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PAUL WILENIUS: Britain's factories were
once the driving force of the economy. Manufacturing goods - like these
cars at Vauxhall in Luton - to be sold across the world. Even though they
now produce less than a fifth of the nation's wealth , for those who work
in them and the Labour Government , they're crucially important , as the
Chancellor admitted in 1991.
GORDON BROWN: Our argument is that manufacturing
matters . That even our service sector depends ultimately on modern manufacturing
strength.
MALCOLM GIBSON: Manufacturing industry at the moment
is under the cosh and unless we see some respite from the problems , particularly
of the high pound at the moment, there is no question that a number of
those businesses aren't going to survive.
DEREK FOSTER: A lot of votes hinge upon
the prosperity of manufacturing industry. Particularly in Scotland, Wales
, the North East, the North West, the West Midlands, but also in many other
parts of the country where there are marginal seats, and the government
can't afford to be seen to do nothing.
WILENIUS: Manufacturing was once
at the very heart of the Labour Party, and its policies. But despite strong
words of support for some of Britain's key industries, the government is
under attack from the unions and many Labour MPs for failing to act. They
fear the high value of the Pound is crippling vital businesses, and is
putting tens of thousands of jobs at risk. Since the election, manufacturing
has been suffering. The government let the Siemens semi-conductor factory
in County Durham close. But coal, Labour's heartland industry, needed
�100 million of aid to head off extinction. Then Ministers backed a rescue
package for Rover, which may only be a stay of execution - while Harland
and Wolf in Belfast was saved at the last minute when a no strike deal
with workers helped win �300 million pounds of new orders. There's also
trouble up at this woollen mill in Bradford. Whiteheads had to merge with
its rivals, invest in new machinery to increase productivity, and slash
the numbers of workers in an effort to cut costs. Textile factories axed
40,000 workers last year, and another 25,000 will go this year. The hardest
hit have been women. The dangers for this plant and the industry are stark,
as factory boss Malcolm Gibson explains. He's fighting to survive as
the huge rise in the value of the pound against the Euro has wiped out
productivity gains.
GIBSON: We have been working very
hard over the last three years to improve our productivity and reduce our
cost base. We have invested in new machinery. Our whole workforce is working
together in a much more effective way to ensure that we can produce more
for less time. In fact we have probably achieved significantly in excess
of a ten per cent improvement in our productivity This has been totally
eroded by a twenty five per cent strengthening of sterling in that period.
WILENIUS: Keeping industries like
this rolling is now a high priority and Ministers are under intense pressure
to bring down the value of the strong Pound, or bolster the weak Euro.
Others want the government to deliver more radical action, to change the
way the Bank of England sets interest rates, or even put up taxes.
JOHN EDMONDS: The remit of the Monetary
Policy Committee of the Bank of England which is just to look at inflation,
worry about that worry a lot about that, but not to worry about anything
else. That's got to be changed. It's got to be changed to have a much wider
scope, to look at competition abroad , to look at interest rates abroad
and see where Britain is standing by comparison, but also of course the
second change is actually need a change in personnel . You need the Monetary
Policy Committee to contain people who know about manufacturing industry.
At the moment it's just academic economists and a few economists from
merchant banks. There's no real experience there. So of course they're
worried about house prices in the South of England and they're not worried
about what happens in Belfast or the West of Scotland or the North West
or the West Midlands.
FOSTER: I've argued for some time
that we've over relied upon monetary policy but Gordon Brown would say
that his fiscal policy has actually been buttressing the monetary policy.
But there used to be a time when the economy was overheating and where
it was consumption that was driving the overheating, and it was a perfectly
feasible economic policy to raise taxes in order to take that extra consumption
out of the economy.
WILENUIS: But to make sure workers
like this stay in jobs , some in the Labour Party want Britain to spend
billions of pounds to prop up the Euro .
JOHN MONKS: Not so long ago there was concerted
action across the exchanges by governments and central banks to bring
down the value of the dollar and I think it is time for the same kind of
concerted action to be put together to bring up the value of the Euro against
the pound but also against the yen and against the dollar. And I am looking
for Gordon Brown to give a lead to the international authorities in the
financial area, particularly the G7 countries along those lines, I think
he can do it, I think the time is right.
WILENIUS: But to some this all
looks like old Labour is back on the march. The Rover crisis sparked off
this mass rally at Longbridge in Birmingham which saw the trade unions
back on the streets . The scale of the protests and fear of up to 50,000
job losses alarmed Ministers. Although the company's saved for the moment
, the new Rover boss John Towers and senior Labour figures feel manufacturing
can only bloom again if the government makes the Pound fall by saying Britain
will join the Euro soon.
MARTIN O'NEILL: The government's commitment
to join the Euro, which at the moment has been understated ought to be
made far more clear and that at the Labour Party Conference, or the TUC
a senior minister or the Prime Minister, or the Chancellor, should make
it abundantly clear that it's our intention to join the Euro within twelve
to eighteen months, or at least have a referendum on it.
