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The Common Market • •

25th August 1961, Page 48
25th August 1961
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Page 48, 25th August 1961 — The Common Market • •
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Which of the following most accurately describes the problem?

Manufacturers are Read and Waiting

European Mainland Regarded by Many As The Place Where Most Expansion Can Take Place : Buoyant Hopes For The Future by John F. Moon

A.M.I.R.T.E.

BUOYANT enthusiasm best describes the mood of the British commercial-vehicle industry with regard to the prospect of Britain becoming a member of the European Economic Community (E.E.C.), or the Common Market as it is more popularly called_ This much is clear

from discussions I have had with senior officials of some of our vehicle and component manufacturers, and there are good reasons why this should be so.

Last year, for example, registrations of new British goods and passenger vehicles in the six E.E.C. countries exceeded 1958 registrations by 70 per cent., despite unfavourable tariffs, whereas in the European Free Trade Area (" Outer Seven ") the corresponding rise in British vehicle registrations was only 44 per cent., this figure including Finland, which country is associated with EFTA.

It is obvious, therefore, that any fall-off in trading between the United Kingdom and EFTA, which might follow our joining the Common Market (because of the abolition of preferential tariffs between the Outer Seven tountries), would be relatively slight compared with the tremendous potential for increased commercialvehicle sales within the E.E.C. which would result, particularly in France, Germany and Italy-markets which have always been difficult because of trade barriers.

The industry is prepared for this possible reduction of sales in EFTA countries, and to a certain extent our trade with the Commonwealth is viewed in a similar light: a few important manufacturers having viewed the Commonwealth as a shrinking market for British commercial vehicles for some time now, in any case, principally because many of these countries-and other overseas countries, which have in the past provided big outlets for our products -are concentrating more and more on establishing their own vehicle industries.

This being the case.

British manufacturers are left with little alternative but to look to the European mainland as their best market, and although I have already quoted figures which show a promising gain in sales in the present Common Market area, this gain cannot be expected to continue indefinitely unless Britain joins the Market, duty-free trading between E.E.C. members being proposed take effect by 1966, although this could well happen earlier at the present rate.

This, then, is the crux of the matter in so far as it affects the British commercial-vehicle industry: our production and

E.E.C.

COUNTRY REGISTRATIONS Belgium and

Luxembourg Total

British France Total

British Germany Total

British Holland .. Total

British Italy Total

British EFTA COUNTRY REGISTRATIONS Austria .. Total

British Denmark Total

British Finland .. Total

British Norway Total

British Portugal Total

British Sweden .. Total

British Switzerland Total

British

sales will undoubtedly rise if the U.K. joins the Common Market, but the state of the industry is likely to be parlous if we do not join, and under such circumstances many of our smaller manufacturers could be put out of business.

To emphasize this point, I cannot do better than quote Sir Henry Spurrier, chairman and managing director of Leyland Motors, Ltd., the champion heavy-vehicle exporters to Europe. Sir Henry told the The Commercial Motor that: "In so far as Leyland is concerned and our associated companies, we are of the opinion that the United Kingdom cannot afford not to belong to the Common Market, bearing in mind that it has a potential of some 200m. people and that it is an expanding and vigorous economy, which is likely to be equal to that of the United States of America."

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Sir Henry added this proviso, however: "At the same time, we feel that prior to actually becoming a member of the Common Market, the British Government must be in a position to negotiate reasonable terms and that we must give full consideration to the long established profitable trading conditions which at present exist between this country and the Commonwealth countries and in which the commercialvehicle industry in particu• lar has been so successful.

"If we do not join the Common Market we feel that one of the biggest trading blocs in the world will be closed to us and that a great competitive stimulus will be removed from our industry, which we think in the long run will do it good. We must bear in mind," said Sir Henry "that many Commonwealth countries today are gradually developing their own manufacturing industries, which, in the ultimate, must restrict the imports which they can accept from this country."

Admittedly, our joining the E.E.C. would throw the British market open to Continental manufacturers, but whilst this might provide the car and motorcycle industries with unwelcome and maybe even overwhelming competition in the domestic market, the commercial-vehicle manufacturers should have little to worry about, and they do not anticipate a really significant increase above the present import figure, which at the moment forms approximately 1 per cent. of the total sales in this country.

