These are not good times for those of us in industrial relations/HRM who
think we are blessed with a sunny disposition. Manufacturing in Britain appears
to be suffering another assault on its very existence.
The collapse of Rover is dreadful news for the West Midlands. The real
significance of the Rover problem has yet to work itself through into the
component supply sector for BMW/Rover. Anecdotal evidence suggests, by the way,
that the component suppliers have been carrying the costs of high interest
rates as the strength of the pound has drive the senior "partners" in
the supply chain to make good their losses by forcing down component prices. So
much for the "partners" relationship.
What is in store for Britain in the absence of manufacturing? It is true
order books for some are OK at the moment. It is also true some aerospace firms
are looking forward to a reasonable future, and car firms like Peugeot are
still making a car the market wants.
However, the net effects of high interest rates designed to keep a lid on
the notional value of my house in London are altering for ever the industrial
prospects of Northern England, Scotland, Wales and Northern Ireland. Inward
investors who are here already are unlikely to leave because we seem to lack
the courage to confront Britain’s xenophobia about the euro and high interest
rates. But they will not expand. And will new manufacturers now come here? We
might have the most flexible "valued asset" – our people – but the
most highly prized asset in reality is money, and our money is too expensive.
Perhaps we are to be rescued by the e-commerce industries. Or not. For
instance, there is much to admire about Cisco Systems worldwide. I listened to
one of its senior managers at a Swedish trade union conference on e-commerce
last week. Its HR policies are cool to the point of asceticism. Two auditors
examine on-line expense claims for 16,000 employees. They don’t do much
training in company time, but an enormous amount of distance learning is
supported, with 80 per cent of sales and technical training done on-line. The
productivity in Cisco per employee stands at $688,000, compared to the car
industry at $160,000. Salaries of executives are largely augmented by share
options. Perhaps in this stunning success story, we ought to be amazed as many
as 3 per cent of staff leave each year.
What does all this tell us? I fear the success of e-commerce based in the
South East, along with the bizarre dot.com frenzy at the Stock Exchange will
further intensify the forces shattering our industrial heartlands. In the rush
to join in with Internet expansion, our high interest rates will have to be
sustained for fear of reviving inflation. My house will continue to be worth
funny money. And I will get 13-plus Swedish crowns to the pound when I visit my
union friends there. None of this will make Birmingham a better place to live.