Mandelson Could Heed Lessons From Italy if He Wants Industrial Recovery in the UK

FIAT and the Russian car maker Sollers have announced a $3.3 billion joint venture to produce some half a million vehicles a year in the region of Tatarstan a thousand kilometres east of Moscow. A passenger car and SUV, designed for emerging countries, and new models from FIAT's alliance/takeover with Chrysler, will be developed and assembled there at existing plant which will gain new production facilities for producing components and a technology park and research facilities. 10% of production is intended for export.

Sergio Marchionne and Sollers' Vadim Shvetsov set up to the joint venture in Naberezhnye Chelny, with Prime Minister Putin announcing that the Russian government is considering long-term loans at a favourable subsidised interest rate for the whole of the investment. The Russian government's cash-for-clunkers scheme starts in March, assisting the recovery of the Russian car market, potentially one of the biggest.

Integrating FIAT and Chrysler technology with partners around the world is part of Marchionne's global strategy for FIAT;  he had originally been one of the front bidders for Opel before leaving negotiations with GM citing their of lack of seriousness  in producing a viable industrial, rather than political, negotiating position.

The Labour mindset, that government intervention and direction creates industrial reanimation (for UK industry is in a Lazarus-like condition) is inimical to modern capitalism. Innovation and research needs to be part of industrial and manufacturing capacity, not set up by government cut off from the companies it serves. Labour is ideologically perverse in its failure to accept that the proper role of government is to facilitate infrastructural modernity and a favourable economic, financial and regulatory environment for market capitalism. No government, no matter how far it spreads its planning tentacles, can replace market allocation and entrepreneurship.