There are two main reasons for this apparent complacency. One is that our biggest-selling makes of commercial vehicle are of a far higher standard in respect of design at least—even if not always in terms -qf quality— than comparable Continental types. Indeed, there is a discernable Continental design trend towards producing British types of vehicle.

The other important factor is price, and here again our larger producers can under-sell their Continental competitors by appreciable margins when the basic prices—. uninflated by duties and taxes—are directly compared, as will be the eventual case with the Common Market. A "low-cost" French diesel 4-tonner, for example, is priced in France about 60 per cent. higher than an equivalent British vehicle in Britain.

Optimism Over Sales Prospects

These two reasons are also, of course, the basis for the industry's optimism concerning our sales prospects if we join the E.E.C. It seems fairly obvious that the greatest sales gains will be made in the mediumand heavy-capacity fields, although the prospects for passenger chassis are bright also. Exports to Europe of light vans might not swell to the same degree, however, because in France, Germany and Italy, indigenous 1and i-ton commercials—embodying private-car running units— provide a serious measure of competition for our own products of this type.

Significant, however, is that many British manufacturers will be prepared to buy rough or finished components for vehicles or engines from other Common Market concerns, providing quality and price are advantageous, although few seem to take kindly to the idea of co-operation with Continental vehicle manufacturers.

British trailer and semi-trailer design is gradually improving, so there is no cause for British exporters of this type of equipment to be unduly depressed about our prospects in the Common Market should we become members, whilst goods and passenger body manufacturers should be little affected either way, as the demand for bodies in this• country will continue at the present rate, irrespective of the country of origin of the chassis on which these bodies are to be mounted, whilst specialized body manufacturers should be able to compete quite happily with their Continental opposite numbers.

Generally speaking, British manufacturers of components and accessories are as enthusiastic about the idea of our joining the Common Market as the vehicle manufacturers and those with any existing markets in Europe at all, feel that the picture could become very black if we did not join, whilst those without markets in Europe at present regard the possibility of our union with the E.E.C. as a heaven-sent opportunity to compete with European producers on equal terms.

For the purposes of this survey I contacted seven British vehicle manufacturers and five component and accessory makers, whilst reactions were also sought from three Continental manufacturers. Unfortunately, it has not been possible to get a general statement on behalf of the industry from the Society of Motor Manufacturers and Traders, Ltd., who feel that the issue has taken on such a political complexion that a pronouncement cannot be made at this time.

However, I consider that the manufacturers' opinions which follow indicate the feeling throughout the industry, whilst at the same time giving an indication of how these manufacturers hope to tackle the scope for increased sales which our link with the E.E.C. would create.

Vauxhall Motors, Ltd. (Bedford) An ORE Bedford vehicles are sold in Europe than any mother British make of truck, sales to Common Market and EFTA countries last year totalling 2.789 and 5,438 units respectively—over 16 per cent. of the total exports of Bedford vehicles for that year, and about 28 per cent. of the total exports of British vehicles to the E.E.C. and EFTA.

Bedford sales in Europe are expanding still further: in the first five months of this year 45 per cent. of all new commercial vehicles sold in Denmark were Bedfords, as were approximately 25 per cent, of the new-vehicle sales in Holland, Norway, Portugal and Finland. These successes have taken place in the face of strong French and German opposition and despite the unfavourable tariffs which British vehicles entering Common Market countries have to carry, so, to quote Mr. C. G. Tipper, Vauxhall's export manager, "Bedford go in with a strong hand." Vauxhalls sell commercial vehicles in all the E.E.C. and EFTA countries with the exception of Germany, German sales not having been developed yet because of lack of production capacity and because distribution in Germany is still providing a subject for considerable planning.

Whilst the demand for the latest Bedford models has far exceeded the supply, it is certain that Bedford sales will expand if Britain joins the Common Market, and Vauxhalls estimate that by 1965 their annual sales in the principal European countries will have risen by at least 10,000 above the present figure, assuming that Britain joins the Common Market within the next year or so.

