Britain - Rover's blackmail over jobs and the fight against the profit drive

Nov/Dec 1998

This year's Birmingham Motor Show, at the end of October, was not just the usual prestigious event designed to promote new (and not so new) models that most people cannot afford to buy.

The tone of the newspapers' headlines that followed the show was indeed more down-to-earth: "Ford chief warns of slumps in sales", "Ford goes on four-day week until Christmas", "Rover is given ultimatum", "BMW to cut deeper at Rover", "Rover losses set to halt BMW spending", "BMW seeks £250m to rebuild Rover", "Mandelson in crisis talks over Rover jobs", "2,400 jobs to go at Rover", etc.. Then there were a few others about the future of various car factories being at risk. But in fact this was only the beginning of a long series of similar headlines - based more often than not on rumours and speculation rather than facts - which will probably go on for quite some time over the coming weeks and months.

This media campaign comes after several months in which there have been daily announcements of factory closures and job cuts across the country, involving just about every sector of production. But whereas, so far, these announcements have concerned mostly medium-sized factories, involving in most cases no more than a few hundred jobs at a time, it is now the entire car industry, or in any case a large section of it, which seems to be coming into the bosses' firing line.

As much as the other announcements made in the past few months are just a thin cover for the bosses' profit drive, so is the "crisis" talk used by car manufacturers today. They seem to be trying to make the best of the general context of rising job losses and protracted financial crisis to blackmail workers into accepting concessions which they would have turned down flatly only a few years, or even a few months, ago. This is particularly explicit in the case of the Rover group and the threats on the future of its largest plant, at Longbridge in Birmingham.

However, today, car manufacturing is by far the single largest industry in the production sector. Its workforce never went through the kind of defeats experienced in other large-scale industries, such as coal mining, steel, shipbuilding or the docks. Partly as a result of this, but also because it is difficult for companies to reduce significantly the size of car plants - for instance to the small scattered units which now predominate in engineering - the car industry still retains some of its past traditions of working class organisation. In other words, in and of itself, the car industry has a social weight and a potential for resistance which could develop into a powerful obstacle to the capitalists' profit-boosting drive.

It is, therefore, all the more significant that the bosses should today be launching what looks like a large-scale offensive against jobs and conditions in this particular industry.

How far-ranging this offensive is going to be is difficult to say. Even the car manufacturers are probably not too sure about this themselves. Today they may know what they want to achieve but, for the time being at least, they are probably only testing the water. Ultimately whether they go for their present agenda in full, stop half-way or possibly go even further, will depend on the resistance they come up against.

In any case, the offensive which is beginning today in the car industry concerns the entire working class. This is because this offensive is an integral part of the general attack on jobs which started around six months ago, but above all it is because it raises the need for, and the possibility of, a general fightback of the working class in much more concrete terms.

Rover, from BAe to BMW

So far, it is at the Rover group that the bosses' agenda is most clearly spelt out.

Rover is the country's largest car manufacturer, with four major production sites - 14,000 workers at Longbridge, near Birmingham, 11,500 at the Solihull Land-Rover plant, 4,000 at the Cowley plant, near Oxford, and 3,500 in Swindon.

It must be recalled that Rover came out of the old state-owned British Leyland group. In 1988, after a decade of underinvestment and cutbacks resulting in over 25,000 job losses in production, Thatcher "sold" British Leyland to British Aerospace - that is, all told, British Aerospace was paid £650m for taking over BL. During BAe's five-year period at Rover's helm, the headcount carried on its downward slide (at Cowley, for instance, the workforce was more than halved), non-production jobs were contracted-out, short-term contracts were introduced, while in some plants, skilled workers were made to rotate between skilled jobs and line jobs. During that period BAe invested very little in Rover, but they made sure to strip as many assets as they could for profit. So, for instance, the sites of the two plants closed down in Cowley were converted for other industrial development.

Then, by 1994, BAe decided that they had squeezed enough out of Rover and BMW bought the company for £800m - which was not such a bad deal considering that this was more or less equal to the amount of profit made by Land Rover alone in just one year. Moreover, this deal allowed BMW to acquire a large sales network in the British market where dealers traditionally play a decisive role.

Predictably this deal generated a storm of nationalistic protest from the Labour and trade-union left to the Tory Euro-sceptics. After all, following Jaguar's takeover by Ford, wasn't Rover the last significant British car manufacturer left? In response, the official line was that German investment would guarantee British jobs - provided, of course, Rover workers were prepared to show some goodwill toward BMW's well-known efficiency. In contrast to the chauvinist fears of allegedly "left" union leaders, many Rover workers were rather pleased - since for them, whoever the owner was did not matter so much, but they saw new investment as a welcome departure from BAe's asset- stripping and cost-cutting.

