The decline of the British tyre industry - Newcastle University

Discussion Papers in Management and Accounting History
2009.4
The decline of the British tyre industry: an evaluation of the policies of the Tyre
Industry Sector Working Party
Tom McGovern
Cultures, Accounting and Management History Research Group
Newcastle University Business School
Armstrong Building
Newcastle upon Tyne
NE1 7RU
United Kingdom
Phone: 0191 222 6000
Email:Tom.McGovern@ncl.ac.uk

Abstract
The Labour Government of 1974-1979 formulated the Industrial Strategy to transform Britain’s industrial
performance. Sector working parties were established to assist companies to become more efficient. The
paper examines the policy response of the Tyre Industry SWP to overcapacity and declining competitiveness
in the industry. Policy solutions focused on implementing ‘efficiency dialogues’ to increase output and
efficiency underpinned by job security. Discussions on strategic issues were constrained by the multi-
national structure of the industry. This restricted the work of the SWP to communication and employee
involvement. It confirms the difficulty of reforming the existing institutional arrangements to legitimise
company-level interventions.
Key words: Industrial Strategy, sector working party, tyre industry, industry decline
Introduction
During the post-war period a growing concern of British governments was relative economic decline and loss
of competitiveness in domestic and world markets. Manufacturing output and productivity grew slower than
in other major industrial economies as Britain’s industries suffered a declining share in world trade. 1
However, analysis and diagnosis rarely resulted in the development and implementation of effective policy
measures. 2 British industrial policy was described as seeking a ‘convincing rationale’ 3 and interventions were
‘ad hoc, sporadic and incoherent’. 4 Further, the policy instruments and administrative machinery available to
successive governments were ‘voluntaristic and constrained by the imperatives of macro-economic policy’. 5
This inhibited the development of effective micro policies to assist specific industries and companies. 6

According to McKay and Grant the implementation of a coherent industrial strategy depends on certain
socio/political conditions: (i) an acceptance among political elites that the government should play an active
role in assisting industry to adapt to change; (ii) good communications between political/bureaucratic and
economic actors and an acceptance by investors of the need for government intervention. 7 Industrialisation
occurred in Britain before the formation of a modern state and this contributed to the ‘deep ambivalence
about the role of government in relation to industry’. 8 The dominant paradigm in British industrial policy has
been the principle of consent and the autonomy of the firm. 9 This produced a ‘continual tension’ between
proponents of dirigiste measures to tackle decline and advocates of liberal solutions. 10 The British state acts
as Pontius Pilate, not a Bismark. 11 Industrial policy has been determined by ‘the state’s inability to coerce the
private sector’. 12 British governments were unwilling to confront the vested interest groups in the economy
to improve competitiveness. 13 Some economic historians attributed Britain’s relative decline to ‘institutional
sclerosis’, 14 whilst others viewed these institutional structures as a ‘retardative influence’ rather than an
insurmountable constraint on growth. 15 On the continent industrial progress was nurtured by a partnership
between government and industry whereas Britain ‘relied on markets, not institutions’. Proponents of
dirigisme argued that resolving the underlying productivity problems in Britain required the ‘visible hand of
co-ordinated control, not the invisible hand of the self-regulating market’. 16
The purpose of this article is to explore the impact on the tyre industry of the 1974-1979 Labour
Government’s Industrial Strategy. This was a ‘planning model’ which included consensus policy formulation
by government, business and trade unions. 17 The selective intervention policy was launched at a special
National Economic Development Council (NEDC) meeting at Chequers on 5 November 1975. The White
Paper entitled An Approach to Industrial Strategy stated that the prime objective was to transform Britain
into ‘a high output, high wage economy……by improving our industrial performance and raising the growth
of our productive potential’. 18 The government held it to be the responsibility of management and unions to
deliver higher productivity. 19 A new structure of sector working parties (SWPs) was established to augment
the original economic development committees (EDCs). The objective of the EDCs and SWPs was to help

companies in their sectors to become more efficient and thus increase their share of domestic and world
markets. 20 This differed from previous indicative planning insofar that the government and the NEDC were
proposing ‘to build up from the bottom on the basis of what was possible and not impose targets from
above’. 21 Politically, these new bodies performed an additional function of helping the government to steer a
course between Tony Benn 22 and his supporters who backed planning agreements and the CBI which
opposed them. The setting up of the SWPs was ‘a means of appearing to institute planning agreements
without doing much about them or risking breaking up the machinery of NEDC tripartism’. 23 One critic
described the Industrial Strategy as ‘not so much a strategy, more an empty slogan’. 24
The strategy emphasised ‘picking winners’, 25 although in reality it was more indiscriminate. 26 The Director
General of the NEDO described the SWPs as the ‘basic mechanism’ 27 underpinning the Industrial Strategy.
Some 39 SWPs operating by consensus and tailored to specific industries were created encompassing 40 per
cent of manufacturing output. 28 Some were new while others, including the Rubber Processing SWP
(renamed the Tyre Industry SWP in 1980), 29 were formed from existing EDCs. The emphasis was on
developing policy oriented strategic plans rather than detailed numerical plans, which mirrored the approach
adopted by companies. 30 Inevitably, SWPs were established in sectors which had a powerful trade
association, or where there were strong links with the sponsoring department in the Department of Industry. 31
The effectiveness of the SWP system as an instrument of industrial regeneration ‘has received surprisingly
little critical attention’. 32 The SWPs could have played a vital role in the creation of an effective micro
strategy by addressing problems confronting their respective industries. The limited empirical research
identified the critical lack of any mechanism for securing the implementation of SWP policies at the level of
the firm. 33 This article will evaluate the policy response of the Rubber Processing/Tyre Industry SWP to
overcapacity and the declining competitiveness of the British tyre industry. It will explore the development
of ‘efficiency dialogues’ and the difficulties of implementing this policy. The paper will examine the

