The decline of the British tyre industry - Newcastle University

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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,
Page 1 and 2: Discussion Papers in Management and
Page 3 and 4: According to McKay and Grant the im
Page 5 and 6: institutional constraints that impa
Page 7 and 8: weight of throughput per man hour)
Page 9: The SWP proposed a two-pronged atta
Page 13 and 14: None of the voluntary targets were
Page 15 and 16: Professor Bain found that Dunlop ha
Page 17 and 18: structure, but it soon became morib
Page 19 and 20: prepared to discuss common problems
Page 21 and 22: Bhaskar, Krish. The Future of the U
Page 23 and 24: 1983. NEDO. Industrial Strategy. Re
Page 25 and 26: 10 Grant, “Government,” 101. 11
Page 27 and 28: 61 Ibid, 7. 62 Ibid, 8. 63 NEDO, Th
Page 29 and 30: 119 Wilks, Industrial Policy, 268.

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