PLANT‐SIZE AND PRODUCTIVITY IN THE MOTOR INDUSTRY: SOME INTERNATIONAL COMPARISONS*
| DOI | http://doi.org/10.1111/j.1468-0084.1978.mp40002003.x |
| Published date | 01 May 1978 |
| Date | 01 May 1978 |
| Author | S. J. PRAIS,D. T. JONES |
PLANT-SIZE AND PRODUCTIVITY IN THE MOTOR
INDUSTRY: SOME INTERNATIONAL COMPARISONS*
By D. T. JONES and S. J. Piis
INTRODUCTION
The motor vehicle industry is a clear example of an industry in which British
plants are below the size typically constructed abroad, and hence are probablyin
a sensebelow 'optimal' size. The industry is of such obvious importance that
the relationship between plant-size and productivity in this industry deserves the
most detailed attention; fortunately for the present authors (if unfortunately for
the industry) it has been the subject of so many recent lengthy official inquiries in
Britain1 that this paper can be kept to relatively modest proportions. It will be
concerned with: the comparative facts on the sizes of plants (surprising as it may
seem, the relevant statistics on this industry have not been published before); an
assessment of various estimates of relative productivity levels; and a discussion
of possible reasons why British plants have remained of limited size.
Important structural changes in the British motor industry (affecting British
Leyland in particular), were under debate while this paper was in preparation; and
by the time it reaches the readers' eyes, the industry may well look different. But
the reasons for those changes are deeply-rooted, and no quick and full solution to
the British industry's problems seems likely; the lessons to be learnt from the
investigation reported in this paper may thus be of more than passing interest.
PLANT-SIZES
Table 1 sets out the results of our calculations on sizes of plants in the motor
vehicle industry based on Census statistics. The median British plant in 1970
employed 2,300 persons; the corresponding German plant was three times as large,
with 7,600 employees. Taking into account the now broadly familiar facts on
* This paper forms part of a wider series of studies at the National Institute on the com-
parative industrial structure of Britain, Germany and the United States; the work is supported
by the Anglo-German Foundation for the Study of Industrial Society. The authors are par-
ticularly grateful to G. Maxcy, R. G. Rhys, C. F. Pratten, A. Silberston and their colleagues at
the National Institute for helpful comments on an earlier draft.
Reaching a peak in 1975, in which year three official reports were published: in April, a
report on British Leyland: The Next Decade for the Department of Industry (by Sir Don
Ryder), the published and expurgated version of which ran to 75 pages; in August a report on
The Moto,' Vehicle Industry by the House of Commons Expenditure Committee, which ran to
125 pages, plus 919 printed pages of evidence (plus expurgations, of unknown length, with
respect to British Leyland); and, at the end of the year, a report (with mild, but significant,
expurgations) on The Future of the British Car Industry by the 'Think-tank' (the Central
Policy Review Staff) which ran to 141 pages.
The following studies of the motor industry, prepared in earlier years, have been found
particularly helpful in preparing the present article: on Britain, The Motor Industry, by G.
Maxcy and A. Silberston (Allen & Unwin, 1959); on Germany, Fahrzeugbau by R. Hild and
J. Muller (IFO, Dunker and Humbolt, 1975); on America, 'The Automobile Industry', by
R. F. Lanzillotti in The Structure of the American Economy (Ed. W. Adams, Macmillan. New
York, 1971).
For simplicity, we refer throughout to Britain, Germany and America, instead of the United
Kingdom, the Federal German Republic and the United States.
131
132 BULLETIN
TABLE 1
Median and quartiles plant-sizes in motor vehicles in
Britain, Germany and A merica (Employees)
Notes:Median and quartile sizes are here defined in relation to the number of employees and not
the number of plants (e.g. a quarter of all employees in the industry are employed in plants
that are greater than the upper-quartile size). The Census-groups (and years) covered are as
follows: Britain (1973), 381-2; Germany (1970), 2440-44, 25.65; US (1972), 3465, 3592, 371,
375, 3792.
b Estimated on basis of special tabulations provided by UK Business Statistics Office and
the German Federal Statistical Office, combined with information from trade sources on the
very largest plants in Germany.
c Estimated from published census tabulations combined with information from trade
sources on the very largest plants.
productivity differences (to be considered in detail below), it appears that the
output of the German median plant was between four and five times the size of
the British one. The American median plant has an employment of 4,000 persons,
with an output perhaps a third larger than that of the German median plant, and
six times that of Britain. The differences at the quartiles stand in much the same
ratios; the very large size of the German upper quartile plant, at 32,000 employees,
should be particularly noted.
These figures are thus in conformity with the frequently expressed view that
British car plants are much too small by international standards. Are there also
in Britain, as in sometimes said, 'too many plants'?2 The motor industry is one
of the few in which there are more plants in Britain than there are in Germany,
2900 as against 2600; but the excess hardly warrants comment if one bears in mind
that there are more component manufacturers in Britain, and it is that section of
the industry which is relatively efficient. In America there are 5,200 plants,3
which älso suggests that the number in Britain is not disproportionate. Much
the same picture emerges if we consider, not all plants, but only those larger plants
with over a thousand employees (see Table 1, line 5); and also if we consider only
those vast plants engaged solely in the assembly of passenger-cars, of which there
are 13 in Britain, 12 in Germany, and about 40 in America.4 The real and important
difference between Britain and other countries thus lies not in the number of plants,
but in the typically much smaller scale of British plants.5
2See, for example, the CPRS report (1975), p. xi, which states simply that there are 'too
many plants'.
This would be decreased slightly to 4,800 plants, if automotive stampingsshown as a
separate industry in the American Censuswere excluded. There is room for a difference of
views on this, but it hardly matters which procedure is adopted for the point made above.
The number of assembly plants quoted here excludes the 'hand-made' specialist producers,
with an output of under fifty cars a week, such as Rolls Royce and Jensen.
The greater size of German plants seems quite clear from the figures we have compiled,
and in general terms has been widely apparent; it is thus not a little surprising that in the report
published by NEDO on The UK and West German Manufacturing Industry 1954-72 (1976)
Britain Germany A menee
Lower quartile 560 1,500 650
Median 2,300 7,600b 4,000C
Upper quartile 7,200b 32,000b l2,000c
Total employees 502,000 611,000 1,012,000
No. of plants over 1,000 employees 97 89 190
No. of plants under 1,000 employees 2,838 2,535 5,022
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