Blog : Project Vinland – an employee’s perspective

Carole Nash Classic Insurance Specialists

Martin Halliwell worked for the Rover Group in Cowley during the 1990s, and saw some interesting changes at the company. Sparked by our recent look at Project Vinland, he shares his thoughts about the company during this vital period.

Roverised in the 1980s, and now in private ownership, what could possibly go wrong? The Rover Group was not your typical car company. As a young Engineering Manager at Rover, keen to do the right thing when assessing investment cost versus parts cost, I asked a Finance Manager a simple question: what is the cost of capital? (For example: what would it cost us to buy a £50,000 tool and use it for five years in terms of interest payments?).

The response? Blank looks and tumbleweed blows around the Cowley body engineering office – this was going to be a long discussion…

The Rover Group could not get capital investment in the normal business ways – banks, share issues, trading profit. In recent times, return on investment was non-existent and finance came from the Government and asset sales. This investment was effectively ‘written off’, so vehicle sales did not need to repay an investor for his risk.

Cashflow problems

This situation is good for cashflow – there is a lot of cash running round an automotive business to pay for the day-to-day costs – but it is not sustainable.

The automotive business consumes investment cash in huge amounts. It needs a lot of capital equipment to start out with, and every new product needs more. There is no way round this. For example, the body is made from pressed steel parts – this is the only way to make a high volume, high quality, low-cost car.

This method was devised in 1930s USA, and has been used ever since by all volume vehicle manufacturers. The key word here is ‘volume’. The press tooling for an automotive body will cost you £100m. This is the same if you make 20,000 or 200,000 vehicles per year – and you can easily spend another £100m in the bodyshop to put it together. The trim and interior is also usually new – another £100m!

This cost is the starting point for a vehicle project; all the other parts are hungry for investment, but you have more chance of reuse and carry-over with the non-styled parts.

The Rover reality

This was the reality of Rover Group in the 1980s and early-’90s. British Aerospace had a great deal of interest in the cashflow, but was less inclined to allocate any investment. Meanwhile, Rover sales volumes were plummeting, because some of the vehicles were not very appealing, and ageing fast. At the same time company overheads were not reducing.

In the years before BMW, the company’s answer was to sell cars to itself. British Aerospace was a new home for a huge fleet of Rover management cars. Also, employees were offered schemes to lease cars – lots of them. The predictable effect of this was to destroy the residual value of all Rover Group products, so the public which had bought cars in good faith lost out badly and fleet sales became difficult.

There were some possible opportunities in progress. The Rover 600 (above) was a high quality product with a sensible cost base, and a proven engineering basis. However, Honda made a huge amount in royalties on every car. Many of the high cost parts came from Japan in boxes, and Honda made a profit on these, too. Therefore, even with the investment written-off a year after launch with the BAe sale of the company, there was not enough profit to pay for future product development.

The problem with financing future products

Financing new products was impossible for Rover; the odd £10 million for a refresh was just about possible. The other issue was infrastructure: Cowley, Longbridge and Solihull all needed new paintshops. Essential and expensive…

The company did not have many assets left to sell, and any equipment that could be sold and leased back had already been put through the books. Many large assets had small metal plates on them indicating that they were owned by some finance company that you have never heard of – this was the background to Project Vinland.

Even with 30 years hindsight, it is difficult to think of a solution that the Rover business leaders could adopt. Rover’s Senior Managers were not naive or inexperienced: remember, the company had the cash to pay good people. The problem was that they had no cash to spend, and they needed a lot. Managers also had perceived and real political issues due to the company’s past – cutting overheads at Longbridge was not easy.

How to solve a problem like Rover?

Project Vinland combined two research activities into a strategy that addressed high investment cost and also improved the environmental footprint of the plant and the product.

The first of these was Granular Injected Paint Technology (GIPT). It was developed by Gordon Smith at Warwick University. Its aim was to deliver painted plastic body skin panels straight from the tool – thus the vehicle plant would not need a paint shop. Also the cost of an injection moulding tool is much less than its equivalent press tool and a moulding machine costs much less than a press line. Other company costs would be reduced – much less floor space, less scrap, less energy (a paint shop typically uses 50 per cent of the factory’s total energy).