institutional constraints that impacted on the policies of the Rubber Processing/Tyre Industry SWP to explain
why its work became narrowly focused on communication and employee involvement.
The objectives of the Rubber Processing SWP
The Rubber Processing SWP contained representatives from the tyre companies with operations in Britain:
Avon, Dunlop, Firestone, Goodyear, Michelin, Pirelli and Uniroyal. The management representatives were
usually a chairman or managing director or, at the very least, a director or senior divisional executive. The
trade unions were led by John Miller, the National Secretary of the Transport and General Workers Union.
All of the union representatives, with one exception, were area, regional or national officers. 34 The other
members were from the British Rubber Manufacturers Association (BRMA), the Rubber and Plastics
Processing Industry Training Board (RPPITB), the Department of Industry and the NEDO. The chairman
was John Cousins, Personnel Director at Plessey and an ex full-time official of the Transport and General
Workers’ Union. 35
The rubber industry products are components for other manufacturers’ end products, in particular the motor
industry. The tyre sector comprises two distinct market segments: original equipment and replacement sales.
The former accounts for 25 per cent of the British producers total sales, and is characterised by direct, large
volume transactions with the vehicle assemblers. The latter is about 2.5 times larger in volume and involves
sales to vehicle owners to replace worn-out tyres. 36
inelastic and is determined by the number of vehicles produced.
The demand for original equipment tyres is price
In 1972 new car registrations in Britain reached a peak of 1.7 million and production similarly peaked at 1.9
million cars. The oil crisis in 1973-1974 caused demand and production to fall in unison, but as demand
picked up production continued to decline, so that by 1977 new registrations had outstripped production. In

1973 Britain joined the EEC and in July 1977 duty on Community imports was removed, which allowed the
continental producers to exploit the British market. The elimination of tariffs was not the sole cause of the
increase in imports. The British car industry had a legacy of uncompetitive plant and an ageing model range
due to the lack of investment in the 1960s. 37 The oil crisis caused a shift in demand away from large-engine
cars and by 1974 cars with an engine capacity of less than 1200cc accounted for 25 per cent of total sales. 38
The foreign assemblers were able to meet this demand whereas the British producers were unable to respond.
As a consequence, original equipment tyre production fell from a peak of nearly 11 million car tyres in 1972
to under 6 million in 1975. 39
The second strategic issue facing the tyre manufacturers was the shift away from the crossply to the longer
wearing radial tyre. The spread of the fabric belted radial in the British original equipment and replacement
markets coincided with the oil crisis. The cutback in vehicle mileage combined with the longevity of the
radial caused the replacement market to dramatically shrink in size. The industry was further depressed by
the adoption of the steel radial in 1975 which captured 38 per cent and 25 per cent respectively of the original
equipment and replacement markets. 40 The feasible life of a crossply tyre was 18,000 miles compared to
28,000 miles for a fabric radial and 40,000 miles for a steel radial. 41 As a result, car tyre production slumped
from 26.64 million units in 1970 to 22.22 million in 1975. 42
In 1977 the Rubber Processing SWP set itself the task of arresting and reversing the decline of the British
tyre sector. The SWP identified two key policies: first, to improve domestic production efficiency; second, to
increase the producers’ sales and marketing efforts. The SWP’s guiding principle was that improving
performance should be underpinned by security of employment, and that increases in productivity should be
determined by increased output and a higher world market share. 43
The NEDO quantified the target output level from market forecasts and productivity data provided in
confidence by individual companies. The information suggested that British productivity (measured by

weight of throughput per man hour) needed to increase on average by 30 per cent to match international
standards. 44 If this target was achieved, an average 30 per cent more capacity would be needed to absorb the
surplus workforce and guarantee security of employment. 45
The NEDO estimated that a further 20 per cent
production increase could be obtained from more intensive use of existing plant. Therefore, to guarantee
security of employment an increase in production of 50 per cent might be required.
Discussions in the SWP suggested that the prospects of increasing production over the following five years
were good providing efficiency increased, but ‘forecast market growth was insufficient to support guarantees
of secure employment’. 46 A subsequent policy document was more conservative and focused on increasing
domestic production by up to 18 per cent from the current level of 32 million tyres. Relative production
efficiency would still need to increase by up to 30 per cent. However, the reduction in unit costs and the
planned increase in production were premised on more intensive plant utilisation and selective investment. 47
Security of employment was dependent on increasing efficiency and sales. 48
The SWP identified increasing exports as one way of expanding production and sustaining domestic
employment. An analysis of the global competitive position showed that British tyre exports were
concentrated in the Commonwealth and the developing world, whilst penetration of European and North
American markets was notably shallow. Europe was identified as a prime target for export led growth
because it was a production intensive market with a high degree of international sourcing, and established
distribution channels. 49 Increased efficiency would enable the domestic producers to reduce their unit costs
and gain a larger share of the European market. 50
The SWP also canvassed the government to encourage the Japanese car manufacturers to establish operations
in Britain. This would potentially increase original equipment production by 2.6 million tyres. 51 The
combination of this extra output with the 30 per cent productivity improvement target implied a contraction