Only, of course, as it turned out, BMW's investment was rather exaggerated. The official figure of £500m a year since the takeover may seem large compared to BAe's record. But this amounts to just over a fifth of BMW's investment in its German plants in 1996 alone, for instance, and certainly much less than Nissan, Toyota and Honda have had to spend on their "green-field" sites in Britain over the years. In any case, BMW's investment was not enough to turn all of Rover's ageing plants into modern production sites.

But at the same time, the old drive to squeeze more work out of the workforce went on relentlessly, only the packaging changed.

In search of flexibility

The build-up to Rover's present demands on the workforce really began at the beginning of this year, at the Cowley plant, where the new Rover 75 - "the first new Rover car designed and engineered in Britain for more than 25 years" according to the official blurb - is to be built.

Rover began negotiating with union leaders with the aim of getting the plant to operate 96 hours a week. But as the working week at Rover is 37 hours, this meant either a third shift, a lot of overtime or some other arrangement involving longer daily shifts. Yet Rover wanted neither a third shift nor to have to pay overtime premiums. However, their initial attempt to obtain longer shifts without any shift premium but with an extra day off during the week came to nothing. Thereafter the talks were shrouded in secrecy for months.

Eventually, in May, Rover sent a letter to all employees. It detailed various options "recommended by your trade unions", which were to be voted on and implemented by November 1st. What came out of this was a system whereby four days of 9h45 were worked every week, with alternating early and late shifts and the possibility for management to rotate the fifth day according to production needs. But in addition, the deal included other flexibility elements. There were the so-called "catchback hours" (already introduced on its own at Longbridge the year before). This required that workers would have to work 2/3 of their breaks on compulsory overtime if "production required" (for instance to make up for the time lost due to a breakdown on the line). Besides, there was the introduction, for the first time ever in Rover, of "Temporary Resources", in plain language, temporary workers, who enjoyed no job security, holiday or sick pay. Nevertheless, they were to be called "associates", since this is how Rover likes to call all their employees from the lowest grade to top managers (even if some "associates" are better "associated" than others, in terms of earnings...).

Overall, this new system was comparable to that operating at the BMW's Munich plant, where it was said to have resulted in an increase in output of about 30% for no increased investment in plant and machinery. Except, of course, that the working week in Munich is 2 hours less (35 hours), wages are 50% higher and paid holidays three weeks longer (taking public holidays into account).

In any case, Rover had managed to introduce a measure of flexibility through the backdoor, first in Longbridge and now in Cowley. As a sweetener, however, the Cowley deal came with the promise of a thousand new jobs. And by early June, there were already 7,000 applicants queuing up for them.

It was against this background that in July, less than a week before the summer shutdown, another letter was sent round by Rover to all their employees, announcing the imminent cutting of 1,500 jobs. In addition, selective short-time working would begin in August. The same letter said that further job losses would only be avoided if workers accepted "flexibility arrangements including carry over of working time account from 1998 to 1999". In other words, workers who were put on a 4-day week due to short-time working, would have to work Saturdays for free the following year in exchange. This "working time account", which suddenly materialised in this letter, was yet another attempt at forcing even more flexibility through the back door. This time it was a system of annualised hours (except that they could possibly be banked over several years) which would allow the company to respond to the ups and downs of production by imposing compulsory overtime (without payment) and short-time working (without loss of pay), thereby saving on the payment for overtime and the recruitment of new workers.

This blatant blackmail, however, did not go further at that stage, not for the time being at least. But the 1,500 job cuts were carried out, mainly through voluntary retirement and non-renewal of short-term contracts.

What is Rover after?

It is precisely the same blackmail which was reiterated at the Birmingham Motor Show on 21 October. Ironically, whereas Rover's letter in July had mentioned the need to "offset the impact of the overvalued pound", this time BMW's chairman blamed the predicted worsening of Rover's financial "plight" on the 30% productivity "gap" between Rover and BMW workers. Of course, it would have been difficult to blame the high pound which had just dropped by over 15% against the deutschmark! In any case, investment at Longbridge was being frozen. If agreement could not be reached with the unions by the end of November concerning new working practices, production of the new Mini would be switched from Longbridge to Cowley and the Birmingham plant would eventually be closed.

The following day as publicity was given to Rover's predicted losses for 1998 - but then any accountant knows how to produce losses in a profitable balance-sheet - Rover announced the cutting of a further 2,400 jobs mainly at Longbridge.

