Industry and the Common Market-2
British Goods in Europe
By RICHARD BAILEY
THE prospects for British industry in the Common Market have been assessed, ap- praised and'reappraised so often in the past five Years that it can be only the least enterprising of firms that have not collected a folder of press cuttings on their own chances. There are two Major difficulties in arriving at anything like pre- cise conclusion. The first is the wide difference in efficiency and competitiveness between firms Within each industry, and the other is the rapid Change in the pattern of economic activity taking place in the Six. Any attempt to forecast success or failure by inter-firm comparisons Would probably end up with quite a different Picture from one made on an industry basis.
In the discussion that has taken place so far, the possible disadvantages to British manufac- turers have, quite understandably, been stressed. These include the prospect of higher food prices, possible tariffs on some raw materials, the deficiencies of Britain's ports and railways, rela- tively higher transport costs, metric units and decimal currency difficulties and the extra efforts at adjustment that will be demanded of a new member arriving on the scene at least four and a half years late. Against this the British Manufacturer has some advantages on this side.. The first is that labour shortages now constitute a major bottleneck in the Six, especially in Ger- many. By comparison Britain is almost an em- Ployers' paradise where spare capacity makes expansion possible without undue inflationary Pressure. Except for Italy and Holland, labour costs in the EEC are now rising much more rapidly than in Britain. If the Chancellor could keel) wage increases from outstripping rises in Productivity the advantages would be enormous.
In assessing the prospects for British industry in the Common Market, the most striking factor is the great similarity in the products of the Six and of the United Kingdom, This necessarily Means that competitive advantages either way are likely to be narrow, and that it is much harder to spot likely openings than to foretell difficulties. The task of the forecaster is made all the more difficult by the developments that are taking place within the Common Market. In both France and Italy a new middle-class market is being created. In Holland the wider range °I Products now available is giving the conser- vative Dutch a taste for variety. In Germany nence has reached levels where price is no s nt°nger, the deciding factor in the choice of con- buer goods. Foreign cars in particular profit by ying different from those driven by three out °f five five Germans. These and other changes hap- Petting inside the Six should all help British anufacturers, provided they are enterprising enough to take advantage of them. Whether they will or not depends very much nti their approach to marketing in the Six. A number of industries have appeared on several of the lists drawn up by forecasters of all kinds as being likely to succeed. Tractors generally pull LIP near the head of most forecasts. One
reason for this is the large scale of the industry in Britain. Another is the labour shortage in France and Germany which is expected to in- crease demand for farm machinery to replace expensive labour. Electronics and automation equipment are also well fancied. Britain made an early start in this field, both for business corn- putors forming part of a broad range of office equipment and for industrial computors designed as part of a process control system. Commercial vehicles, of which Britain is the biggest manu- facturer in Western Europe, should also do well. This category includes not only trucks and vans, but buses as well. Motor accessories made by firms large and small in. the Midlands and the London area should benefit from increased de- mand in the context of a European motor in- dustry with a tariff-free market of some 220 million people. Plastics and *growth' chemicals are also expected to develop big sales in the EEC.
The two industries most often tipped as likely to be favoured by the new situation are clothing and food. Sales of ready-made clothes, especially for women and children. should shoot up in areas where the industry is largely undeveloped. High- quality woollen textiles and men's tailoring should also do well if due attention is paid to the varying likes and dislikes of customers in the different parts of the far-from-common market. Manufactured foods, such as biscuits and mar- malade, are well known on the Continent. The increase in sales of these products will be helped by the changes in distribution methods now taking place in France and to a lesser degree Italy. The small shopkeepers of the kind who sup- ported M. Poujade a few years ago still provide the main outlet for consumer goods, but the supermarkets now opening up in the provincial towns, as well as in Paris, are an indication of the shape of things to come.
It is part of the logic of competition that there will be losers as well as winners. Which are the industries likely to find exporting to the Six difficult? Here again it is necessary to qualify any judgment by saying that there will be some firms in the problem industries that will succeed in winning a place in the Common Market. They will be the exceptions, however, and their suc- cesses will be due to their skill in overcoming the special problems facing their industry. Cotton textiles are likely to have difficulty com- peting with the recently modernised industry in the Six, as well as that of the Asiatic countries. Rayon-weaving also faces problems, but the newer man-made fibres such as nylon and the acrylics should benefit from rising demand. The cheaper woollens will meet strong competi- tion from the Italian manufacturers centred on the Prato district. Carpets, with Belgian producers as the main threat, are also likely to be in diffi- culties. The pottery and glass manufacturers will be able to sell more of their high-quality lines, but the cheaper everyday end of the trade is expected to encounter considerable competition.
One of the most controversial questions is
the possible fortunes of the motor-car industry. British sports cars are generally agreed to be not only of high quality, but different from any- thing else in their class. The removal of tariffs will give them a clear run in the Common Market. For British cars in general the prospect is not nearly so bright. A great opportunity was lost in the days after the war when Britain was the only country able to export cars to Europe. At one time the car parks of Brussels, Dussel- dorf and Amsterdam contained a high propor- tion of British cars. Unfortunately, neither their performance nor the standard of after-sales ser- vice encouraged their purchasers to buy British a second time. The future prospects for the motor industry depend entirely on whether enough capital is sunk in service facilities to build up a more favourable image. In the en- gineering industry it is extremely hard to pick out the winners and losers on an industry-wide basis. Radio and television sets, and household appliances, all have good possibilities and it will depend on the individual firm how far these are realised. Earth-moving machinery is expected to do well, while varying fortunes arc predicted for the makers of machine tools.
Many of the difficulties which loom so large at the present time may prove to be short-lived. Some of them can be overcome simply by de- voting more attention to the European market, which up to now has not been taken very seriously by some manufacturers. Salesmanship will have to be aggressive and the recommenda- tions of reports such as the one by the Federa- tion of British Industries on the use of foreign languages will have to be given careful study. Designs, too, will have to be reconsidered by some firms. A long unbroken period of success can have disadvantages in a loss of adaptability. Another factor needing close attention is in- vestment by British firms. In the past decade the funds devoted to plant modernisation have tended to be less than on the Continent. The lowering of tariffs will change this situation.
But difficult as the short-term problems may be, there is no doubt that over time the ad- justments that will have to be made in order to compete successfully in the Common Market will be much more rewarding than would the equally difficult changes forced on industry if Britain stayed outside. The Common Market is now one of the facts of economic life, and the industrial countries of Europe, including Britain, have either to join it or learn to live with it.
'My dear Gauguin! Where hare you been hiding yourself"
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