Why Can't the British Manage Car Companies? AS ROLLS-ROYCE IS SET TO GO TO A FOREIGN BUYER
Byline: MARTIN VANDER WEYER
THERE is something quintessentially British about Rolls-Royce, or so we like to think.
The brand-name has entered international language as synonym for timeless, understated craftsmanship of a kind which - at least in certain fields, like bespoke tailoring - the British still do best.
So it comes as a special blow to nationalistic pride to learn that the great car company for sale and all the likely buyers are foreign.
A blow, perhaps, but hardly a surprise: 99 pc of the motor industry in this country is already in American, German, French or Japanese hands.
Rolls-Royce was tucked into that last percentage point, along with handful of specialist sports car makers and that forgotten wonder of utilitarian design, the London taxi.
But now it is set to go the way of Jaguar (owned by Ford) and Lotus (owned by Malaysian interests). In all probability it will join Rover under the ownership of BMW, which already makes engines for some Rolls.
Why is Britain incapable of nurturing motor industry of its own? We have design and engineering skills in depth, as demonstrated spectacularly on Sunday in the triumph of the Williams team (with Renault backing) in this year's Formula One constructors championship.
We have a proud history of automotive achievement: the first BMWs were Austin Sevens produced under licence, and Hillman Minxes were once a common sight in Tokyo.
We have in the City of London what is trumpeted as the most efficient capital market in the world.
That last claim leads us into one popular explanation of this supposed failure - I say 'supposed' because the question is whether it really counts as a failure at all.
The theory made fashionable by Will Hutton, author of The State We're In, is that the City may be efficient at moving capital around, but - driven by the short-term whim of speculators and the excessive income demands of powerful institutions - it has been destructive and irresponsible in its influence on British manufacturing industry.
The accusation is that British investors undervalue serious large-scale industry and shy away from it. They prefer property and service businesses offering quicker, easier returns.
They hate investing in research and long-term development.
Rover was sold to BMW in January 1994 by British Aerospace partly because BAe was fed up with having its stock-market rating depressed by a car division which investors considered deeply unsexy.
Before the [pounds sterling]800 million deal was signed with the Germans, the possibility was explored of selling Rover to the public through the London Stock Exchange, but it was readily apparent that the men from Munich would bid more than domestic investors.
Vickers, which owns Rolls-Royce, has indicated that it prefers to concentrate on other (mostly defence-related) activities because further investment in Rolls 'would not be the best way of maximising shareholder value'.
Motor industry guru Karl Ludwigsen described the Rover sale as 'a clear rebuke to Britain's financial and investment infrastructure'. The Will Hutton school would say the same of a BMW takeover of the Rolls factory in Crewe.
But this is too facile. Major British companies have triumphed in other sectors with heavy research and development demands and long-term risks - like pharmaceuticals and defence electronics - with the enthusiastic backing of the City. The point about the motor industry is that it was stained in a particular way by the experiences of recent history. …