The second of these technologies was the development of an aluminium spaceframe with simple node joints. This work was done at Gaydon and Cowley and LCV2/3, which is now in the British Motor Museum at Gaydon, is a lasting example of this – possibly the only surviving Rover remnant of Vinland. The aluminium spaceframe was a method of producing a lighter body structure: aluminium extrusions are a low-investment product and they do not need a paintshop to achieve corrosion protection. Moreover, they are unseen so do not need to be decorative or styled.

A strategy combining these two developments was perfect for Rover Group with its lower volumes. Project Vinland offered lower investment and lightweight products that could possibly command a premium. The complete environmental story was very positive and forward thinking. It was difficult to imagine this kind of revolution at Longbridge! A greenfield site was proposed for Vinland.

Sadly, Vinland did not happen. The other Rover strategy was to find a new automotive partner (owner) with lots of cash and economies of scale. Enter BMW.

What is the legacy of Project Vinland?

Work continued on GIPT and on the lightweight strategies, though BMW had its own developments ongoing in both of these areas. BMW did take away all Rover ideas, and probably gave them a lot more thought and consideration. Undoubtedly, Vinland would have been analysed in full.

Interestingly, the recent BMW electric vehicles have many similarities with Vinland – including the formation of a fairly autonomous company for their manufacture. Ironically, today finds a form of Vinland at Gaydon in both Aston Martin’s facility and products. The factory was built on a greenfield field site within the boundary of the old BL Technology site and next to the Jaguar Land Rover Design and Engineering Centre.

Some of the Vinland team members left Rover and joined Hydro Aluminium. Here they continued the development of the basic concept with the Lotus Elise, and this progressed to the basis for all the current Aston Martin products. These two groups of products have bonded aluminium extruded chassis/structure with plastic or composite skin panels, minimal paintshop requirements and really low investment.

That would have worked for Rover too…

16 Comments

  1. The early 90s were a period of revival for Rover, though. Well made, good looking and good to drive products like the 200, 400 and 600 were winning back private buyers and interesting the fleet market, who had largely moved over to Ford and Vauxhall in the seventies and eighties.
    Remember in 1990 how good the 200 was and how cheap looking and awful to drive the Escort was. Given the choice between a Rover 214 Si with quality fittings, a refined and powerful new engine, upmarket styling and good quality and an Escort 1.4 LX with its harsh, thirsty CVH engine, drab styling and cheap interior and poor quality, buyers were flocking to Rover. There was even a waiting list for the 200 and its 400 sibling in 1990 as the cars were so good.
    It wasn’t to last, as Rover started to go backwards again in the mid nineties, but for about five years, Rover got it right.

    • The 200/400 were quality products, small touches like the strip of wood on the interior made it feel like an upmarket car.

      The 600 too, I read somewhere that a Honda executive was impressed that from the bland looking Accord of that generation, the 600 looked classy.

      I guess the point though was that they were being built with huge royalties to Honda.

      • Yes. R8 was a fantastic product too, and a bargain for the customer. But again the margins did not make a sustainable business. The marketing was a bit odd too. It tried to compete with vehicles in the next segment to escort. But it was never big enough to be a cavalier or Sierra.

      • If it was the Honda executive I am thinking of, he was more than impressed with the 600, he was seriously annoyed that the Honda stylists had produced another bland car in comparison’s to Rover’s equivalent…

        I remember the in mould coating being started with wheel trims as a way to improve efficiency by reducing production processes and possibly developing the technology to allow it to be sold for other applications.

        One of the problems with Rover’s finances was that certain longstanding practices, especially in outlying subdivisons such as Cowley Body, were rarely queried or tested via normal mainstream commercial procedures.

  2. Interesting stuff – echoes of the earlier aluminium/plastic ECV3 and AR6.

    Harold Musgrove was cautious about going too far with the Honda partnership and his concerns seem to have been borne out.

    How similar was Vinland technology to the ECV3/AR6 aluminium architecture?