in the workforce from 40,000 to about 34,000 in 1981. The NEDO estimated that this reduction could be
achieved through ‘natural wastage’ while guaranteeing secure employment for the remaining employees. 52
Efficiency Dialogues
The SWP’s strategy to increase output and efficiency and simultaneously guarantee job security was to be
achieved through the mechanism of ‘efficiency dialogues’. To initiate this strategy, J Walter Thompson was
engaged in 1978 to develop a communications programme for the industry. The objectives of this programme
were: (i) to extend the dialogue beyond the SWP; (ii) to inform employees about the world outside the
factory; and (iii) to reinforce the management and trade unions’ leadership in companies. 53
During visits to tyre plants, and after interviewing nearly 100 key opinion formers in the industry, the
consultants received feedback from the shop floor that the major cause of the industry’s troubles was cheap
imports from Eastern Europe. 54
Although this viewpoint was incorrect, the SWP decided to use this issue to
raise its public profile with rank-and-file employees, who were largely unaware of its existence. A ‘strongly
worded’ letter was sent by the SWP to the Secretary of State for Trade requesting anti-dumping action and/or
selective controls on imports from Eastern Europe. This letter paved the way for the first major tyre industry
conference held in Birmingham during November 1978.
The aim was to introduce the Rubber Processing SWP and to establish its credibility with the industry’s
major opinion formers. Nearly 400 representatives from all seventeen domestic tyre plants, plus government
and trade union officials attended the conference. It was the first time that management and unions had
assembled together on a multi-plant basis. 55 The conference was held ‘amidst rumours of plant closures and
redundancies’. 56
The delegates unanimously agreed that plant level ‘efficiency dialogues’ was needed to
reverse the serious decline in competitiveness and employment in the British rubber industry.

The SWP proposed a two-pronged attack to improve performance: (i) an aggressive marketing of
competitively priced tyres; and (ii) more efficient use of plant and manpower. 57 This strategy entailed
reducing unit costs to make the British plants competitive with those in Europe. The government argued that
productivity improvements depended only partly on investment and crucially required ‘making better use of
existing plant and getting higher output (as competitors do) from new buildings and plant’. 58 To achieve
change, the SWP suggested that two conditions should be met: (i) those working in the industry should feel
and be involved in any initiative to achieve higher efficiency; and (ii) workers participating in efficiency
schemes should have assurances on security of employment. 59
However, raising productivity in a stagnant
market was incompatible with employment security, and this should have been obvious to the SWP. Further,
without increased investment, the British plants could not match the efficiency of the European plants.
Overcapacity was an indicator that the older, less efficient British factories would close.
The SWP advocated that ‘efficiency dialogues’ should be conducted at plant level through existing
consultative committees, or new plant development committees. 60 These committees would not just address
increasing efficiency, but would cover issues beyond joint consultation including marketing strategy,
employment trends, and profits as they related to the plant. 61 The SWP suggested that divisional and/or
company level bodies could also be established to discuss the financial performance, new legislation,
investment, manpower policies, and market position. It was argued that discussions on these issues would
help to ‘improve the quality of decisions and would complement the decision-making procedure’. 62
composition and procedural arrangements for plant and company-level bodies were to be agreed between
management and unions.
Mr David Warburton, the National Officer for the rubber and chemical industries at the General Municipal
Workers Union, welcomed the document. He stressed that greater disclosure of information was paramount
to enable the exercise to go ahead. In return the unions made a commitment to discuss manpower planning.
He warned against any attempts to use ‘efficiency dialogues’ as a ‘sophisticated exercise in indiscriminate
The

demanning’. 63
However, with the substantial obsolete capacity in the home market, it is difficult to see how
increasing efficiency would not be at the expense of jobs.
Evaluation of the SWP strategy
The SWP acknowledged that it was unable to influence product and investment planning in the industry. 64
Policy agreements in the SWP to increase output and efficiency and guarantee security of employment could
not be realised at the company or plant level. The NEDO advisors were aware of this, but it was the only way
of getting the parties to reach an agreement. The companies wanted improvements in productivity whilst the
unions sought job security. Data produced by the NEDO revealed that if a 20 per cent increase in efficiency
was to be achieved by 1981, together with security of employment, import penetration of car tyres from the
EEC would have to be reduced from the current level of 25 per cent to 2 per cent. 65
This was not feasible!
Insert Table 1 Employment and output in the UK tyre industry, 1973-82
Table 1 shows that in 1981, total tyre production (car, truck, bus, earthmover, dumper and tractor) fell to 24.2
million tyres, a considerable way short of the target of 36.3 million tyres, whilst employment had shrunk to
27,700 people compared to the target of 34,000. 66 The net effect of the reduction in employment was to
increase productivity (output per man) between 1975 and 1981 by 31 per cent. This supports Crafts assertion
that: ‘The productivity surge of the 1980s appears to have owed little to greater investment in plant, people,
or research and development but to have come primarily from more efficient use of existing factors of
production and in effect to have been based on a shake-out of inefficiencies which had accumulated in the
earlier decades’. 67 Six tyre plants were closed during this period 68 which contributed to the large increase in
productivity. However, the fall in employment was insufficient to counteract the decline in output. Hence

