Lorries in Europe some crystal-ball gazing
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by John Darker
• A blistering attack on Common Market bureaucrats whose policies were frustrating the enterprise and initiative of motor manufacturers, and others, was made by Lord Stokes this week when he addressed a large, international, gathering at a conference on -The European Motor Industry" — arranged by The Financial Times, in London.
The conference was notable for much crystal-ball gazing on the likely growth of markets, co-operation — or head-on conflict — between manufacturers, labour relations, industrial location, marketing, and the new responsibilities of distributors.
In a well-researched and thoughtful paper, "The Future for the Commercial Vehicle in Europe", Dr Joachim Zahn, chairman of the board of management, Daimler-Benz AG, said that at the beginning of 1973 there were approximately nine million commercial vehicles registered in Western European countries, or 23 per 1000 inhabitants. By comparison, the United States had 97 per 1000, and total registrations of 20m vehicles, Japan had 92 per 1000, and 10m vehicles.
Commercial vehicle densities Within Europe the varying commercial vehicle densities per 1000 population were: Federal Republic of Germany 20; Great Britain 32; France 38; the Benelux countries 28. Although these figures appeared to show ample room for increases, this would be a superficial conclusion, "as the vehicle population depends upon the structure of the overall carrier system as well as the influence of political priorities and the appertaining governmental measures, in terms of' which Europe is closer to the saturation point".
Dr Zahn stressed that the West-European motor vehicle industry accounted for 14-m employees and so far as the important commercial vehicle sector was concerned, they — and many others — depended upon the fate of the product which supported them.
It was likely that the increasing integration and economic involvement among the nations of the Economic Community would increase the demand for transport and that trucks would gain in importance because of their inherent advantages. However, the truck market of the future would be characterized by qualitative changes in transport requirements.
In many areas of the economy productivity increases within actual production processes were limited, but in distribution there were promising opportunities for rationalization in the organization of continuous "transport chains", such as containers, and the wider use of special
purpose vehicles, including refrigeration units.
Although there were forecasts which indicated greater growth possibilities for trucks than cars, "it would be fallacious to close one's eyes to the risks particular to the truck market as well as the realities of existing obstacles".
The truck market, said Dr Zahn, was highly responsive to swings of the business cycle and consequently to all political and fiscal measures aimed at influencing capital investments. By diminishing utilization the truck user had less restrictions on the timing of his replacement purchases and during such periods even the rate of repair sank! Production fluctuations around 30 per cent was experienced in the US and in Europe this figure was approached.
"In our opinion," said Dr Zahn, "the problem is aggravated by the not inconsiderable excess capacity in the European commercial vehicle industry. For example, this is shown by the fact that even in times of great demand .
almost disastrous price-cutting prevails."
There was still no uniform European market for commercial vehicles, thanks to the multitude of existing national regulations governing the production, registration and sale of commercial vehicles. The European transport market was comparable to the agricultural market with regard to the nearly incredible multitude of controversial problems.
Dr Zahn said many developing countries were setting up protective barriers against imports of commercial vehicles because they wished to build up their own industries at any price. In Europe, the Japanese planned to obtain a significant share of the European truck market, despite over-capacity of European makers. The production capacity within COMECON countries, too, would add significantly to competition.
Dr Zahn gave figures for the 1972 production of principal commercial vehicle manufacturers. General Motors produced about 966,000, Ford about 796,000, Toyota 805,000 and Nissan 577,000. "Even for the large European manufacturers the figures are far lower, eg British Leyland (131,000), Fiat (100,000) and Daimler-Benz (154,000)."
Although limited importance should be attached to comparative figures unrelated to vehicle size, said Dr Zahn, those quoted gave an indication of the company potential involved. Above 3 tons, the picture was quite different; here Daimler-Benz. with some 120,000 vehicles in 1972, although surpassed by the large US manufacturers, exceeded the corresponding production figures of the Japanese.
Dr Zahn was not prepared to forecast how many manufacturers there would be in 1980 or 2000. He thought that then would not necessarily be concentration ir the European market since the possibilitie5 for useful co-operation between maker5 had not been exhausted. This method hae been fruitful, especially in the case o mutual projects for • developing nem propulsion systems and for sharing tht production of certain commercial vehich major components.
Dr Zahn concluded that the marke. for trucks would increase rather that decrease, though road systems could no be enlarged indefinitely with existim constraints. Truck market fluctations woult increase as saturation point was approached giving financing problems. Existing capacit: — and sales and service capacity — was absolutely adequate. Competition fron non-European makers would increase am exports to third countries would diminish There would be greater rationalization production of lorries. Increasingly customers would be "single large firm or State services"; the scope for rational ization and dispersed production facilitie would be limited by industrial relation legislation and plans for worker co-detei mination — a trend presenting seriou problems as well as a threat to viability.
After a lengthy tirade expressing hi strong belief that we were "hurtling" toward a situation where, individuals, companieE even nations, had no say at all in th forming of the future, because the faceles minions at Brussels continually searche, for more and more regulations, directive: homologation proposals, etc, Lord Stoke said that compared with the 1964-72 perio where the growth rate of commercit vehicles was 3.2 per cent, the lates estimates were for a growth rate of 2.. per cent in the 1973-80 time-span,
Blunt words Lord Stokes had some blunt words ti say on the subject of high wage level in the motor industry where increases c 10 to 12 per cent wages annually wer expected. This meant a doubling of preser wage levels in seven years (at 10 pc cent) or six years (at 12 per cent), i by the end of the decade. Manufacturer would have to look even more' close] at future investment in terms of labou content.
The present industrial centres would nc be able to supply motor vehicles if predicte demand was realized. The alternatives wet for Europeans to cease to export vehick or to set up new production facilitie in high unemployment, low-wage (relativel3 centres in Spain, Portugal, Yugoslavi; Greece, Turkey and Southern Italy. -Th would obviously do away with the nee for more people but would cause chac to the balance of trade."