Ryton Closing

A sad day for the British car industry as the closure of Peugot’s Ryton plant is announced with the loss of some 2,300 jobs.   And why?   Because the model run (206) is ending and it is too expensive to tool up for a new model when they can concentrate resources elsewhere in other plants (France), where they have excess capacity.

And the other reason, although they don’t say this, is because it is possible to close a business here, whereas it is prohibitively expensive in France.   Legislation there is so restrictive that to make staff redundant costs almost as much as keeping them employed for life.

This sounds great if you are an employee – until such time as this complete lack of ability to compete means your employer goes bust – but it is not good for industry.

Listening to Tony Woodley of the TGWU on Radio 4 was interesting.   He thinks the rules here should be more employee focussed.   More generous.   More like France.

No Mr Woodley, you miss the point.   The fact that we have 10 car manufacturers in this country – Ford, Honda, Nissan, Vauxhall, Jaguar, Land Rover, BMW, Toyota, Rolls Royce and Aston Martin, not to mention the smaller producers like Morgan, Bristol, TVR and Lotus, means we do have at least a business environment that is better than in France.

The UK accounts for about 10% of EU car production and France about 20% which, considering the comparable sizes of our countries, suggests we are doing prety well.   How many foreign car manufacturers make any cars in France?   Two.  Smart (who have just about stopped making cars anyway) and Toyota.

Why?   Because, as anyone who has done business in France knows, it is simply too expensive.   In a country with a 35 hour working week, a venture that does not succeed is too expensive to close, which dissuades inward investment in the first place …which is not good if you are an employee in a country with one of the highest unemployment rates in the EU at 8.9% and with youth unemployment nearing 25%.

Wake up and smell the blue mountain Mr Woodley.   We don’t need to become more like the EU…..

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