productivity (productivity index) failed to meet the target of 159 considered by the SWP to be necessary to
make British tyres competitive at home and overseas. 69
For production to be on course, output per man
should have risen to 1,063 tyres by 1981 compared with an actual figure of 875. By implication, employment
in 1981 should have fallen to 22,810 people, as opposed to 27,700 then employed. Clearly, more job losses
were to be expected, and this should have been obvious to the SWP representatives.
The production targets were not achieved, and hence jobs were lost, because the industry failed to meet
domestic and export market objectives. The SWP set a target for 1981 of a positive balance of trade with the
EEC of 3,360,000 car tyres and 480,000 truck and bus tyres. 70
In practice, between 1977 and 1979, Britain
suffered a negative trade balance in car tyres as captive and independent distributor imports from the EEC
increased sharply from the mid-1970s. The following year witnessed a steep rise in exports to the European
Community, accompanied by a fall-off in imports, which produced a positive balance of 1.8 million tyres. A
year later, in 1981, the UK recorded a deficit of 319,000 car tyres with the European Community. The trade
in truck and bus tyres fared much better, inasmuch that no deficit was recorded. In 1976 a favourable balance
of 325,000 tyres was recorded, but this fell to 8,000 tyres in 1977. There was a steady climb in the trade
balance, culminating in a surplus of nearly 274,000 truck and bus tyres in 1981; but, it was still 43 per cent
below the SWP target. There is little evidence that higher productivity led to substantial improvements in the
trade balance.
Exports failed to meet the SWP targets because the policy conflicted with the strategies of the tyre
companies. During the 1960s, the tyre companies regarded Britain and the Continent as two distinct
markets. 71 However, with the development of the European Community, followed by Britain’s entry in 1973,
the tyre companies viewed Europe as one market, and planned production on that basis. This proved
detrimental to Britain, which was now experiencing poorer economic performance and lower growth than her
European neighbours. As the size of the domestic market started to shrink, owing to the oil crisis, the
displacement of the crossply by the longer lasting steel radial tyre, and the declining output of British cars,

the tyre producers viewed Britain less favourably as a production base. 72 The British plants were used to
source only the home and Commonwealth markets. The European producers concentrated their sales within
the European Community and were able to establish a stable base to exploit other markets. 73
The trade union representatives on the SWP demanded import controls to protect the domestic industry. This
conflicted with government strategy which stressed that ‘sectors should aim to compete with imports by
identifying the vulnerable product areas and the reasons for importing, and not to seek to limit or regulate
imports’. 74 Import controls were contrary to Community membership and also conflicted with the
manufacturers’ sourcing policies. The tyre companies were only prepared to support the SWP’s anti-dumping
action against ‘disruptive’ imports from Eastern Europe. An agreement was, however, reached to set
voluntary import ceilings to reduce import penetration by 1981 to the level pertaining in 1975. 75 This would
allow the substitution of up to one million imported car and commercial tyres by home production. 76
There was little prospect of these targets being met as the SWP had no influence on the policies of the
producers or the independent distributors that imported tyres into Britain. The impotence of the SWP is
shown in table 2. Car and van tyre imports’ share of the replacement market increased from 27 to 42 per cent
between 1975 and 1980 (captive imports increased from 11 to 16 per cent whilst distributor imports
increased from 16 to 26 per cent). 77 After 1977 captive imports displaced home production. 78 Dunlop was
reducing its dependency on British production by concentrating investment overseas. Dunlop’s British plants
had insufficient steel radial capacity and its European facilities were used to meet the shortfall in domestic
supply. 79 The NEDO did, however, secure a promise from Dunlop to stop importing East European tyres. 80
Insert Table 2 Import penetration of the UK net replacement market, 1973-80 (%)

None of the voluntary targets were met. In 1980, imports of car and van tyres exceeded the 1981 target by 56
per cent, truck tyres by 95 per cent, tractor tyres by 72 per cent and earthmover/dumper tyres by 88 per cent.
In the last two categories, the levels of imports exceeded the size of the replacement market, indicating they
were also used to source the original equipment market. 81 Driver suggested that the SWPs produced a
relative improvement in manufacturing import penetration, which he attributed to the import substitution
measures that they initiated. 82
There is no evidence that this occurred or was successful in the tyre sector.
Increases in productivity did not lead to a reduction in imports.
Employee Involvement Programme
Some trade unionists such as Mr Howlett, the Engineering Branch Secretary at Firestone, were sceptical of
the SWP’s approach. He argued at Birmingham that the tyre plants needed investment and modernisation. 83
Two days after the conference had finished, Dunlop announced the closure of its plant at Speke, followed
shortly by the announcement that Firestone was withdrawing from Britain. This was a turning point in policy,
with any pretence of reversing the tyre sector’s decline now abandoned. The SWP was forced to admit that
‘efficiency dialogues’ ‘had not been a great success’. 84
management and the shopfloor to confront the industry’s problems.
A different approach was now needed to force
The SWP felt compelled to become directly involved in the communication process in each company,
although reservations were raised about using existing communication channels. 85 The companies were
content to use the SWP leaflets and briefing materials in their communication programmes. They were less
willing to allow the SWP to make presentations in their plants. Goodyear was persuaded to allow the SWP to
address its Wolverhampton workforce in November 1980. This was video-recorded and made available to
employees in the plant, although representatives from the other companies were excluded and the circulation
of the video was restricted to Goodyear.

