FOR A BAILOUT

Making stuff is different from selling stuff, and that is why Woolworths is allowed to fail while Vauxhall might just be granted a lifeline.

The unpleasant truth is that, while unemployment hurts individuals with equal measure, not all jobs are considered equal. The business of making planes, trains or automobiles is complex and requires a plethora of skills. They tend to be higher-earning jobs and their loss creates a bigger gap in the economy than the closure of a chain of high-street shops.

More important than the immediate round of redundancies is the consequential loss. Close a shop and a landlord loses rent until a new retailer fills the space. Retailing is a fast-moving industry and the gaps on the high street left by Woolies will be filled quickly by rival traders.

The closure of a motor assembly plant is more like a falling boulder that sets off a landslide of losses. A car plant depends on a web of outsourced suppliers making everything from windshield wipers to catalytic convertors. While a retailer may be able to work with toymakers in Taiwan, car companies are dependent on just-in-time logistics and commercial relations with specialist component-makers.

By this logic, a bullet in the heart of the carmaker can destroy a whole body of manufacturing skills and rip the technological capability from a nation's industrial community. It is not easily repaired and it is the reason why, for instance, President Sarkozy lobbied relentlessly to secure permission from Brussels to rescue Alstom, the French maker of turbines and TGV trains. He got his bailout approved in 2004 when the firm was on its knees. It has since gone from strength to strength.

Opponents of bailouts argue that there is little benefit in taxpayers propping up an industry that fails to deliver a product that people want to buy. However, the British motor industry is no longer the mess that was the nationalised British Leyland. Today it is mainly a collection of foreign-owned private enterprises. With the downturn in the financial services and retail sectors, the country cannot afford to lose its much-diminished manufacturers as well.

Carl Mortishead

AGAINST A BAILOUT

There are plenty of good reasons for giving Britain's car industry a rescue bung. Unfortunately, most of them are political, centring largely on the marginal constituencies in which many car manufacturing plants and their suppliers are located.

The economic arguments in favour of a general bailout appear to be based solely on the suggestion that the car industry boasts many of the highly-skilled manufacturing jobs Britain needs to preserve.

The main business with the begging bowl out, at present, is Jaguar Land Rover, the luxury car maker bought in March for £1.15 billion by Ratan Tata, the Indian billionaire. This is a business which — until the past 18 months — had been loss-making under its previous owner, Ford, because not enough people wanted to buy its cars.

It is difficult to see why taxpayers should shell out to keep such a company going - particularly when the Tata Group has more than enough capital to support it. This is a business after all which, late last week, announced a sponsorship deal with the Ferrari Formula One team.

In fairness to Tata, it is not the only one looking for help. Vauxhall, owned by General Motors, is also looking for assistance and may well receive it. However, rescuing such businesses would send out a terrible message to their competitors, in particular the Japanese-owned Honda, Nissan and Toyota.

They have found their own ways of dealing with the financial crisis. Nissan's is to give workers at its Sunderland plant an extended Christmas break. Mini's German owner, BMW, has done the same.

Many of the carmakers asking for help around the world are no more deserving of taxpayer support than poor old Woolworths. They are in their current predicament because, like Woolies, they did not sell enough of the goods that people wanted at a price people were prepared to pay.

That may sound harsh on the carmakers, in view of the rescue package put in place for the banks, but the cruel truth is that the entire economy is not going to go under if carmakers go out of business.

Ian King

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