Letter: Japanese car assembly plants threaten UK industry

Sir: Your leading article 'No profit in Japan-bashing' (15 March) referred to the comments I made to the House of Commons Select Committee on Employment. In my evidence, I readily acknowledged the benefits that Nissan and other Japanese manufacturers are bringing to this country. No one questions the contribution they will make to UK exports and they are establishing productivity levels that set an example to domestic industry, both in the automotive sector and elsewhere.

In responding to questions from members of the committee, I did also express concern over the implications of Japanese transplants for the UK skills and technology base on which so much of our industrial future depends. Since you compare the relative contributions of Ford and Japanese companies, I should remind you that Ford is now the only automotive company with major research and engineering facilities left in the UK. We employ about 4,000 engineers and spend on average pounds 250m each year in Britain on the design and development of vehicles. By contrast, the Japanese do all their important research and development work in Japan and use the UK as an assembly base.

You suggest that Japanese car manufacturers in Britain 'buy as many components locally as their longer established competitors'. This is not the case. In 1991 Ford spent around pounds 2.7bn with suppliers in the UK, more than twice what all the Japanese car manufacturers together will spend by the mid- 1990s. But here again the issue is not just the level of purchasing. Manufacturers now work in partnership with suppliers in the engineering and development of components and here again the UK loses out if the skilled work is carried out in Japan.

You also argue that restraints on Japanese car sales in the EC have postponed 'the much-needed restructuring of the European car industry'. In Ford's case, productivity has dramatically improved since the early 1980s and we have maintained investment in our British operations at about pounds 700m a year. Through co-operation with the trade unions, we are closing the gap with the best Continental plants and our intention is to match Japanese performance later in the decade.

To express such views in a constructive sense is not 'Japan-bashing'. We value the associations we have with a number of Japanese manufacturers, but it is right to raise fundamental questions about the implications for UK technology if the excess capacity created by the Japanese undermines established companies and the demand for technical skills and training.

The threat to manufacturers that undertake high, value-added engineering work in this country puts in peril Britain's long-term industrial capability. It would be tragic for the UK to become simply a place where robots in assembly plants bolt together kits of components designed and engineered in the Far East. The Japanese could make an even more significant contribution if they were to transfer more of their high- wage, high value-added research, design and engineering work to Europe.

Yours faithfully,

IAN McALLISTER

Chairman and Managing Director

Ford Motor Company

Brentwood, Essex

17 March