Government-industry relations and industrial crises: A comparative analysis of the steel and auto industries in Britain and France in the 1980s

The 1980s were a turbulent time for west European manufacturers. New technologies were developed, while market shares fell and new competitors arose. Governments became involved in helping firms to adapt, even to survive. The British and French governments were embroiled in intense national debates about the use of nationalisation, privatisation, and trade and industry policies, to revitalise key industries such as auto and steel production. The Mitterrand and Thatcher governments espoused radically different ideologies towards government-industry relations. However, at the level of individual firms the policies adopted, and the ways in which they were implemented, were remarkably similar across nations and industries. The key to this similarity was each firm\u27s need to raise enormous sums of money to finance restructuring. The governments\u27 specific relations with four key firms are analysed--British Steel, Usinor-Sacilor, Peugeot and British Leyland. In each case, regardless of ideology and of formal ownership, the focus was on the firms\u27 financial needs. The governments backed the firms\u27 restructuring plans, rescued the near-bankrupt, assisted the small producers in each sector and encouraged private investment. Once we place the financing of industry at the centre of government-industry relations analysis, a number of conclusions become apparent. First, the policy process was highly exclusive, whatever the political context involved. Second, the particular degree and form of the governments\u27 involvement with each firm depended primarily on the firm\u27s financial structure, and in particular on the kinds of capital to which the firm had access. Third, how a government structures and intervenes in financial markets is a critical component of contemporary industrial policies. Analysis of government-industry relations must focus on how companies get their financing, not just on formal ownership. Finally, the impact of the European Community\u27s Project \u2792 is extensive, but national patterns of financial regulation are eroding slowly and will not disappear in 1992. National governments will continue to play a significant role in shaping the financial environment of private and state-owned industries