Rover has now been removed to the Happier Hunting Ground. In a brief obsequy broadcast from Birmingham, Tony Blair sympathised with the dependants. The economy was strong, he told them, good jobs were being created, and £40 million of public money had been set aside to turn Longbridge, Rover’s old home, into an industrial park. A fitting memorial, he must feel, and better than a car park. This idea is sure to be of interest to St Modwen, the property company, which is now Rover’s landlord. Desperate to keep going, Rover sold the site for £57 million and leased it back but, of course, the money ran out, as it does. St Modwen will miss the rental income — those buoyant Brummies had taken out a 35-year lease — but will dry its eyes. The development value is what matters. If that works out well, St Modwen might look across the Atlantic and see what might be for sale in Detroit. There, the distress signals are flying at General Motors. This week GM owned up to losing more than $1 billion in the last three months, and declined to say what it expects from the rest of the year. Apart from the problem of making and selling enough cars that people will buy, GM has a ‘health-care crisis’, in the same way that companies like Rover have a pension crisis. The effect has been to degrade GM’s credit, which is in imminent danger of being rated as junk.
Good for the country
To think that, within working memory, this was the world’s biggest company! ‘Engine Charlie’ Wilson, who ran it, was recruited to President Eisenhower’s cabinet and thought this a natural progression: ‘What’s good for General Motors is good for the country.’ Robert Townsend in Up The Organisation picked it out as a company whose biggest worry was to keep its share of the market down to 55 per cent. The Japanese turned out to have other ideas, and by now the car industry seems to have more than its fair share of sufferers. Fiat is struggling. (It was allied to GM, which pulled out, having troubles enough of its own.) Daimler soon rued the day when it bought — or, in theory, merged with — Chrysler. The mass production of cars may be hard to sustain in countries where costs are high and entrenched. Think of the costs imposed on employers in Europe, or of GM, slowly working out what health care costs. No wonder that, in this bracing new climate, Rover caught its death of cold.
Norman Tebbit once worked up an auction for Rover — or, rather, for British Leyland, which in those days was the name on its collar. At the Department of Trade and Industry, he talked to General Motors, which in those days had the money. GM wanted the trucks, but was willing to buy the whole business. Then Ford heard about it, and wanted the K-series engines and the tax losses. Then the story leaked, and Tory MPs from the nut-and-bolt belt — in those days, there were some — joined forces with Labour to rescue this national treasure. Lord Tebbit was accused of stabbing British Leyland in the back. ‘If I did,’ he said, ‘it was with a chequebook’ — but the whips got cold feet, and so did the Cabinet, and GM took its chequebook away, and the chance never recurred. Cause of death: not a stab in the back, but political suicide. Dooms like these tend to recur.
Shop till you drop
These may have been hard times for people who make things — such as cars — but for people who sell things that others make, life was never better. A boom led by consumption and imports and a trade gap of £58 billion a year say something for our retailers’ achievements. In Trolley Wars (Profile, £17.99) Judi Bevan tells their story — but, of course, these wars have winners and losers. Famous names like Boots mislay their sense of purpose. Tesco eats Sainsbury’s lunch. Sir Peter Davis is brought back to do the job he always wanted and to have one more run round the course of seven-figure salaries, bonuses, share options, pensions and so on. His plans misfire and the Sainsbury family realise that the cashflow to their charities may not be there for ever. The boom may not be there for ever, either. There are portents of harsher times ahead, of more bitter warfare and, of necessity, more losers.
Thinking man’s pension
In the days when thought was not a prerequisite, among stockbrokers or among their clients, Philip Darwin of Laurence Prust was known as the thinking man’s stockbroker. Now in retirement, he has been applying his mind to the real cost of Gordon Brown’s raid on the pension funds. Eight years ago, the incoming Chancellor helped himself to £5 billion out of the kitty, and he has repeated the act year by year. So the direct cost is now £40 billion, but the funds need to work out how much they would need to invest so as to replace the missing £5 billion of annual income. A yield of 5 per cent would require a lump sum of £100 billion — enough to ruin the pension providers, or to make them close their schemes while they still can. Mr Darwin might add that the bill for insolvent schemes will now be sent to the solvent schemes, by a compulsory levy. Thanks, Chancellor.
Moth, mother, mostGood news from France, unless you are a female grape-moth. On a whistle-stop (siffle-arr