I'll focus on the automotive industry aspect of your question as an illustration of the issues within the broader manufacturing industry in the UK at the time. A number of the issues facing the UK motor industry were common across the whole manufacturing sector (e.g. tariff reductions), but the motor industry faced a number of its own challenges that were fairly unique to the UK.

The straight forward answer to your first question is that industrial relations posed a significant challenge to the UK motoring industry - and indeed, the wider British economy of the late 1960s and 1970s. But it should be noted that industrial relations challenges were not unique to the UK. One of the more famous dynamics was in Italy, which had a long standing dynamic between Italian socialists and communists; and FIAT. Unions were also highly activist in France, closing the major Boulogne plant for much of 1968, and even in the US 300,000 auto workers went on a 67 day long strike at General Motors in Detroit.

I also have to acknowledge that the fundamental role of unions - then as today - is to provide benefits for workers through collective action. The industrial action narrative in the UK in the 1970s was a fairly simple zero-sum game between workers' rights and capitalist interests. Part of that resulted in a contemporary perception of unions "blocking" progress when industrial demands (e.g. refusing flexibility around night work) were legitimately perceived by workers and unions as the only way to bargain for wage increases and maintain living standards. This was important in the context of high price inflation and interest rates.

The failure of the British motor industry was ultimately measured in its lack of sustainability and competitiveness, underscored by the unprofitability of its largest conglomerate British Leyland. Given similar industrial strife elsewhere in the world, union activism is unlikely to be a sufficient explanation for the uncompetitiveness of the British motor industry. To find other causes, you can also look to organisational dysfunction in the largest UK car producer of the time (British Leyland and its predecessor British Motor Holdings), macroeconomic challenges that left the UK export motor industry vulnerable to international competition - and by 1974, utterly exposed to British economic malaise, changing tastes driven by economic growth and a larger middle class that could afford imported cars from overseas, and a fundamental inefficiency in UK car production, which was a legacy of its fragmented pre-war structural form and industrial inflexibility.

British Leyland (BL) is a fairly fascinating case study to illustrate all of this. BL was a giant merger in 1968 that created the world's fifth largest vehicle producer, after Ford, GM, Chrysler and Volkswagen. Consolidation had been a feature of the British motor industry since the end of WWII, bringing together a number of historic firms such as Morris, Austin, and Jaguar. During the 1960s, the industry trend was for mass volume, low margin production as the key to profitability, in keeping with the growth of the middle class following the post-war economic boom. Similar consolidation occured in the US , France, Italy and Germany.

BL merged together Leyland Motors and British Motor Holdings (BMH). BMH was the sum of a number of these smaller historic marques, and had strong armed a number of former domestic competitors into being bought out through its acquisition of the upstream car body supplier Pressed Steel (which produced the bodies for Jaguar cars, among others). BMH's core car models were unprofitable, the company was "overmanned" by around 15-20% of its workforce, it struggled to resolve industrial disputes, and faced chronic component shortages. It was also handicapped by credit restrictions in the late 1960s and the devaluation of the pound sterling.

Leyland was therefore in a position to drive a takeover of BMH by 1967, despite BMH's significantly larger profile. Meanwhile, the British Government encouraged the merger to create a new "national champion" and help resolve wider economic issues facing the country (e.g. the "balance of payments" crisis that was a feature of 60s/70s political debate).

So why did the creation of BL not solve the problems faced by BMH? Several factors can be pointed to:

• The new BL board was wholly inexperienced for a company of over 200,000 people.
• The corporation was structured into seven divisions largely reflecting the previous, pre-merger arrangements (e.g. Austin; Rover; Triumph; Pressed Steel; Trucks and Buses).
• These divisions effectively worked in competition with each other, partly driven by cultural views held by the workforce that were embedded before the merger of BL (the "family firm")
• Tastes in the UK market were changing; by 1975 the UK was importing a third of its cars compared with just 8% in 1968
• BL inherited hopelessly antiquated plants, which were highly fragmented due to a lack of physical consolidation to match the organisational consolidation
• A Conservative government that while industrially encouraging, was ultimately laissez-faire and non-interventionist in supporting BL financially.

This isn't to understate the industrial challenges BL faced. They were significant, and partly for this reason American producers did relocate from the UK during the seventies. Overall though, there was early cause for optimism in 1970/71 as labour disputes settled and early investment in new facilities came online. BL was maintaining profitability, albeit by a slim margin.

The optimism didn’t last long. New products (Austin Allegro; Morris Marina) that were designed as stop-gaps for a changing market did not fare well. New cost-control processes did not match with quality control, and cash flow problems meant these products remained on sale for far longer than intended (and in comparison with their competitors).

By 1973 and 1974, labour disputes had restarted across the country (led by the Mining Unions) combined with the UK's entry into the European Common Market, which would progressively remove import tariffs over five years. Despite a boom in the UK economy, BL could not maintain production and the importers filled the gap. Further, the collapse of Bretton Woods meant that BL had to factor exchange rate risk into its export market, in case the pound suddenly jumped in value (which ultimately killed the British sports car industry in the early 1980s).

By 1973, BL's slide into bankruptcy was inevitable. Interest rates rose to 11.5% (reducing credit availability), the consumer boom ended (slowing down orders), union militancy was rising across the country (which for BL meant strikes and an inability to meet production targets). The oil embargo arrived by October, raising fuel prices and suppressing consumer demand further. 1974 marked almost complete economic malaise in the UK, with fuel crises hitting motorists and power shortages necessitating a three-day work week (which further hit BL's ability to produce cars). Meanwhile, BL's domestic competitors (Ford, Vauxhall) were being merged into Ford and GM's wider European assets, enabling greater efficiency and lower costs.

Industrial relations and the sclerotic UK economy was an issue of absolute national political importance. The inconclusive February 1974 election was largely fought around the issue of industrial relations, mostly around the mining unions but also automotive. While "scapegoating" of union groups is probably overstating things, there is some evidence of a stated preference for overseas cars (e.g. Audi and Fords) by some consumers that can be attributed to dissatisfaction with the industrial action. However, by this point BL's goose was already cooked - see next comment.