  3. So, to cut a long, and interesting, article short.. Rover was a semi rotting corpse even when it was providing cars that people wanted to buy.
    I wonder if there’s any way of someone going back and costing out prices on the R8/600/800 etc and working out a price list otr where RG would make enough on sales to be able to survive and create new models. I suspect many in here would get a nasty shock about how bad things actually were.
    Also no one seems to have commented on the fact that if a company has a bad reputation its also recruitment that suffers in time, you build a couple of pitiful generations of cars, and recruitment of good people falls off, then even if you build something like the 600ti or the R8 it still fails because either you don’t have good negotiating skills on bip, or you’ve been lumbered with accountants whose brains jammed in low range at the age of 10.
    It must have been so frustrating for talented people in the company having to pick their way around the sort of dead wood usually associated with the 1987 storm, as mentioned in the article.

  4. As has been said so many times before, every time a model was launched that didn’t live up to expectations, it made the following replacement that much more difficult to develop.

  5. Hmmm……interesting comments about Cowley paint…..considering it had the most modern paint shop in Europe…..and the comments about Aston Marin are ill-founded….yes, extrusion tooling is cheap, but the cost of post-process machining is big, leading to huge piece prices. So much so that AML are returning to pressed parts.

  6. A-B paintshop was discarded by BMW when they relocated mini to Cowley, quality was poor and the capacity did not match their aspirations and mini’s complex paint options. Their opinion of the Solihull paintshop is not printable here! Extrusions are low investment for everybody, even A-M. Anybody that does significant machining on extrusions is doing something wrong with the engineering. Vinlands used planar cuts on the extrusion ends. You should work to the strengths of the technology or use a different technology. Also machining is a low investment route too.
    The point of Vinlands was reduced product investment. This investment is a total loss when you cease production and for low lifetime volumes this is a disaster.
    Aston Martin should think carefully about the future before loosing their V H architecture building blocks – it was adopted for the same reasons as Vinlands. Tell the engineers machining is not allowed – it will bankrupt the company.

    • You should tell Ferrari about your ideas on machining then…..they do it as well!

      The VH platform is going, regardless of your thoughts on it. AM’s new products are all on a completely new architecture. The new platform is lighter, stiffer, cheaper, and better quality, than the old VH platform.

      • Machining is low product investment. Low lifetime volumes need low investment. If Ferrari AM McLaren etc were using pressed metal bodies like VW , even with their huge margins they would not get a return on their investment. Platform sharing is not an option either for these brands. The point of Vinlands was to develop a vehicle architecture that matched rovers falling volumes, margins would never be as high as AM or Ferrari so piece cost also had to be watched – no machining!!
        The automotive business is very conservative and adapting to change is very difficult and you need deep pockets. As I said, with 30 years hindsight I can’t think what Rover group could have done to survive long term. JLR got their hands on 10s of billions to try to get volumes where they need to be for sustainability. I hope it continues.

  7. I must aggree with most comments already made, cars made in the 90s were well made, I ran rover 420 Gsi in BR green on 97 plate, its 13600 miles, its was only scrapped because beyond repair, well built solid car compared to my MG ZS 180 facelift, I had Rover 800 viteese, fastback, another excellent car.

  8. That the aluminium techniques were subsequently adopted by Lotus and Aston Martin (both small scale manufacturers of sports cars, and neither exactly famous for making large profits) does suggest that the technique is great for low volume producers, but completely uneconomic for the mass market.

    More generally, Rover never had the scale to develop new models/platforms by itself in the volume market. The likes of Seat and Skoda would never have survived as independent producers, their production volumes (especially the former) are viable because they are sharing platforms and mechanicals with the VW group. Checking the numbers, Seat make around 170,000 Ibizas a year, only viable because of the shared technology

  9. Having read this interesting piece, particularly the part headed ‘The problem with financing future products’ it is perhaps easier to answer Keith’s June blog about whether MGR should have been saved in 2005.
    And it’s an easy No. Why would anyone, including the guardians of the public purse, want to bail out a declining (dead?) manufacturing organisation with no hard assets to speak of, and only liabilities?
    Although, as I’m sure someone will point out, that’s exactly what those same guardians did a couple of years later when the banks crashed in 2007/8.

  10. Close to me is the remains of a factory known as High Duty Alloys, which made aluminium extrusions for the aircraft industry and was once part of Hawker Siddeley, before changing hands several times and closing in 2007. I’m sure their expertise in aluminium extrusions would have been useful for Rover and provided them with more work, perhaps saving the factory, which employed over 200 people in the nineties, if Rover survived.

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