Even such an employers' mouthpiece as the Financial Times was sceptical about Rover's claims. After all, had not Rover boss, Walter Hasselkus, admitted that the company had been successfully using the financial market to hedge changes in currency rates since the mid-90s and that this had largely insulated Rover against the effect of the strong pound? As for pricing themselves out of the market, why weren't other companies also complaining? As the Financial Times put it: "Other carmakers did not hedge, or hedge as much. Despite this Rover claims to be more affected than most - stranger still given other car companies export more."

As to the productivity gap claimed by BMW's chairman, it did not prevent Rover's exports from increasing by 6% last year, nor even BMW's profits from increasing substantially as well. BMW found £40m to burn on the copyright to the Rolls-Royce label alone, while investment at Longbridge has been next to nothing. So it is not hard to see what Rover is aiming at.

On the one hand, Rover certainly has its eyes set on the government's purse. The papers have leaked the news that BMW was demanding a £300m subsidy for any future investment at Longbridge. Already, a £45m subsidy has been awarded for a new joint Rover-BMW engine plant at Hams Hall, near Birmingham - not to mention a smaller (but still..) £350,000 for a new railhead at the Cowley plant. So why not a large subsidy for investment at a large plant like Longbridge?

On the other hand, the conditions planned for the future workforce at Hams Hall provide a blueprint for what Rover wants from its present workforce: two 4-day rotating shifts operating six days a week for a total of 115 hours, 48 weeks a year, with working time account thrown in for good measure.

In fact, there is probably no better summary of Rover's policy than this statement made by Doug Dickson, managing director of the Cowley plant, which was reproduced recently by the Sunday Times: "Capital productivity is vital. We are making the assets sweat through introducing flexible shifts - we have agreements that could enable us to run the plant throughout the year." Yes, but machines don't "sweat", only workers do - and they are obviously considered as part of Rover's productive "assets".

The union machineries' response

National bargaining in the large car companies is directly under the control of the top leadership of the main unions concerned - that is today the Transport union (T&G), the engineering and electricians' union (AEEU), the General union (GMB) and the white-collar and technicians' union (MSF). Joint Negotiating Committees are in charge of the entire business and even if officials from the main plants are usually part of these committees, those who are really in control are national full-timers whose faces are never to be seen on any shopfloor.

In Rover, the union machineries have an appalling record. In the 1970s and 1980s, they went along with the attacks launched by the company against militant shopfloor activists at Longbridge and Cowley, without lifting a finger to oppose the large-scale closures and job cuts during that period, nor in fact during the first five years following privatisation, under British Aerospace management.

In BAe's days, there was an increasing tendency among managers to by-pass union officials. After BMW took over in 1994, however, this seems to have been reversed, with the new management beginning to rely more heavily on the union machinery for implementing decisions.

One of the practical consequences of this was that many shop- stewards got much more bogged down in endless discussions with management, at the expense of intervention on the shopfloor.

But there were other consequences. For instance, last year in Longbridge, the works committee chose to sign up to compulsory overtime over the heads of the workforce. This had been met by widespread individual resistance and set in train numerous instances of disciplining and even several sackings, as many workers refused to work the overtime. Another example came last May at the time when the rotating shift-issue was raised in Cowley. Instead of managers doing the presentation of the new shift patterns and conditions proposed by Rover, plant union officials did the job themselves. Clearly co-operation between managers and leading plant officials has become so close that the latter see no problem in doing the former's jobs.

Then, in July, when Rover announced 1,500 job cuts, union leaders joined their voices to those of Rover managers to blame the "overvalued pound" and the Bank of England for sabotaging the export efforts of companies like Rover. Of course, it must be said that all the unions concerned at least made a gesture by proposing a strike ballot should Rover try to impose its working time account. However, this was certainly not a very daring gesture. First because, there was certainly no question of Rover "imposing" the working time account without the unions' agreement, anyway. And second because, as is well- known, there is much more talk of strike ballots these days than ballots actually being held, and many more ballots than actual strikes.

Besides, the same union leaders had just signed up to an agreement for the new Hams Hall engine plant which included, precisely, that same working time account. How could they be trusted to oppose it seriously in the rest of the group? On the other hand, these union leaders knew very well that, having got its way for Hams Hall, Rover would try it at some point for the other plants.

At about the same time as the BMW chairman was reading the riot act to Rover workers at the Birmingham Motor Show, a Rover union delegate meeting was held. It was addressed by Tony Woodley, the chair of the Rover Joint Negotiating Committee and national automotive organiser of the T&G, who used tough talk. But instead of directing his anger against BMW and Rover, he targeted once again the Bank of England and, to a lesser extent, the government.