LORD HASKINS: The government has got to
in my view make a more positive statement about where it might find itself
vis a vis the Euro in two or three years time. In other words if the conditions
that the government has laid down for joining the Euro are met they would
need to be saying at some point that that would clearly accelerate the
case for us joining the Euro. I don't think business is hearing a clear
enough message from government about its intentions about the relationship
with Britain and Euro land.
WILENIUS: This one hundred and
forty year old woollen mill in Bradford needs help, as it's fighting to
survive. The Government's unwilling to go beyond sending a message to
markets that the Pound is too strong but there are now growing calls on
Ministers to intervene in other ways, to support ailing businesses. And
these businesses will need gentle nurturing over the next couple of years.
Ministers are under pressure to give much more help to factories like
this Yorkshire woollen mill, otherwise it may become just another historical
monument to a golden age of British manufacturing.
MALCOLM GIBSON: We are not a headline industry,
the large companies, the motor industry which is obviously getting a lot
of publicity at the moment and appears to be getting support, a lot of
smaller and medium sized companies that are really where the back bone
of the employment is in this country could also benefit from having some
assistance in either a regional form or helping with training or similar
sort of aspects.
WILENIUS: The motor industry faced
two big crises last week over Longbridge and Dagenham. Here at Vauxhall
they're successful and investing. But to keep the wheels of manufacturing
industry turning many are calling for direct government intervention.
They want more "Regional Aid " to help hard hit areas, such as the West
Midlands and the North of England. "Grants " available for development
and training. And business is calling for "Tax Breaks " to keep industry
moving forward.
JOHN MONKS: We want to see the governments
intervene to protect jobs and employment and good jobs. We know that there
comes a time with some areas where those jobs can't be continued but there
are other cases where the dip is temporary and we don't want to see people
go out of business and jobs lost and Britain suffer loss of a major earner,
because of some short term dip.
WILENIUS: Although company bosses
wants tax breaks, they don't want a return to government intervention where
taxpayers' money is used to bale out lame duck businesses.
DIGBY JONES: I would hope over three years,
that this government has learned that where business is left to create
wealth, as long as it is responsible in a socially inclusive way. As long
as it can take on most of the processes going forward, the unions with
it, and the environment with it. The best role for government is to have
created an environment and butt out.
WILENIUS: But when the wheels of
business fall off , the big global companies can close factories very easily
in Britain. So many in the Labour Party also want British workers to have
the same kind of protection as workers on the Continent.
JOHN EDMONDS: Frankly within Europe ,British
workers are regarded as mugs. We're not properly protected . We haven't
got the sort of rights that should exist in a civilised society and frankly
any company can sort of shut up shop and leave almost without any notice
at all and BMW did in this country what they could never do in Germany,
just saying we're going to sell off Rover and go. No consultation with
government, but no consultation with their own employees. I mean what sort
of civilised standards are that. And that's possible in the economy at
the moment.
DEREK FOSTER MP: I think in the short term it's
very difficult for the UK government to stand on one side and to make our
manufacturing employees more vulnerable than anyone else in Europe. We
cannot actually live with unnecessary closures.
WILENIUS: Tony Blair will be told
by CBI bosses over dinner this week, that manufacturing industry is under
serious threat. They don't want Labour to go back to its old ways and
use taxpayers money to prop up ailing industries. But there'll be a political
price to pay, if parts of Britain boom, while more manufacturers go bust.
JONES: I want to hear this week
from the Prime Minister that he understands the serious effects that the
strength of sterling is having on jobs in the country. That he doesn't
abrogate the responsibility for the challenges that are now facing industry
by saying it's all down to interest rates and a weakness of the Euro.
WILENIUS: Tony Blair's determined
not to return to the old days of Labour intervention, but he could well
have his work cut out explaining to his party and the voters that this
could mean more lost jobs.
MARTIN O'NEILL: We've got to recognise
that the recent local election results are evidence of the end of the honeymoon.
I mean it really was the longest honeymoon in history and I think in that
sense, the government has got to recognise that they cannot take the electorate
for granted and that they've got to get across the message that we live
in a rapidly changing world economy in which production is being shifted
ruthlessly in part by the manufacturers and in part by the customers because
they will go where the prices are most attractive.
EDMONDS: The government can't afford
to allow manufacturing industry to suffer any more. The economic arguments
are very strong. But the political ones for a government in its last
eighteen months of office are overwhelming. Unless action is taken a lot
of marginal constituencies are going to feel the heat and the government
is going to feel the heat from the MPs who represent them now.
WILENIUS: Indeed this is one of
Tony Blair's hottest problems. If he backs old style Labour intervention,
his hard won reputation in business and the City could disappear. But
if he continues to leave manufacturing to its fate, many factories, jobs
and voters could well head off elsewhere.
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