The West Midlands Automotive Industry: The Road Downhill

This paper examines how the structure of the automotive industry in the West Midlands has changed since the 1970s. In the early 1970s the West Midlands accounted for circa 60 per cent of total car production in the UK. By 2008, this had dwindled to 18 per cent. The discussion here will focus particularly on the most likely reasons for the decline in volume production and the region’s increasing reliance on relatively small scale luxury car production. The automotive industry was caught up in the general de-industrialisation that took place in the region since the mid 1960s prior to the economic crisis of the early 1980s, as well as suffering from the effects of increasing globalization in the car industry itself. By 2008 the context for the sector had become the global financial crisis. Due to a lack of economies of scale and investment the domestic firms such as British Leyland and Rootes became increasingly unable to compete in the market place despite restructuring and government intervention. Similarly foreign direct investment by firms such as Chrysler, Peugeot, BMW and Ford through a series of takeovers failed to restore prosperity and eventually all of them withdrew from the region. The outcomes have led to factory closures and a hollowing out of both the assembly and component sides of the industry, leaving the region heavily dependent on Jaguar-Land Rover which has been acquired recently by the Indian conglomerate, Tata. This paper assesses the reasons for the decline of the automotive sector in the West Midlands region by contextualizing its growth and decline against that of the UK auto sector as a whole. Considerable emphasis is placed on the fates of a number of key firms in the region – the British Leyland Motor Corporation, MG Rover, Rootes and Jaguar – with explanations offered for their decline.