The SWP progressed to the third stage of the plan devised by J Walter Thompson. The management and
trade union officials supported ‘efficiency dialogues’ but saw it of limited use because of ‘the lack of
understanding and knowledge of the participants’. 86
A solution put forward in May 1981 was an Employee
Involvement Programme aimed at changing the attitudes of managers, supervisors and shop stewards.
Dunlop agreed to participate in this experiment.
In July 1981, it was agreed that the Office should hold informal meetings with the management and unions to
implement this programme. The trade union representatives raised two matters of concern. First, they
objected to the programme being funded by the government and, second, they were opposed to the
companies being directly responsible for the training of both shop stewards and managers. 87
The first
problem was tackled by the NEDO funding the programme. The second objection was overcome by the
engagement of Professor George Bain, a leading industrial relations researcher at Warwick University, to
undertake a feasibility study at Dunlop.
Professor Bain was asked to investigate how communication/participation was working at Dunlop; the effect
that it had on developing ‘efficiency dialogues’; to identify those issues which required joint discussion and
determination, and to identify the information and training needs of employees to further the development of
the participative process. 88
From December 1981 to January 1982, he held meetings with senior group and
divisional management, and shop stewards from all the unions represented in the plant (rubber workers, staff
and craft). The initial meetings were held separately, but eventually joint meetings were held with the rubber
workers and staff and, finally with them and senior management. After two initial meetings, the craft workers
declined to take any further part in the project. This was because flexibility had been introduced into the craft
areas and was not universally supported by these workers. They did not believe that the communications
programme offered any benefits.

Professor Bain found that Dunlop had implemented many of the general proposals outlined in ‘efficiency
dialogues’, including greater labour flexibility, improved quality control, more efficient use of plant and
machinery, reduced manning levels and lower costs. Dunlop had devised its own involvement policy using
action learning, briefing and involvement groups to encourage greater employee commitment to business
objectives, and to improve overall effectiveness. 89 However, Bain reported that the unions were ‘dissatisfied
with the company’s involvement policy’, 90 because it emphasised ‘communication rather than consultation’,
or to quote one shop steward ‘management decides and we listen’. 91
The stewards stated that they required more finance information: group and divisional profit levels, the
budgeting process and the extent to which divisions were financially autonomous; the level and
determination of transfer pricing; the contribution that foreign licensing agreements made to profits; short
and long-term investment plans at home and abroad; and the viability of production at Fort Dunlop. In the
marketing area, the stewards wanted information on pricing strategy; sourcing policy regarding captive
imports; and Dunlop’s strategy for selling the extra production resulting from the increased efficiency. 92
The
provision of this information was necessary to gain workforce support for the proposed changes. There is,
however, no evidence that the trade unions had a strategy for acquiring and effectively using this
information.
Bain informed the SWP that his team would engage in ‘strategic mediation’ to create a favourable climate
which would allow the management and unions to reach an accommodation. Strategic dialogues would begin
at group level and then be extended to divisional level. The experiment was planned to run from March to
December 1982, and if successful, would be extended to other divisions. The programme was put to the SWP
in February 1982 for approval, whereupon it was savaged by the AUEW representative who declared that it
was not the SWP’s business ‘to intrude on matters of job demarcation, plant maintenance, etc’. 93 The
chairman, John Cousins, felt that he had no alternative but to resign. The SWP suspended its operations,

while the NEDO sought a new chairman and a new consensus around which to re-establish the committee. In
the meantime, the Employee Involvement Programme was dropped from the agenda.
The AUEW’s position was determined by the opposition of the craft workers at Dunlop to the Involvement
Programme. The craftsmen were angry over the imposition of new working practices at Dunlop’s
Washington plant, and concerned about the proposed changes at Fort Dunlop. Perhaps, if John Miller, the
senior union official on the SWP, and an advocate of ‘efficiency dialogues’ had been present at the meeting,
he may have been able to persuade the trade unions to maintain their support for the Involvement
Programme. 94 He saw the initiative as a way of extending the bargaining power of the trade unions. The
chairman, John Cousins, was also a strong supporter of ‘efficiency dialogues’. The Secretary of the SWP and
his support staff from the Manpower and Industrial Relations division saw ‘efficiency dialogues’ as a means
of establishing consensus at the plant level. 95
These principal actors had pushed participation much further
than was palatable for other committee members. Furthermore, the economic and political climate had
changed since the inception of ‘efficiency dialogues’. The new Conservative Government had no
commitment to its predecessor’s Industrial Strategy and, of course, the tyre sector was in decline.
Policy constraints
A major weakness of the Birmingham conference was the absence of the vehicle manufacturers, and the
delegates’ failure to consider the impact of the motor industry on tyre production. The decline of the British
motor industry was not discussed in Birmingham. 96 It was not until 1979 when Britain had become a net
importer of cars that the relevance of the vehicle industry to tyre production was given any serious
consideration by the SWP. It appears extraordinary that a strategy for the tyre industry was not discussed in
the context of a strategy for the vehicle industry. A motor industry EDC was set up in 1967, but it held its last
meeting in 1971. The Motor Industry Tripartite Group was established in 1976 outside of the NEDO