All this requisite increased production will stem from Vauxhall's British plants, but in what condition the vehicles will be sent to Europe is at present open to some doubt. a15 Currently c.k.d. packs are sent from Dunstable to the G.M.C. plant at Antwerp, where Bedfords for the Benelux countries are assembled, and to the G.M.C. Copenhagen establishment, which supplies the Danish market.

For all other European sales, complete vehicles are sent from Dunstable, and whilst reduced tariffs should remove the need to use c.k.d. packs, if labour rates in Belgium stay low the present system might be continued—at any rate until the Antwerp plant reaches the limits of its capacity.

Vauxhall's regard their greatest potentials for Bedford vehicles as being in France, Germany and Italy, and expect to make major gains in these rapidly growing markets. These increases will mainly deal with medium-capacity diesel trucks, sales of light vans not being expected to rise to the same degree on account of locally produced vehicles of similar type.

It is expected that the existing Bedford dealer network in Europe, which is led by G.M.C. organizations in seven countries, will have to be expanded, but this is not viewed as being likely to cause• too many difficulties. Neither is it intended to develop any new designs specifically for Europe—after all, the success of existing designs shows that Vauxhall's are already tuned to European lines of thought.

A fall-off in sales of Bedford vehicles in non-European territories is regarded by Vauxhall's as inevitable, irrespective of whether Britain joins the Common Market or not, partly because so many countries are setting up their own vehicle industries, whilst Japan—whose output is second only to the U.S.A.—is now providing very fierce competition in Asia and Australasia. Vauxhall's have found that sales of Bedford vehicles in the Commonwealth have been showing a distinct decrease of late, so they regard Europe as being their most important market in future years—a market which Continental makers will find Vauxhall's tackling with increased vigour.

The Leyland Group (Leyland, Albion, Scammell and Standard-Triumph)

GC TT will mean hard work, but nevertheless a welcome Ichance to expand an already thriving export market." That is what the prospect of Britain entering the Common Market means to the Leyland group, who not only have extensive production facilities in Great Britain, but manufacturing arrangements in several Continental territories also.

Sir Henry Spurrier, told me: "The Leyland Group of companies is well established in the Commonwealth and we do not wish to lose the strong position which we have built up in those territories in many years. At the same time, however, we realize that we must adapt ourselves to a changing world, and we readily accept the challenge offered by the European Common Market as we are convinced that, given equal opportunities, our company can compete with any European manufacturer in existence today.

"At the present moment, we are already well established in Belgium and Holland, and look forward to the opportunities offered by being able to expand in France, Germany and Italy."

In the Common Market Leyland products are sold in appreciable numbers in Belgium and Holland, whilst strtall but significant penetration has been made into Germany, though mainly with industrial power units. So far as EFTA is concerned. Leyland group products sell in all countries.

Because of these existing markets Leyland have developed manufacturing facilities in Belgium and Holland, the more important centre being in Belgium, where the Brossel plant

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could manufacture sufficient chassis to meet the needs of Benelux and northern France. Brossel production can be increased by reducing the number of components which Brossel themselves have to manufacture and using instead, parts made in either Britain or other Common Market couniries.

Assuming that some of the EFTA countries will join the Common Market if Britain. decides to, Leyland's position is further strengthened by their ownership of D.A.B., Denmark, a company which, although basically body manufacturers, could build Leyland group chassis, if necessary.

Leyland do not pretend that new designs may not be necessary, and example the Brossel Europ and the latest Pegaso ranges as current instances of .this trend. The Leyland group is fully prepared to tailor its designs to suit European requirements therefore.

It is not felt that Leyland will have to follow the lead of certain important French, German and Italian manufacturers, who have banded together to provide combined servicing facilities throughout Europe. Accordingly, they have already started to reorganize their sales and service network and intend to remain independent of other manufacturers when the time comes for expansion.

Leyland anticipate increasing demand in Europe for articulated outfits and feel that medium-duty six-wheelerssuch as the Albion Reiver—could well become popular if general agreement is reached as to a Continent-wide set of vehicle-construction regulations, which could well limit four-wheelers to about 14 tons gross solo weight. They do not regard competition in Britain from Continental manufacturers as being a particular menace.

