History : British Leyland, the grand illusion – Part Five
Ian Nicholls, AROnline’s own resident historian, follows up his excellent run-down of the British Motor Holdings story with a five-part study of the British Leyland years, 1974-1977.
Here, in the fifth and final part, we see how the British Leyland story finally plays out.
Enter the man from Chloride
On the day Michael Edwardes became British Leyland Chairman, 1 November 1977, some 1500 workers at Triumph, Speke Number Two, walked out only a few hours after they had resumed work. They had been laid-off for over three weeks by a strike since settled at Triumph, Coventry.
The trouble centred on management plans based on studies by industrial engineers to introduce new manning scales and work levels to improve productivity. Shop stewards claimed that the company had broken a local agreement by taking a unilateral decision to implement these new arrangements. However, the company maintained that the decision to go ahead with the plans was taken only after national negotiating procedures had been followed when it became clear that no progress towards agreement could be made at plant level.
The plant, which produced the Triumph TR7, had not experienced a strike before, but the trade off for this appears to have been an atmosphere of poor discipline, low productivity and dire build quality. How Michael Edwardes dealt with this strike was crucial for the future.
The revival of British Leyland was also crucial for the prospects of the Labour Government. How could it sell the concept of further nationalisation if workers behaved as if state ownership meant commercial considerations went out of the window and the taxpayer was regarded as the source of further inflation busting pay rises, regardless of whether the company could afford it or not.
Edwardes inherits a poisoned chalice
Despite countless threats by the National Enterprise Board (NEB) to withhold funds, the British Leyland workers knew fully well that the Government had no intention of closing the company down, or breaking it up and selling off the parts with potential. And although at times the injections of taxpayers money had been frozen, the strikes had always abated long enough for the NEB and the Government to relent and the funds had been given to British Leyland.
It appears the price Michael Edwardes had extracted from the Government and the NEB was carte blanche to do whatever he saw fit in order to salvage something from the wreckage. There had been plans to rationalise the loss-making nationalised British Steel Corporation since 1975, but ministers had continually vetoed them in order to preserve employment. Michael Edwardes made sure that he was not bound by such strictures and he had the Government over a barrel – his resignation over his right to manage British Leyland the way he wanted to would be a political embarrassment.
Both Alex Park and Derek Whittaker saw the time was right to head for the exit and they resigned. They had, in effect, been pawns of Lord Ryder – they had no authority to withhold investment from strike hit factories and had to operate within the confines of Ryder’s increasingly flawed business plan. They were soon employed elsewhere, but in jobs that had lower profiles and responsibility. Other executives joined them in the rush to the exit, though it is not clear whether they disagreed with the new management or they had, in fact, failed the various management tests Michael Edwardes had instigated.
British Leyland is going to be managed by the management, not the Government. We will be kept informed. We haven’t the resources in the Department of Industry to manage Leyland and there is no desire on my part to do so.’
– Eric Varley
The Trade Unions were hostile to Michael Edwardes plans to axe 12,000 jobs through natural wastage and his re-organisation of Leyland Cars into smaller units. They met Eric Varley who was non-committal. Varley said on television: ‘We have to have a strategy for British Leyland which will arrest the decline and put it on a sound footing. I support Michael Edwardes in his approach. There’s no way you can force people to buy Leyland cars. They will only do so if the products are equal to or better than the competition.
‘I am amazed that the Labour and Trade Union movement has not yet really understood this. We aren’t talking about water boards or electricity supply, but manufacturing industry in the most fiercely competitive market. I am sure that this is not fully grasped on the shop floor. British Leyland is going to be managed by the management, not the Government. We will be kept informed. We haven’t the resources in the Department of Industry to manage Leyland and there is no desire on my part to do so.’
Clearly, while Eric Varley may have shared his predecessors ‘cradle to the grave’ ideology, he also felt it had to be earned, and not everything could be financed by punitive taxation on the wealthy, who if they could, left the country. The problem was that Tony Benn was the darling of the Labour movement, and he had convinced many in the public sector that they had a job for life.
Callaghan backs British Leyland
The Prime Minister, James Callaghan, told the Birmingham Chamber of Commerce; ‘The country has shown faith in Leyland’s. Now it is up to Leyland’s to justify that faith from top to bottom, management and workers. I say to them all: Give yourselves a chance and give Michael Edwardes a break. Do not look to the Government for any more solutions. We have done our part. Now it’s up to you. I add only one other thing. There’s not a single one of us who will not feel proud if Leyland’s can succeed in becoming a symbol of all that is best in Midlands craftsmanship.
‘Now the company must solve its problems. Putting public money into Leyland’s is an act of faith. Are we going to be let down? I make no threats about withholding funds if targets are not met. That kind of language can lead to bloody mindedness. But I say to everyone in Leyland’s that the way Nemesis will come is when you have no customers left to sell to.’