structure, but it soon became moribund. 97
The motor manufacturers saw little benefit in tripartite discussions.
There was never any prospect of devising a strategy for the entire motor and components industry. The tyre
conference confirmed how far the SWP was operating in a policy vacuum.
The major policy issues facing the SWP were the slump in British tyre production, rising imports and job
losses. The papers prepared for the committee focused on international competitiveness. Hence, policy
prescriptions were biased towards this aspect of efficiency: the need to raise productivity and reduce costs.
There was little analysis of the other factors such as investment and production and sourcing strategies which
contributed to the sector’s decline. In 1980 SRI International was commissioned to conduct an independent
assessment of the prospects for the British tyre industry. 98 The consultants recommended that strategy should
be based on the ability to win a larger share of the European and other markets by taking into account:
market growth rates; capacity constraints; investment intentions and sourcing policies; and the international
competitiveness of the British producers based on output, productivity, production costs and exchange rate
movements. The NEDO used the report to prepare two policy papers on ‘The future of the UK tyre
industry’ 99 and ‘Forecasts of markets and manpower requirements’. 100 The companies responded through the
BRMA to leave the NEDO in no doubt that ‘the manufacturers have some doubts about the value of
producing strategy papers of this kind, relating as they do to a national tyre industry strategy as opposed to a
company strategy’. 101
The producers did not see a strategic role for the SWP beyond acting as a
communications channel for the employers in their dealings with the government and the trade unions.
Previous studies revealed that managers attended SWP meetings because it presented ‘an additional
opportunity for business to influence government policies’. 102 The tyre companies regarded the SWP as
relatively unimportant compared to the BRMA, the industry’s main vehicle for discussions with the
government. The SWP did perform one important function for the rubber companies. With the demise of the
industry’s National Joint Industrial Council, it was the only forum where the employers could meet with

senior union officials. The companies used the SWP as a medium to get the message across to the workforce
that the industry’s problems stemmed from low productivity.
The oligopolistic structure of the industry prevented the SWP from discussing the rationalisation and
restructuring of the tyre sector. There were no discussions on matters relating to any individual company
(rules under which the SWPs operated), especially jobs and future plans. If the government wanted to discuss
these matters, it would do so directly with the company concerned or else through the BRMA. The NEDO
could do little to extend the role of the SWP because company participation was voluntary. The companies
could have withdrawn from the SWP without damaging their relations with the government. Further, the
companies dealt directly with their sponsoring division in the Department of Industry on matters such as
financial assistance for new investment. The Department of Industry did not use its participation in the SWP
to encourage the development of a sector strategy. The presence of its representative was to gather
information for informing government policy-making, including the trade unions’ perspective, with which
the department had no direct contact.
Conclusions
The Labour Government’s industrial policy was ‘voluntary and responsive, rather than dirigiste’. 103 Stout
argued that the SWPs could pursue industry-wide objectives because the management and trade unions had a
common interest in developing policies to enable the British producers to compete with the foreign
competition. 104 The tyre companies were, however, multinationals and competed against one another in
domestic and overseas markets. The White Paper on the Industrial Strategy made no reference to the
internationalisation of production. 105 The integrated production strategies of the tyre companies made it
‘impractical to conceive of sectoral planning on the national level’. 106 There were limits to which managers
were willing to develop common sector policy solutions with their competitors. 107 The managers were

prepared to discuss common problems in SWP meetings, such as competing overseas, but they were ‘not
prepared to blur competition at home for the sake of any industrial strategy’. 108
The weakness of the SWPs was summed up by the Director-General of NEDO: ‘SWPs have inherent
limitations in what they can do. They are not executive bodies; they operate at sectoral, not company level;
management members are often, if not always, in competition with each other in the market place’. 109 The
main limitation of the SWPs was the ‘lack of any effective instruments for implementation’. 110 The SWPs
conducted analysis and proposed policy in terms of the industry as a whole whilst decisions on investment
were taken by individual companies. Imberg and Northcott found no evidence that the SWPs influenced
investment decision-making at the level of the firm. 111 The case study of the Tyre Industry SWP supports this
finding. The SWP did not initiate any major policy initiatives that had a direct impact on the operations of the
tyre companies. 112
The case study also supports Imberg and Northcott’s conclusion that there was no mechanism for translating
the aggregate industry targets for production, exports and imports into individual company objectives. 113
Tyre imports continued to increase despite the growth in productivity because the SWP could not influence
the production and sourcing policies of the multinationals or the independent distributors. The evidence from
the tyre industry does not support Driver’s contention that the SWP system was a surrogate for selective
protection measures. 114 The NEDO did not see the role of the SWPs to be involved in policy implementation.
Their task was to communicate ‘the results of their work and their recommendations to those who can
implement them’. 115 The Tyre Industry SWP relied upon the cooperation of the management and unions in
individual firms to improve productivity and efficiency. This was the level where the Industrial Strategy was
at its weakest. 116
The case study explains why the SWPs were not ‘powerful enough’ 117 to reverse Britain’s industrial decline,
and why their achievements were ‘meagre’. 118 It confirms the difficulty of trying to reform the existing