The British Motor Corporation WHEN I asked Mr. J. F. Bramley, B.M.C.'s export sales

• • director, how he viewed the prospect of Britain joining the Common Market he gave a cautious reply: "We support the idea of the Common Market in the widest possible sense, but the Government should not place us in the position of losing established markets and having to make up the lost volume in the highly competitive European area." Although B.M.C. sell commercial vehicles successfully in all Common Market and EFTA countries, Mr. Bramley was quick to point out that B.M.C.'s European policy is a combined one for both cars and commercial vehicles.

Mr. Bramley said that, whilst he felt we should be in the Common Market, Commonwealth trading problems caused some concern. At present a slightly higher percentage of B.M.C.'s commercial-vehicle sales went to EFTA as opposed to the Common Market, although the combined sales in both areas, whilst expanding rapidly, were small compared with total exports, and Common Market trade was a small proportion of that with the Commonwealth.

B.M.C. expect to expand sales in Europe, and recognize that the rapidly expanding market in Europe offers considerable scope should Britain join the E.E.C. The increased production needed to cope with expansion in Europe will be provided by the new Bathgate factory, the eventual production capacity of which will be in the region of 2,000 trucks a week.

B.M.C. do not anticipate having to change the designs of their commercial-vehicle ranges to suit European conditions, as they say the designs are formulated for much more arduous use than prevails in the Common Market in any case. Any future chassis and cab developments for all world markets would benefit European users.

British manufacturers would have an added incentive to enter into assembly or manufacturing agreements if we fail to join the E.E.C., but joining would not preclude such arrangements where they were on an economic basis.

Sales and service should present no problems, as B.M.C. have a growing but flexible network of distributors and dealers throughout Europe, with new headquarters being established in Geneva.

The Rootes Group NEARLY £4m. worth of commercial vehicles were sold by the Rootes Group in Europe last year, the European market accounting for 23 per cent, of all the Group's exports. Of this total 11 per cent, of the sales were made in Common Market countries, whilst for. the first six months of this year the figure has risen to 15 per cent., Benelux being the biggest customer.

The Hon. B. G. Rootes, managing director of Rootes, Ltd., told me that our joining the Common Market would provide plenty of Opportunity for increased sales in the Common Market countries and would lead to increased production in Rootes factories in Britain. Mr. Rootes felt that whether the other EFTA countries joined the Common Market or not, sales of Rootes commercial vehicles in those countries would not rise to the same extent as they would in the Common Market area, the rapid rise in the standard of living in the E.E.C. countries being responsible for this.

Mr. Rootes added that there could well be a 400 per cent. increase in European commercial-vehicle requirement within the foreseeable future. He warned that should British labour costs rise too sharply, imports of Continental light and medium vehicles could well form a threat in Britain, explaining this by saying that Continental manufacturers usually worked to a larger profit margin than British companies, enabling them to absorb wage increases more readily.

Designs might have to be changed, said Mr. Rootes, particularly if common vehicle-construction regulations for the whole of Europe come into being. Even so, he pointed out that Europe formed less than a quarter of Rootes' exports, so designs would not be changed at the expense of other markets unless these other markets decreased in importance in the meantime.

Being already well established in Europe, with associate companies in Belgium, France, Germany, Italy, Sweden and Switzerland, the Rootes group is now concerned with the long-term process of building up really efficient dealer and service organizations.

A.E.C., Ltd.

iN the event of Britain joining the Common Market, A.E.C., Ltd., would cease to assemble vehicles in Belgium and Holland, being of the opinion that it would be cheaper for them to ship built-up chassis from Southall to Europe. This would lead to a considerable increase in Southall production because A.E.C., in common with most heavyvehicle manfacturers, view the prospect of our joining the Common Market with relish, and feel that France, Germany and Italy are markets which provide tremendous scope for the sales of A.E.C. heavy vehicles.

At the same time, however, a senior export official expressed the feeling that they could expect some competition in Great Britain from the principal Continental manufacturers.

A.E.C.'s main territories in the Common Market area are the Benelux countries, and they are particularly well established in Belgium and Holland. Should Britain join the Common Market, the Belgium company would act as the marketing hub, whilst the Dutch concern—Verheulwould continue to manufacture passenger and specialist vehicles.

