People : Peter North, Leyland Australia
Anything but an average company?
I rarely have much reason to be grateful to my 14 year old self, but searching through some old papers at the weekend, I was delighted by my youthful prescience in keeping a Financial Times article from 26 June 1973, the day of the Leyland P76’s launch in Australia. Don’t expect any juicy engineering detail or much about the car itself. This is about management, and offers an insight about the new spirit within the company as it prepared to introduce what should have been its most important product.
The new life of Leyland Australia
Financial Times June 26 1973
TODAY’S launch by Leyland Australia of the all-Australian designed P76 medium-sized car marks the high point in the reorganisation of this much troubled British Leyland offshoot.
Like its parent, Leyland Australia has faced the whole gamut of motor industry problems, bad labour relations, bad customer relations because of poor workmanship, bad dealer relations because of a poor supply situation; all problems over which the management theorists would shake their heads and solemnly pronounce ‘bad management.’
But the management of Leyland Australia has taken firm hold of its problems and set about seeking and implementing solutions. Whether these are right or not is another matter and one that only time can judge. However signs of the reorganisation, and the new mood of Leyland Australia, are already visible to the Australian public and may sometime even produce profits for its British parent.
At the end of February, Leyland Australia announced its buyer protection plan. This was a new deal for car buyers which abolished the old wordy warranties and instead offered a simple statement of less than 100 words—subject to certain conditions, If anything went wrong with the car and it was Leyland’s fault, Leyland would fix it.
As a promotion, it was successful. For once, Leyland had stolen the initiative. Ford, General Motors and Chrysler were forced on to the defensive.
‘It crystallised everything we have been trying to do for the last 18 months,’ the managing director Peter North said. ‘When the idea first came up of a promotion based on the fact that we were building better cars, could afford to back them better, and to produce a simple warranty statement, we realised that here was a way to recognise consumer demands for better cars and to overcome a credibility gap all at once.’
The first hurdle was the product but now rationalisation and better design has produced a range of cars, some still to be introduced, which could set the company on its feet again. The P.76 is the group’s challenge in the six and eight cylinder market, still a major one in Australia in spite of a trend towards smaller cars, and one in which Leyland has been very weak.
But resolution of the product problem was not enough. The real changes necessary were in the style of management. Starting from the top, North, a former Ford and McKinsey man, has switched much of the discussion and some decision-making emphasis away from the non-executive Board to an executive ‘ management committee which meets regularly, and at which new projects and ideas are brought up and have to be justified.
Thus in naming one of the new cars, the marketing people’s advice was rejected by colleagues and they had to rethink the whole marketing concept until reaching a conclusion satisfactory to all. Further, some lines of emphasis have been changed.
Management services is a prime example. In the pre-North days, the department comprised a small group of computer men reported to the finance department. Their job was to use computers for normal systems, payroll work and information on part, accessory availability and warranty claim analysis.
North changed this, elevating the department o one which reported directly to him and broadening its base to a corporate level. Adrian Wallace, a former IBM man, was brought in to head the department, which is now essentially run by management specialists., some of whom have computer knowledge.
Its function is now one of providing corporate systems from the point at which a pencil is raised to begin the information process right through until, say, the delivery of an order. It has evolved a programme that can track any individual car order down to its place in the factory, and project its delivery schedule. This is important in the light of Leyland’s change to a system of producing cars as ordered rather than mass manufacture of vehicles and hoping they will sell.
It involves dealers and customers as well as the factory, and computers take a place that is important, but secondary to the management function. It is an essential part of the buyer protection plan in that it has evolved a system to ensure that any telephoned complaints are quickly processed and answered. In fact, these changes were such that if one drew the shape of the management in triangles, the old pre-North system had a narrow base and high apex, the new one a broad base and low apex.
North, in his search for new talent, moved in many cases outside the motor industry. His new PR man comes from a hotel group, others come from PA Management, accountants offices and computer companies. The task was to identify the jobs and find a man to fill it, with the ultimate product, cars, taking second place—almost heresy in the motor industry. So on the finance side, with sales running at $A150m. a year, North looked for men who knew money and the operation of money markets rather than cars and car manufacture.
This change at the top in turn expressed itself with a direct contact at the grass roots level. The company objective of producing better cars is being achieved by a programme of consultation and co-operation with foremen and workers, with a two-way exchange of views rather than, say. a zero defects system. At this level, however, there was also a determined drive to stop absenteeism. This in consultation with unions, meant some punitive action against some workers but the effects on morale were good. Still the problem of turnover of assembly workers— it is still over 100 per cent.—has not been solved.
This, however, is a problem that has its roots mostly in the fact that the car industry generally is a focal point for new arrivals in the country. Some stay, many just join for a quick job till they settle down. On the assembly lines, however, major changes have been made in order to relate one person’s job to the total concept, and in increased scrutiny of the quality of the product.
This has a twofold effect—one is to identify trouble spots much more quickly and make remedial action swift, the second to simply produce better cars whose knobs don’t fall off. At the end of the assembly, each car also goes through a special check-out of 112 inspections and, if it fails one, it goes back to the beginning and starts again.
Leyland in Australia was a complex group, with the truck division executives and the car production people all entangled. Trucks have now been hived off as a separate group and production rationalised. Other activities, such as the pressed steel operation for car bodies, were also brought into proper perspective—some employees did not even know it existed. The earth-moving division of Aveling Barford has been sold back to the parent, excess property owned by the group sold, and the company withdrawn completely from dealership and car retailing.
On the sales side, major changes have been made, with increased pressures on dealers to improve the quality of their showrooms, and to improve their sales. A new system has also been introduced by which a dealer orders the cars he wants, and thinks he can sell, and these are then made. Under the old system, the company simply made the cars it thought the dealers (and hence the public) wanted, and either sent them out or had them standing in the factory yard for ages. It is said that one car stood in the yard for nine months waiting for an order. Now, when systems work properly, it is no more than a five-day period from manufacture to distribution.
Throughout the group, North’s aim has been to establish early recognition of problems with a view to turning them into opportunities, by now a classic management approach. His structure, he says, is flexible to the point that some jobs may have only a short life, and once that life is over, then the job changes to meet a new need.
But above all, the aim is to make the group viable as a car manufacturer in Australia
Perhaps the greatest measure of North’s success lies in the ever-increasing morale of the middle and lower executive level, and a greater corporate identity among all the workers.
Not much more than a year later the Zetland plant was closed by North’s successor, British hatchet-man David Abell, leaving the firm’s Australian presence as a CKD assembly, import and distribution operation. North had resigned, giving as his reason chronic disagreement with the British Leyland management. “The differences have reached a point where l feel I must resign in the interests of the company, its employees and dealers.’
Yet, reading through the 1973 FT article, there’s a feeling of hope, confidence and competence, that goes beyond braggadocio and ‘70s management-speak. Did Leyland in the UK adopt any of the ideas and systems of ‘North-era’ Leyland Australia?
I doubt it. Leyland Australia’s demise coincided with the UK company’s absolute nadir as far as quality and customer satisfaction went. As WHEELS’ headline for their posthumous Force 7 story said, ‘What a bloody shame!’