Company returns reveal an economic collapse

fundamental basis of the British economy continues uninterrupted. Latest returns from manufacturing lachine tools are ample verification of this trend.

Capital investment in manufacturing for 1972 is expected to be 3 per cent down on last year's figure. That in turn was 8 per cent down on the 1970 figure.

It is in this context that Alfred Herbert of Coventry, Europe's largest machine-tool manufacturer, has just announced a £2.28m loss for the six months to April 1972.

The previous half-year resulted in losses of £3.22m. It is not surprising, therefore, that no interim dividend is being paid this time.

ATTEMPTS to arrest Volkwagen's 1971 profits slide have led to 14,000 men losing their jobs.

Last year the West German giant ended with net profits of The latest figures show that the value of sales fell by £5m or almost a quarter to £15.8m./ The order intake was also down £5m to £14.4m.

No account has yet been taken of the losses suffered following the collapse in June of HerbertIngersoll, the Daventry-based Anglo-American, advanced machine-tool venture.

Alfred Herbert, which had a 44.3 per cent share in the company lost about f2m in the operaThe British machine-tool industry is now in its worst slump since the 1930s. In real terms, the £71.5m worth of net home orders received last year was the lowest yearly total since 1950.

Proof of the world nature of the economic crisis comes from a glance at the American machinetool industry, the most advanced in the world.

US output last year was a third down on 1970 and less than half the 1967 level. The West German and other European machine-tool industries have followed the slump in Britain.

1,000 jobs only £1.5m and was forced to cancel dividends to shareholders. World-wide group profits slumped by 75 per cent.

Since last year the directors of VW, which is 40 per cent state and federal government-owned, have moved ruthlessly to improve their trading position, beginning with the dismissal of combine chief Dr Kurt Lotz.

Rationalization has pruned the VW workforce in six factories at Wolfsburg, Brunswick, Salzgitter, Kassel, Hannover and Emden by 14,000 men. New plants are to be opened in South America and the 'underdeveloped' world where labour costs are cheaper.

Sales for the traditional VW 'Beetle' car have fallen disastrously and the labour cut-backs are part of preparations for new production lines, which it is hoped will be turning out a fresh range of 900 cc to two litre cars by next year. The emphasis will be on interchangeability of parts and economies of scale.

The international currency crisis, especially the effective devaluation of the dollar, coupled with intense Japanese competition, has severely hit VW sales and profits.

Now the world machine-tool output - which in the boom averaged an annual growth of 7 per cent - actually declined in 1971.

In the past two years, Alfred Herbert has purged its workforce ruthlessly in a futile attempt to overcome the crisis. The number of sites went down from 15 to Il and they sacked over 3,000 workers, one quarter of the labour force.

Now City commentators say that unless the company picks up substantial orders within the next six months it is likely to go bankrupt.

Britain's car industry-capitalism's great survival hope-is also sliding into deeper and deeper financial trouble.

Chrysler UK, the former Rootes Motors group, has just turned in a net pre-tax loss of £1.3m for the first six months to May 1972.

This compares with a profit of £3.26m at the same time last year. Turnover for the latest period was down £5.4m at £134.4m.

The news follows last week's Vauxhall announcement of a pretax loss of £2.55m for a similar period.

Although both companies have tried to blame domestic strikes and the miners' dispute for their losses, it is clear that something more fundamental lies behind the returns.

The main reasons for the slump are devastating foreign competition. Overseas competitors— especially the Japanese-have steadily been increasing their share of the British car market. Their share now stands at about 25 per cent and was built up during the lengthy credit squeezes.

Although there has been a substantial growth in demand for cars in Britain following the relaxation of credit restrictions, manufacturers like Chrysler and British-Leyland have been unable to take advantage of it.

Mr George Turnbull, managing director of the Austin-Morris division of British-Leyland, in a British manufacturers are bad position to meet the competition.

'None of the domestic manufacturers, except those with massive unused capacity, can hope to supply their full potential 1n the market,' he says. And AustinMorris was not in that position, he explained on Monday when he launched the new Morris Marina vans.

It is for that reason that British-Leyland is one of 80 big firms who have refused to renew their 5 per cent price restraint pledge to the Confederation of British Industry.

Chrysler UK is still considering the position. Other refusals have come from Courtauld's, Redland. the hrick ers, and Finally, a survey just published shows that Britain's share of world invisible trade has continued to decline. The Tories and financiers often make great play about shipping, investment and insurance earnings abroad which help to cover balance of trade deficits.

The figures published yesterday for 1969 show Britain's share falling from 12 per cent to 11.6 percent.