Regarding service, A.E.C. will concentrate on finding topquality distributors for their products in France, Germany and Italy, and if these cannot be found they are prepared to buy-up existing concerns. France is viewed with particular importance, as even small penetration into this market would have appreciable financial and prestige value. Should other EFTA countries join the Common Iviarket if we do, A.E.C. anticipate that Swedish manufacturers will provide their greatest competition within the present EFTA area, except possibly in Portugal, where A.E.C. sales are high already.

It is not expected that radically new designs will need to be evolved to meet future eventualities. Thus the A.E.C. plan is fairly straightforward: concentration of production at Southall, increased output and consolidation of existing Continental centres.

The Ford Motor Co., Ltd.

OFFICIALS were not prepared to issue a statement with regard to the current Common Market negotiations. a/ I THE COMMERCIAL MOTOR Seddon Diesel Vehicles, Ltd.

IN the opinion of Mr. H. Redmond, joint managing

director of Seddon Diesel Vehicles, Ltd., our joining the Common Market should be "a good thing" in the long run, particularly as British manufacturers can match Continental makers on price. However, Europe could not be divorced from existing and potential Commonwealth markets, and provided sales in these markets did not fall off, our joining could only lead to increased sales and production.

To cope with this, Seddon's would expand their existing assembly facilities in Belgium and Holland and would make as much use as possible of low-cost labour in these countries to assemble their vehicles. Costs would be the key.

Mr. Redmond told me that he felt the major problem would arise if we did not join the E.E.C., in which case all Seddon's existing European markets would harden against them.

The Perkins Group THE managing director of F. Perkins, Ltd., Mr. M. I.

Prichard, welcomes enthusiastically the idea of Britain joining the Common Market and anticipates a noticeable increase in production and sales following this move, plans already being afoot to expand the current Peterborough production by 50 per cent.

Perkins, who sell engines in all the Common Market countries—although no automotive units as yet in Germany —arc fortunate in having a well-established base in the Common Market, this being their engine-production plants in Paris. Should we join the E.E.C., therefore, production will be rationalized between Peterborough and Paris, so that eventually all of some types of engines will be made in France, with production of other types emanating solely from Peterborough, where daily production will shortly reach a figure of 1,500 units.

Mr. Prichard dismissed fears of competition from Continental-manufactured engines inside the United Kingdom, other than a very limited call for specialized units. With regard to competition from existing manufacturers in the Common Market, he felt that our joining the Market would definitely make this competition more fair and can only result in increased sales, as Perkins engines sell successfully now despite tariff impositions.

There will be need to revise and modify existing Perkins designs to suit Continental conditions, and such plans are already in hand, a turbocharged version of the Six 354 unit being scheduled for production next year.

After-sales service in Europe will be handled by existing and potential Perkins-owned companies, to whom supplies would be sent direct from the manufacturers, The existing Perkins market in EEC. countries is large, 1960 sales totalling f5-km.. with a further £ I im. of sales into EFTA. Although only a small percentage of these engines were automotive, the numbers involved are significant from the prestige angle and will form a firm foundation for future automotive engine sales in the areas concerned.

The Dunlop Rubber Company A SSUMING a continuation in the present rate of growth

of the potential market in Europe, Dunlop feel that it would definitely be to their advantage if Britain joins the E.E.C. and, anticipating this development, have carried out thorough investigations into the present and potential tyre-trading positions in Common Market countries.

They are not complacent about the future, however: in the words of their managing director, Mr. Reay Geddes, the Common Market "does not bring growth, but brings the opportunity for growth." Already Dunlop tyres are sold throughout the Common Market and EFTA, and the company does not foresee any reduction in home-market sales being occasioned by increased imports of foreign tyres.

To sum up the Dunlop position, therefore, it is obvious that they are already in a strong position to deal with whatever increased trade may result (there are several Dunlop factories in France and Germany), but design and production problems will continue until standardization permits an appreciable reduction in the number of different types of tyre at present required. Even so, "variety of problems means variety of opportunity," to quote the recent words of Mr. T. E. Peppercorn, Dunlop's overseas director.

