial resources to BL. BL’s capital requirements will be satisfied from its internal generation of cash and from its borrowings. There is no change on guarantees. There have been discussions about BL’s borrowings as in earlier years. We reached agreement with BL on their likely future pattern and also on the treatment of receipts from privatization, and the Government will carefully monitor all aspects of BL’s performance, including its financial performances and borrowings.
If it became clear that BL had any need or fear that it was going to deviate from the agreed pattern, the company would talk to the Government. Mr Tebbit said later that the people in Unipart were enthusiastic about a return to the private sector, and he hoped it would be accomplished, market conditions permitting, this year.
Mr Robin Corbett (Birmingham, Erdington, Lab): Before there is any question of privatisation, the millions of pounds invested by the taxpayer should be returned to the taxpayer and not go into private pockets.
Mr Tebbit: Sadly, very many thousands of those millions of pounds have been simply lost due to the very unwise way in which the previous government supported the Ryder plan, and very many millions were lost by fruitless, stupid, anarchic industrial disputes in the company.