The next day, a letter signed by Woodley and other members of the JNC was sent out to all Rover workers (printed in capitals). "The situation", says this letter, "is far worse than you may have appreciated." It speaks of "heavy losses" (no details) adding that "the very future of the Rover cars, if not the whole company, is in question if BMW cuts back on investment". Then comes the important part: "the future of Longbridge and confirmation of ongoing investment for new models at the Solihull plant remain in the balance. Without major surgery to cut cost immediately via significant job losses, alongside cuts to employment related and other costs, there will not be a supportable survival plan to place before the BMW board" (our emphasis).

In other words, not only does the JNC endorse entirely the "crisis" claims made by Rover and BMW to justify their attacks against workers, but they even endorse the "solution" proposed by Rover - that is the attacks themselves, since boosting profits is the only plan acceptable to the BMW board and its shareholders.

The profit drive can unite workers' ranks

As mentioned earlier, the case of Rover is the most explicit, but not the only one. Ford, the second largest car manufacturer in the country, seems to have embarked on a parallel, although apparently more cautious course.

Like the BMW chairman, Ford's worldwide manager took the opportunity of the Birmingham Motor Show to make a few grim statements about the future of the car market. And these statements were immediately relayed and amplified by the press, which was probably exactly the aim of the exercise.

It must be said also that it would be a lot more difficult for Ford to cry poverty at this particular point, than it is for BMW. First because the company has just announced high after-tax profits of £600m for the third quarter only - an increase of 10% over the previous year. Second because its sales in Britain have increased.

However, this has not prevented the media from presenting the 4- day working introduced by Ford in November at its Dagenham plant near London as the sign of a crisis situation. Ford has been careful not to deny such statements. But in fact, 4-day working is a regular feature at Dagenham at this time of the year, with only a few exceptions, like when a new model is launched.

On the other hand, Ford is certainly keen to keep alleged threats over jobs hanging over the heads of the workforce. One reason for this, among others, has also to do with flexibility, since the introduction of compulsory, flexible overtime was turned down at the last pay deal, in 1997. Since then, Ford has wasted no time to introduce, with the help of the union machinery, a lot more flexibility by using systematic outsourcing for instance. In this, Ford is probably a few steps ahead of Rover. But the fact that, for instance, the company keeps trying to introduce flexible working patterns for designated sections of workers, shows that it has not given up on its 1997 attempt.

Besides Ford is an old hand in the art of blackmailing workers over jobs. The same scenario which is being acted out today by Rover was already played before, in 1997, by Ford over the fate of its Halewood plant, near Liverpool. Even some of the actors were the same - at the time Tony Woodley was already in charge of the trade-union side and managed to defuse the workforce's anger and to paint the loss of 980 jobs as a "victory" (today he would probably describe it as a "necessary evil"). At the same time Ford gave the then government a good pretext for a hand-out of £80m.

So, the odds are - and insistent rumours confirm this in the Ford plants - that it is just a matter of time before Ford turns to the workforce with some kind of blackmail over jobs, similar to that at Rover. And judging by how keen the union machinery was, last May, at the Dagenham plant, to "offer" the company a speedup in exchange for a guarantee on jobs (workers got the speedup but not the guarantee of course) - it is not hard to imagine the same union officials volunteering all the excuses Ford might need in order to introduce its flexibility.

Rover and Ford are only two examples, among many others, where employers are playing with workers' jobs to cynically boost their profits or to blackmail workers into accepting yet more concessions on their conditions, and generally both. But the bosses' can only get away with this as long as the groups of workers which are under attack remain paralysed by their isolation. This is what is happening for the time being, with, so far, only a small number of isolated fightbacks against the plant closures and job cuts which are being implemented up and down the country.

With workforces in large car companies coming under attack, this could change, or rather the car workers, or those of other large industries which are targeted, could reverse this situation. They would have the advantage of their numbers and political weight, and the resources to organise themselves independently from these union machineries which are so "understanding" today toward the bosses' so-called "difficulties" and so quick to side with them in demanding sacrifices from workers.

When a large car plant goes on strike, it is a political event in and of itself, which is significant enough to become a focus of interest for workers far beyond those directly affected by the strike. This can give the strikers the opportunity to reach out to the hundreds of thousands of workers in smaller industries who are at the receiving end of the same profit drive - if only, for a start, among subcontracting firms. The greed of the capitalists and the need to fight against it can provide a solid cement capable of uniting the anger and aspirations of workers across sectional and industrial divisions. For this cement to "set", what is needed is a common purpose and objective - that of turning the tide and making the bosses pay, for once!

8 November 1998