The Lucas Group (C.A.V., Girling, Lucas and Rotax) IF the Common Market means a continual growth of business in vehicles and components, we intend to have our share." This was the reaction of a sales director of the Lucas group when discussing the possibility of Britain joining the E.E.C. He added that they would welcome the competition—both in Britain and on the Continent—and said that it would "keep us on our toes." Whilst they could expect to lose some business in the United Kingdom they would gain more than this on the Continent.

The Lucas group is well placed tactically to deal with a European sales battle, a central exporting group—Joseph Lucas (Export), Ltd.—having been formed in 1950, to handle the group's overseas sales and service. A chain of agents now exists throughout Europe, and the group is supplying original equipment to vehicle manufacturers in France, Holland and Italy in the Common Market. and Austria, Finland and Sweden in EFTA.

Service replacement parts are sold in all European countries—in fact, wherever British vehicles with Lucas group equipment are operating. This is the pointer: much of Lucas' trade depends on how many British vehicles are sold abroad at present. although there are big plans to expand their original-equipment market.

Regarding competition from Continental parts entering the U.K.. Mr. E. W. Spracklen, director and general manager of Joseph Lucas (Export), Ltd.. told me that any reduction in the British import duty on fuel-injection parts could lead to an influx of such components, but that the same thing would apply to British products on the Continent.

If Britain does not join the E.E.C., the group may decide to build more factories in Europe, in addition to the future Girling plant in Germany and the existing Rota-Diesel factory in France.

As only 8 or 9 per cent. of the group's export business is in the Common Market, they would not be in favour of our joining if it were at the expense of their other overseas

markets. Nevertheless, they feel that the potential market on the Continent is vast, and would not be slow to take advantage of the possibilities offered.

The Guest Keen and Nettlefolds Group A N export official from this group told me that there is "-little doubt that G.K.N.'s European trading position would suffer if we did not join the Common Market. Already there was a discernible trend away from G.K.N. in favour of cheaper commodities purchasable within the framework of the Market.

Our joining the E.E.C. would arrest this trend, enable existing outlets to be consolidated, and give the opportunity for general expansion throughout the whole of Europe. They are therefore an in favour of our joining the Common Market.

Laystall Engineering Co., Ltd.

A LTHOUGH this concern, which .manufactures Laystall ".Cromard cylinder liners and all types of crankshaft, do not at present sell direct to engine manufacturers in the Common Market, discussions are under way with a view to having these products made under licence in France and Germany.

The company viewpoint is that the reduced tariffs which would follow our joining the Market will remove one possible objection to Continental manufacturers buying from Laystall, so our joining cannot help but lead to more fair competition and the chance of establishing a European market for original equipment.

Scania-Vabis (Sweden) HE export sales manager of A.B. Scania-Vabis, Mr. Gunnar Samzelius, told The Commercial Motor: "We still hope for an agreement between EFTA and the E.E.C.,

but regard the official British declarations at the latest EFTA meeting as otherwise. We expect, however, that Britain will not take separate action, but will negotiate in full co-operation with other EFTA members."

D.A.F. (Holland) THE commercial adviser to D.A.F. gave the following 1 views when questioned about his company's reactions to the possibility of Britain joining the Common Market:

"As a member of the Common Market, Britain will find an immediate improvement in the possibilities for her motor industry in Holland . . whilst the Dutch motor industry will have to establish itself gradually in the United Kingdom. We are convinced that Britain's joining the Common Market will mean a sharp increase in the sales of British goods, and especially motor vehicles, in Holland." He went on to say that there was already a notable increase in the mutual trade between the present member countries.

"Should Britain decide to join she will be welcomed as a strong and equal partner . Britain must then naturally accept the fact that European firms, and especially the European motor industry, will do everything they can to obtain a firm footing in the British domestic market." This would involve a considerable amount of time and effort but, "the Continental motor industry will certainly exert itself to the utmost, all the more so as conditions will then be the same for everyone."

M.A.N. (Germany) THE only comment Dipl.-Ing. Otto Meyer, M.A.N. -Ivehicle export manager, was prepared to make on this subject was: "The Dutch D.A.F. concern have managed to sell 500 units in Germany within 18 months."

1 think this is sufficient indication that the German commercial-vehicle industry is prepared for trouble should Britain join the E.E.C.


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