institutional arrangements to legitimise company level interventions on a consensual basis. 119 The attempt by
some members of the SWP to use ‘efficiency dialogues’ to intervene at the plant level failed because it
contravened the British tradition of ‘voluntarism’ in industrial relations. This was based on the complete
autonomy of the bargaining parties and their opposition to outside intervention. 120
The Industrial Strategy
had encouraged an ‘open’ style of management and changes in work practices to improve competitiveness.
However, the employers sought productivity improvements but could not guarantee job security as the
industry was contracting. The tyre companies were keen to protect their competitive positions and restricted
the role of the SWP to communication. The disclosure of information at plant level was used to assist the
rationalisation of the industry. Furthermore, the political climate had also changed as the new Conservative
Government had no commitment to its predecessor’s Industrial Strategy.
In terms of the McKay and Grant framework the Industrial Strategy did not meet the first socio/political
condition. The SWPs were a constituent part of a ‘very weak institutional structure’. 121 The government
played a minor role in the policy work of the Tyre Industry SWP. The more important body was the BRMA
which had developed extensive relationships with the policy makers. A coordinated strategy for the vehicle
and tyre industry was superfluous because the multinational companies operated on a European not a national
basis. There is no evidence that a more dirigiste strategy would have proved more successful. The Industrial
Strategy failed to satisfy the second condition because of the opposition of investors. Kirby argued that the
industrial strategy experiments of the 1970s were destined to fail because they were not favourably viewed
by the international financial community on which Britain depended to maintain financial solvency at a time
of acute balance of payments problems, and by industrialists suspicious of socialist policies. 122
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1 Kilpatrick and Lawson, “Industrial decline,” 93.
2 Grant, “Government,” 101.
3 Hay, “Competition ,” 35
4 Grant, “Government,” 116.
5 Grant and Wilks, “British industrial policy.” 19.
6 Williams et al., Why are the British Bad, 99; Kirby, “Institutional rigidities,” 653.
7 McKay and Grant, “Industrial policies,” 9.
8 Grant, “Government,” 101.
9 Young and Lowe, “Intervention,” 188 and 207.

10 Grant, “Government,” 101.
11 Wilks, Industrial Policy, 11.
12 Ibid, 16.
13 Jones and Kirby, “Competitiveness ,” 13. Conservative governments in the inter-war years and the 1980s for
political reasons tried to curb the power of the trade unions.
14 Olson, Rise and Decline, 78.
15 Jones and Kirby, “Competitiveness ,” 11.
16 Elbaum and Lazonick, “An institutional perspective,” 10.
17 Grant, “Selective financial assistance,” 374.
18 Cmnd.6315, Industrial Strategy, 1.
19 Ibid, 6-7.
20 Middlemas, Industry, 203.
21 Young, “Industrial policy,” 86.
22 Tony Benn was Secretary of State for Industry. In June 1975 he was removed and replaced by Eric Varley (see Tom Forester,
“Industrial Strategy” ; Michael Shanks, Planning and Politics, 73-79 and Scott Newton and Dilwyn Porter, Modernization
Frustrated, 168-176).
23 Middlemas, Industry, 95.
24 Forester, “Industrial Strategy,” 88.
25 Kirby, “Supply-side management,” 255.
26 Shanks, Planning and Politics, 80; Beath, “UK industrial policy,” 224.
27 NEDO, State and Progress, 1.
28 Hall, “State and economic decline,” 277; Grant, Political Economy, 63; Stout, “De-industrialisation”
190; Kirby, “Supply-side management,” 255.
29 The name was changed to the Tyre Industry SWP because its work was focused on tyres rather than general rubber goods.
30 Shanks, Planning and Politics, 81.
31 Middlemass, Industry, 95.
32 Driver, “Import substitution,” 165.
33 Imberg and Northcott, Industrial Policy, 8-9.
34 The trade unions represented on the SWP were Association of Professional, Executive and Computer Staff; Amalgamated Union
of Engineering Workers (TASS); General and Municipal Workers’ Union; Amalgamated Union of Engineering Workers

(Engineering); Association of Scientific, Technical and Managerial Staffs; Union of Shop, Distributive and Allied Workers; and
Transport and General Workers Union.
35 John Cousins was a full-time official of the TGWU for 12 years. In 1975 he was appointed Manpower and Industrial Relations
Director at NEDO. He replaced Mr Asher as chair of the Rubber Processing SWP in February 1978. Cousins was appointed
Director of Personnel at Plessey Telecommunications in 1980.
36 Fishwick, Evolution of Concentration, vii.
37 Rhys, “Motor vehicles,” 186.
38 Bhaskar, Motor Industry, 119.
39 Rubber Statistical Bulletin, various issues.
40 Tyres & Accessories, Nov. 1976, 40.
41 Tyres & Accessories, Jan. 1980, 24.
42 Rubber Statistical Bulletin, various issues.
43 NEDO/RP/IS (77)18, “Market objectives for the UK tyre industry,” Rubber Processing Sector Working Party, 23 June 1977: 1.
44 Ibid.
45 Ibid.
46 NEDO/RP/IS (77) 5 th Meeting, para 4.7.
47 NEDO, Industrial Strategy, 14 December 1977, paras 1.10-1.12.
48 Ibid, para1.12.
49 Ibid, para 2.16.
50 Ibid, para 2.26.
51 NEDO/RP/IS (77)18, “Market objectives for the UK tyre industry”, paras 6.2-6.3.
52 Ibid, paras 5.2-5.3.
53 NEDO (80)60, “Sectoral Report: Tyre Industry,” Note by the Secretary, 19 September 1980: 5.
54 NEDO, Progress Report 1979, 19.
55 NEDO, The tyre industry, 1.
56 Ibid.
57 NEDO, Efficiency dialogues, 17.
58 HM Treasury and Department of Industry, Industrial Strategy, 8.
59 Ibid, 6.
60 NEDO, Efficiency dialogues, iv.

