By Dr Steven McCabe from Birmingham City Business School

Today’s unemployment figures give us all cause for concern and there is certainly little to be currently optimistic about.

For those of us who have been around for a while and can remember the 1970s we know that even in the bleakest of times there is always hope of change.
The trouble is, there is a great deal to fear.

Our economy is ‘flat-lining’ and the historically low period of phenomenally low interest rates has simply kept things from getting worse.

We can only hope that events in Greece do not lead to another spectacular crisis of finance which will impact on all of us and, of course, make recovery even harder.

So, what can realistically be done to create the success our economy desperately needs to achieve an export-led recovery?

Surprisingly we can look for inspiration to a sector once written off as displaying all of the characteristics that seemed to epitomise everything that was wrong with British industry.

Once again we are back to the 1970s when car manufacturing, or the frequent lack of, regularly made the news headlines.

British car manufacturing has a rich tradition. When I was a child in the 1970s every household in Birmingham knew or was related to someone who worked at factories making components or in the huge assembly plants such as at the Austin plant in Longbridge where my dad worked in the foundry.

For many of my class mates working in the car industry was a reasonable, if somewhat unexciting, prospect. Sadly, though, it was not a sector that inspired pride.

Indeed, for a great many it generated feelings of contempt at what many saw as the worst of industrial relations. For others it was like witnessing the protracted illness of a once-loved relative.

Longbridge was symbolic of just how bad things had become; lack of investment made the factory look archaic and the ability of management and workers to see eye-to-eye was, at best, difficult because of shop stewards whose objective seemed to be anarchy. Longbridge seemed to be a factory that was literally ‘out of control’.

As history was to demonstrate, despite the valiant efforts of workers and some management (but certainly not the “Phoenix Four”), it was not possible to ensure that mass car production could continue at Longbridge.

Nonetheless, there was a recognition that if you wish to remain successful as a car producer you need to learn what the Japanese had shown was possible; that you can make cars which customers perceive to have ‘quality’ and will perform to extremely high standards.

Everyone who has studied Japanese production learned that they place great importance on constant innovation and development, obsession with quality control and, crucially, the value of putting people at the heart of the production system.

Every student who learns the history of how Japanese car producers achieved pre-eminence will discover the irony that these principles were taught by two American statisticians who went there to assist in post-war development of industry Dr. W. Edwards Deming and Dr. Joseph Juran.

The title of this blog is in homage to Deming whose seminal book Out of the Crisis, published in 1982, stressed the need for America industry to learn what he had taught the Japanese thirty five years earlier.

The fact that domestic car sales are declining is no surprise. The current climate makes us fearful of what the immediate future holds. However, other economies are doing much better.

The ‘BRIC’ economies are well known (Brazil, Russia, India and China). More recently there is the emergence of what are referred to as the ‘CIVETS’ (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa). These provide opportunities for those manufacturers able to produce goods, such as cars, which are seen to be high value and data shows that this is the case for large volume producers and the luxury marques such as Bentley and Jaguar.

It is notable that all top five car producers in Britain have ownership outside of this country; BMW (who produce the Mini in Cowley), Land Rover, Honda, Nissan and Toyota.

Significantly the owners of these companies, as well as the other smaller luxury produces, explicitly recognise that whilst they cannot compete in terms of unit costs, if the product is perceived to be superior by being designed and assembled by highly skilled and committed workers, it is perfectly possible to not just survive the current problems but to prosper.

So what is needed? As an academic based at Birmingham City University I make no apology for stressing the importance of education at every level. The children we are teaching today need the skills and confidence in their ability to be part of quest for innovation and creativity which will be essential in the future.

We need our business and political leaders to continuously hammer home the message that our manufacturers can be the best in the world. But manufacturers must be supported in every way possible. If we can spend umpteen billions on a new railway line then we can surely invest in research and development and provide financial incentives to encourage the brightest and best to be part of the manufacturing revolution.

This is what will get us out of recession; whatever happens elsewhere.

Originally published on the Birmingham Post Business Blog.

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Dr Steve McCabe

Dr Steve McCabe

Birmingham City Business School