Jonathan Pearce over at Samizdata apears to miss a point about the modern car industry in both the US and the UK. He’s quickly corrected in the comments on the subject of the UK ….we haven’t lost the UK industry, not at all. We’ve lost the UK owned industry, which is a rather different matter. As a country we now produce more cars than at any time since the glory days of British Leyland…it’s just that the manufacturers are people like Honda and Toyota.
There are those who think that this in itself is a problem, but when you think about it why should it be? We now have open capital markets, and if investors wish to own a piece of the British car industry there are plenty of brokers happy to sell them Japanese or US car company shares, shares in those companies that manufacture here. The profits are still available to UK investors….actually, it’s rather better than that as there are in fact profits to be had.
The US industry, with the downgrading of Ford and GM debt might seem to be a larger or more difficult problem, and it’s true that if companies of that size go bankrupt that there are indeed implications for the wider economy. Yet car manufacturing as a whole in the US is not in any real danger. Those plants owned over there by BMW, Honda, Toyota and all the rest are still pumping out the vehicles, the profits from that are available to US investors…it’s all a symptom of particular companies having problems, not of the industry as a whole.
In short, just as in the UK, what have been historically the US owned car companies (or if you prefer, those companies held to ransom by unions) are in trouble, but not the industry.
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