61 Ibid, 7.
62 Ibid, 8.
63 NEDO, The tyre industry, 15.
64 NEDO, Progress Report 1979, 12.
65 NEDO/RP/IS (77) 3 rd Meeting, Rubber Processing Sector Working Party, 28 July 1977 (attached graph).
66 NEDO, Progress Report 1979, 7, figure 3.
67 Crafts, “Economic decline,” 94.
68 EIU, “The UK tyre market,” 23.
69 NEDO, Progress Report 1979, 9, figure 7.
70 Ibid, 4, figures 1 and 2.
71 Hood and Young, Multinationals, 137.
72 Ibid, 46; McGovern, “Dunlop,” 891-894.
73 NEDO, Industrial Strategy, 14 December 1977, paras 2.19.1 and 2.19.2.
74 NEDO, Analysis of Sector Working Party Reports, 10.
75 NEDO, Industrial Strategy, 14 December 1977, paras 3.11 and 3.13.
76 Ibid, para 4.2.
77 McGovern, “Dunlop,” 893, table 1.
78 Ibid, 893.
79 Ibid.
80 NEDO, Progress Report 1979, 10.
81 NEDO, Progress Report 1980, 2.
82 Driver, “Import substitution,” 173.
83 NEDO, The tyre industry, 16.
84 NEDO/TI (80) 2 nd Meeting, Tyre Industry Sector Working Party, 10 April 1980, para 4.3.9.
85 NEDO/TI (80) 1 st Meeting, Tyre Industry Sector Working Party, 23 January 1980, para 3.7.
86 NEDO/TI (81) 6, “Employee Involvement Programme,” Tyre Industry Sector Working Party, 29 April 1981.
87 Elliot, “Tyres sector working party”, 22.
88 NEDO/TI (82) 3, “Employee Involvement,” Tyre Industry Sector Working Party, 12 February 1982, 2-3.
89 Ibid, 4.
90 Ibid, 5.

91 Ibid.
92 Ibid, 6.
93 Elliot, “Tyres sector working party,” (Secretary’s meeting notes) 23.
94 Ibid, 22.
95 Ibid, 25. Under the Conservative Government of 1962-64 public officials sitting on the EDCs were in a junior role. However,
the Labour Government of 1964-69 used the public officials to press government policies (Shonfield, Modern Capitalism, 174).
96 NEDO/RP/IS (79) 3 rd Meeting, Rubber Process Sector Working Party, 30 August 1979, para 5.2.
97 Wilks, Industrial Policy, 188 and 277.
98 SRI, Prospects and Opportunities.
99 NEDO/TI (81) 3, “The future of the UK tyre industry,” Tyre Industry Sector Working Party, 30 January 1981.
100 NEDO/TI (80) 38, “Forecasts of markets and manpower requirements,” Tyre Industry Sector Working Party, 29 October 1980.
101 NEDO/TI (81) 4, 30 April 1981. The BRMA did confirm that members would discuss the strategy papers at the next SWP
meeting.
102 Grant, Political Economy, 65.
103 Stout, “Deindustrialisation,” 195.
104 Stout, “Deindustrialisation,” 194.
105 Wilks, Industrial Policy, 266.
106 Ibid, 269.
107 Grant, Political Economy, 65.
108 Ibid, 66.
109 NEDO, State and Progress, 3.
110 Imberg and Northcott, Investment Policy, 8.
111 Ibid.
112 The SWP did lobby government for anti-dumping action against East European imports and a new tyre-tread law.
113 Ibid, 8-9.
114 Driver, “Import substitution,” 173.
115 NEDO, Annual Report 1978-79: 10.
116 Grant, Political Economy, 68.
117 Balogh, “Comment on Stout,” 201.
118 Kirby, “Supply-side management,” 255.

119 Wilks, Industrial Policy, 268.
120 Flanders, “Trade unions and the force of tradition,” 289.
121 Grant and Wilks, “British industrial policy,” 23.
122 Kirby, “Institutional rigidities,” 653.
Table 1 Employment and output in the UK tyre industry, 1973-82

1973
1974
1975
1976
1977
1978
1979
1980
1981
Employment
47,000
42,800
40,400
40,300
41,200
40,300
35,700
32,800
27,700
Tyre output
(millions)
31,480
28,621
27,063
31,003
30,013
27,641
27,650
26,884
24,247
Output/man
669.8
668.7
669.9
769.3
728.5
685.9
774.5
819.6
875.3
Sources: Tyre sector employment, 1973-78: NEDO, Progress Report 1979: 7.
Tyre sector employment, 1979-81: RPPITB, 1980 to 1982
Tyre production, 1973-81: Rubber Statistical Bulletin (various issues)
Productivity Index
100
99
100
115
109
102
116
122
131
Table 2 Import penetration of the UK net replacement market, 1973-80 (%)
1975 1976 1977 1978 1979 1980 SWP Target
for 1981
Car and van 27 31 38 44 41 42 27
Commercial
vehicle
20 17 35 33 33 39 20
Tractor 46 36 57 53 75 79 46
Earthmover/
Dumper
49 88 85 67 90 92 49
Sources: NEDO, Progress Report 1980: 2, table 3; NEDO/TI (81) 9, table 7