She who pays the piper may call the tune

The takeover of Opel – which includes Vauxhall – by Magna (Canada) and Sberbank (Russia) relies on E1.5 billion of bridge loans from the German state. We learn that the four German plants are to be kept open. We await detailed information on the futures of Ellesmere Port and Luton.

At current exchange rates the UK plants should come out well from any business analysis of costs and productivity. Whether that will be sufficient to save British jobs is more doubtful, given the close involvement of the German government in the answer.

The sad truth is that there is far too much motor manufacturing capacity in the world. Some of that surplus is going to lead to closures in the EU. On both sides of the Atlantic governments have intervened. Their actions will not save more jobs or plants in the medium term – indeed they might lose more. However, they will influence the pattern of closures. The UK needs to be aware. Having a cheap currency will not necessarily take the trick.

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7 Comments

  1. Denis Cooper
    Posted May 30, 2009 at 3:26 pm | Permalink

    Dear Mr Redwood, a quick albeit off-topic question.

    I notice that in his Reading Chronicle column this week:

    http://www.readingchronicle.co.uk/opinion/blogs/articles/2009/05/28/38839-rob-wilsons-westminster-diary-may-28-2009/

    your colleague Rob Wilson writes:

    “The Conservative Party view is that the Lisbon Treaty is a European Constitution which removes too many powers from us, so we oppose it and will honour our manifesto commitment to let the people decide with a referendum.”

    and

    “That’s why a Conservative government will put the current proposals and any future European changes that increase the power of Brussels to a referendum.”

    Please could you clarify whether the official Conservative position has changed so that its promise of a referendum is now unconditional, or does the previously stated condition “provided that the treaty has not already come into force” still apply?

    Thanks.

    reply: yes, the Lisbon referendum is conditional on it not being in force.

    • Denis Cooper
      Posted May 30, 2009 at 7:16 pm | Permalink

      Thank you.

      There is a chance that next May the treaty will still be alive (not killed by the Irish in October) but not in force (eg because Vaclav Klaus has delayed signing it off), but that chance is slim.

    • Adrian Peirson
      Posted May 31, 2009 at 2:13 pm | Permalink

      I don’t want a referendum, I want all the treaties torn up, If David Cameron doesn’t know how to do this, I will show him, but it’s reallt very easy.

  2. Mike Stallard
    Posted May 30, 2009 at 7:11 pm | Permalink

    In UK, we surely learned the hard way that pouring good money after bad in the motor industry doesn’t work, even in marginal and safe Labour seats. It also doesn’t work in areas which are in virtual civil war because it does not even bring peace (de Lorean).
    What we ought to be looking for are ways to make money in the world.
    Computers?
    Our way of thinking outside the box?
    Medicine?
    Not a joke: uncorrupt government?
    The army?
    Not a joke:Banking?
    Chain stores?
    A friend of mine is currently setting up a famous Public School in Bahrein.
    We have got a lot to offer, despite the current rash of scandalous corruption.

  3. Adrian Peirson
    Posted May 31, 2009 at 7:30 pm | Permalink

    Hey, why don’t we build our own cars instead of importing them,

    no wait, that’s wrong, it must be, Otherwise ‘He’ would be advocating it, the Way to solve problems caused by massive Govt Borrowing and Globalisation is with more globalisation and more Govt Borrowing, Sorry Mr Redwood, please feel free to delete this ludicrous suggestion.

    • Adam Collyer
      Posted May 31, 2009 at 8:44 pm | Permalink

      Actually quite a large number of cars are still made in Britain. Even in April 2009, 68,258 cars were made here (of which 56,267 were exported). Brands that build cars here include Land Rover, Jaguar, Nissan, Toyota, Mini, Rolls Royce, Bentley, Honda, LTI (maker of the London taxi), Aston Martin, Lotus, MG and of course GM (Vauxhall).

      Interestingly, Ford, who are often seen as the most “British” of the foreign makes, no longer make cars here, though they do make engines and Transit vans.

      • Adrian Peirson
        Posted June 1, 2009 at 8:04 pm | Permalink

        I bet we Import massively more than we Export though, along with our food, the EU seems determined to ensure we can Never stand alone as a Soveriegn nation Again by making us all interdependant on each other, I don’t mind trading but deliberately destroying our ability to produce, food and tradeable goods.
        Look at our Military, we hardly make our weapons, as I understand it, our Nuclear detrerrent is not much of a deterrent because without US codes being issued in an emergency, we cannpt even Launch them.
        We have a Growing population yet we cannot even feed ourselves, when they Let Turkey in we are going to be in an even worse situation.
        No one can be this insane and still manage to string a sentance together so it’s by design.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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