This, then, was the state of play with British Leyland when Michael Edwardes took over the reins. He inherited a political football that many saw as an exercise in socialist planning, in which billions of taxpayers’ money was to be invested, with no redundancies or changes in working practices – an ideological experiment in which everybody would work together in harmony to create a better tomorrow.
This may have been the original objective of Tony Benn and his supporters, but it was clear from recent statements from both James Callaghan and Eric Varley, that those in the Government with responsibility for British Leyland did not share this viewpoint.
The immediate root cause of British Leyland’s problems was the continued toleration of the unofficial or wildcat strike, that surefire way of getting a grievance promptly addressed. And yet the issue of outlawing unofficial strikes had continually been fudged, whether through ideology, or fear of Trade Union power. The turning point came in the ‘Winter of Discontent’ of 1978-1979, when the Trade Unions rebelled against the Labour Government’s 5% pay restraint policy.
Strikes paralysed the nation, as the Labour movement committed an act of electoral suicide. In fact, 22 January 1979 was the biggest individual day of strike action since the general strike of 1926. The ‘Winter of Discontent’ was a pyrrhic victory for the unions, as it created an inflationary spiral for non-union members to founder in and discredited the movement as defenders of ordinary people. In the ‘winter of discontent’ the Trade Unions had put their interests above that of the country and they would never again be invited to the top table by Government.
Margaret Thatcher breezes in
In May 1979 the Conservatives won the General Election under Margaret Thatcher. Her Government now had the will and public support to reform industrial relations laws, which they did, and these were not repealed by the Labour Government of 1997-2010. It has been argued that, had Harold Wilson and Barbara Castle got their white paper, ‘In place of strife’, on the statute books in 1969, much of the industrial relations trauma that destroyed the credibility of British manufacturing industry in the 1970s could have been avoided. It is a nice thought that today – British-owned companies could be major world players.
However, I’d argue that, as Edward Heath found out, there was insufficient public support in a divided country to enforce such laws. Britain had to go through the industrial chaos of the sordid 1970s to make up its mind.
The other problem confronting Michael Edwardes was the lack of market penetration by the newly-renamed BL Limited’s products. The problems with the Rover SD1 were never really solved, despite the mothballing of the Solihull assembly plant and the transfer of production to Cowley. Even today it is difficult to comprehend how Rover got it so wrong with the detail and production of the SD1, when the earlier P6 had been such an outstanding success. The disappointing sales performance of the Rover SD1 dealt the brand a blow to its quality image that it never really recovered from and the SD1 was the last real Rover developed by Solihull.
By 1983 it was the iconic Land Rover that was coming under pressure from the Japanese, as annual production dipped below 20,000 per year. Land Rover was effectively driven out of many markets by more reliable Japanese rivals. Watch a TV documentary filmed in the Third World and see if you can spot the Land Rover.
Fortunately sales of the more upmarket Land Rovers more than compensated for this loss of market and Solihull engineering continued to be innovative in the best traditions of the Wilks family who bequeathed to the company an ethos that continues to breed success.
The period from 1974-1977 effectively destroyed Triumph as a viable quality brand. A damaging strike crippled production in late 1974 as the parent company ran out of money, led by Eddie McGarry, one of the joint leaders of the Combined British Leyland Shop Stewards Committee, and a key figure in Lord Ryder’s plans for worker participation.
Triumph dies; Jaguar rescued
The replacement for the Dolomite, the SD2 was axed, and in 1978 the TR7 assembly plant in Speke was closed after the long, much publicised strike that broke out on the day Michael Edwardes became Chairman of British Leyland. Along with Speke went the Triumph Lynx (above), a V8-powered four-seater coupe version of the TR7, which was intended to replace the Stag. By closing Speke Number Two, Michael Edwardes dealt a blow to the jobs for life culture that permeated British Leyland. The decision to close Speke Number Two marked the end of the Rover-Triumph expansion programme announced by Lord Stokes back in May 1973.
The plan was that, by 1978, Rover Triumph would produce 470,000 vehicles a year, compared with around 230,000 they built in 1973. By 1981 it was all over for Triumph, bar the badge-engineered, Honda-based Acclaim.
Jaguar’s fortunes were not helped by being shackled to the parent British Leyland combine whose reputation for strikes and poor quality was reported by the media in the lucrative American market.
Chronic under-investment certainly occurred over at Jaguar but, ironically, it was Sir William Lyons’ parsimony that enabled it to survive and stay afloat in the 1970s. There was no bank funded dash for growth by Lyons. The basic problem confronting Jaguar was its image in some quarters for poor quality and reliability, which actually restricted its expansion, and production remained relatively low for such a highly rated product. Simply put there was no market for Jaguar to expand into.
This was not helped by being shackled to the parent BL combine whose reputation for strikes and poor quality was reported by the media in the lucrative American market. The Jaguar was a superb, refined car, if it was well put together and reliable – if not so, then it was a nightmare and a good reason to switch to a rival German brand. When the luxury car market recovered in the late 1970s from the oil crisis, Jaguar was unable to exploit this and resume expansion.
Eventually, John Egan pinpointed the main problem at Jaguar as being poor quality bought in components. Once sorted, Jaguar sales rose, but this was a remedy for existing models. Once the new XJ40 came on sale in 1986, the old concerns about Jaguar quality re-emerged. The car had been developed by a relatively small team in comparison with rival firms and the XJ40 was exposed as underdeveloped. Ford took control in 1990 and was horrified by what they found in Jaguar’s plants.
Ford poured billions into Jaguar, but an insistence on retro styling and a gradual drift towards SUV-type vehicles in the luxury sector prevented progress. The problem for the now Tata-owned Jaguar is that the switch to SUV-type luxury vehicles suggests that annual sales of 30,000 XJ saloons are but distant memories. Not a problem if you own Land Rover, but a threat to the traditional Jaguar saloon.
The finest hour? Metro revitalises Austin-Morris
In the volume cars division the ADO88 Mini replacement mutated into the LC8 supermini, later known as the Metro. Although superficially the Metro sold well from its launch in October 1980, statistics suggest most buyers were former Mini owners and not conquests from rival brands. This alone suggested that BL had been terminally damaged by years of industrial strife all carried out in the public gaze. The subsequent failure of the LM10 Maestro and LM11 Montego, exposed the volume car division, now known as Austin Rover, as still being incapable of assembling vehicles properly and reliably, despite all the public relations window dressing thrown at the media.
Ford and General Motors had now joined the front-wheel-drive market and, as the European car market boomed in the mid-1980s, Austin Rover had become bit -part players.
Perhaps the reality was that BMC/Austin Morris/Austin Rover’s moment in the sun had passed. When Sir Alec Issigonis had been sidelined in 1968 by British Leyland, the company had reverted to producing uninspiring mechanical porridge that were exposed as being badly built in the strike ridden factories of a company with a failing management culture, itself in a divided society. It was simply asking too much in a society that tolerated wildcat strikes and thought that throwing money at the problem was the solution.
Sir Alec Issigonis’ genius, aided and abetted by Charles Griffin, had created a situation where British cars seemed poised to conquer the world. The Mini and ADO16 1100/1300 were British-designed world cars loved and bought all over the globe. Their innovation enabled buyers to overlook their detail design flaws, faults that would not be tolerated in their successors. The Mini and ADO16 had brand values that later volume British Leyland cars did not, but nobody seemed to realise that at the time.
End of an era
When Sir Alec Issigonis died on 2 October 1988, BL was now know as the Rover Group in an attempt to give Austin-Morris a quality image. This image was, in part, boosted by co-operation with Honda. Let’s be under no illusion, Rover’s success, particularly in the European market in the 1988-95 period, was in the main down to Honda’s reputation. But Ken Cure of the AUEW union once remarked that Honda was a Trojan horse and he was correct.
Having established their reputation in Europe, Honda began manufacturing at Swindon and the need for a link with Rover became superfluous. The subsequent Rover 600 and HHR 400 were Honda designs adapted on conditions imposed by Honda on the cash strapped British manufacturer. Rover had served its purpose and Honda was moving on.
BMW identified Land Rover and Mini as the brands for exploitation while rivals soon caught and passed Rover’s 16 valve technology and the cars seemed less appealing now that the Honda connection was severed. And some would say the Honda Civic was a better car than its Rover HHR 400/45 clone. Many owners of the post-1995 Rovers, in effect badge-engineered Austin-Morris motors with some Honda DNA, had the fast but fragile K-Series engine.
This engine was prone to head gasket failure, a design flaw that Rover was at first in denial of, then reluctant to rectify. Having clawed itself out of the mire from the depths of the traumas of the 1970s and rebuilt its credibility somewhat, the issue of the fragility of the K-Series engine was seen by many as further evidence that unreliability came as standard with cars built at Longbridge and Cowley. It simply reinforced old views that British cars were unreliable. Have you ever tried telling anybody faced with a repair bill for their K-Series engine that a 1995-2005 Rover is a good car?
Eventually, BMW offloaded Rover to the Phoenix Four and Land Rover to Ford, thereafter concentrating on the new MINI. That has proved to be a great success, suggesting that, in terms of volume production, BMC>Rover had produced nothing of real significance in global terms since the original Issigonis-designed Mini and ADO16.