The BMC>MG Rover Story : Part Four – The Ryder Years, Ship sinking fast
Sir Don Ryder had been plunged in at the deep end by the government. He was given little time to make sense of a mess that had been building up since, arguably, before the merger of Austin and Morris in 1952. In a nutshell, he was faced with the following problems:
- Appalling record across the factories for striking and industrial disputes
- Poor build quality and even worse image of the cars that the factories did manage to build
- Inter-factory competition – workers at Longbridge feeling that they were working for a different end to those at Cowley – ‘Them and Us’ syndrome. This had been lessened when the ‘Common enemy’ at Leyland took over BMH, ironically!
- A range of cars that comprised of too many individual model ranges that often competed against each other.
- Weak and ineffective factory management, dominated by the shop stewards.
Sir Don Ryder’s Report when it appeared was called, ‘BL: The next Decade‘ (reproduced in detail) and along with a team that included Bob Clark (Chairman of Hill Samuel), Fred MacWhirter (a senior partner of Peats) and Sam Gillen (the ex-head of Ford UK and Ford of Europe) Ryder managed to produce this document in double-quick time. Ryder actually passed it to Tony Benn on 26 March 1975, a mere 14 weeks after the original commission! Tony Benn approached the cabinet for approval and they backed the plan produced by Ryder wholeheartedly.
Some Ministers saw the Ryder Plan as a gamble, because it would set a precedent and dictate government policy for the rest of its term – this would in effect, be the undoing of the 1974-’79 Labour government. The report immediately sparked off a round of high-profile resignations, which most notably headed by John Barber (to be replaced by Alex Park). Before Park joined British Leyland in 1973, he worked for Rank-Xerox and so was still new in the machinations of the company.
So it was a great surprise to him when he was offered the job by Stokes – so much so, that his initial reaction upon receiving the offer was, ‘You must be joking!’
When The Ryder report, became public on 23 April 1975, it had appeared in record time – almost rushed to the point of recklessness and it pulled no punches. In brief, the report made the following recommendations:
- Donald Stokes should resign as Company Chairman
- The ‘grotty’ factory machinery should be replaced and as a matter of highest urgency.
- A cohesive model strategy needed to be devised, cutting out the immense overlap in the company’s range.
- The company build a new test and development centre in order to facilitate more efficient development of new cars.
- Industrial relation problems should be eradicated.
In terms of finances, it would take an enormous amount of investment to return the company to health, making it a, ‘viable and fully competitive’ company by 1981. The Ryder report proposed that capital expenditure of no less than £1.264 billion would be required from the government, along with £260m worth of working capital. These numbers must have made eye-watering reading for Tony Benn, but this paled into insignificance beside alternative – the notion that the government had allowed the UK’s leading car company to dissolve. No one wanted to imagine the consequences if the Ryder plan failed because there would be an estimated million people put out of work if British Leyland were closed.
Harold Wilson did not oppose the plan at all, in fact the Government gave the plan its full and unconditional blessing – and it went forward, full steam ahead. As a result, BLMC ceased to exist as an independent company and on 27 June 1975, it became known as British Leyland Limited. This signified that the company was now fully under government control.
Against Ryder’s recommendations that Donald Stokes should resign, Harold Wilson stated that he was his personal friend and that his sacking (for events that were not entirely of his own doing) would hurt the man terribly – it was highly unfair that he was being made the scapegoat for the sins of his predecessors. The Prime Minister thought that Stokes would be far better employed as some kind of travelling export promoter for the company – an acknowledgement of the fact that Donald Stokes was undoubtedly a super-salesman and an audacious negotiator. Because of the direct involvement of the Prime Minister, Donald Stokes was made the Non-Executive Chairman of the Company – effectively a figurehead, just as Wilson had envisaged.
Ryder optimism for BL’s future
In the event, the Ryder report was certainly very optimistic about the future of the company, painting a rosy image of what shape it would be in by 1981. One controversial prediction that Ryder based a great deal of his forward projections on was that BL would maintain a 33 per cent share of the market in UK. In 1975, the year of the Ryder report, BL actually held 30 per cent of the market and its closest competitor, Ford, held 21 per cent.
So, Ryder was basically saying that after his recommendations had been implemented, the company would regain lost market share on its way to prosperity. In the event, facts would sadly prove Ryder to be very wrong: in 1977, Ford actually overtook BL to become the UK’s best selling brand – even though BL built 650,000 cars compared with Ford’s figure of 406,000. Of course, Ford imported the deficit, into the UK from their European operation – a strategy that would serve them well during the strife-torn 1970s, and along with Vauxhall and Chrysler would mean that year-on-year the ratio of imported cars to domestically produced ones would continue to move in favour of the imports.
Amazingly, Ryder made no recommendations for plant closures, just sweeping organizational changes to the management structure. In line with Ryder’s recommendations, Sir Ronald Edwards replaced Donald Stokes as the Executive Chairman of British Leyland, but he would tragically only remain in the role until January 1976 – a mere four months – due to his untimely death.
As far as the output of British Leyland was concerned, Ryder recommended that the company remained a presence in both the volume and specialist manufacturing fields and that it should be split-up into four divisions: Cars, Trucks, International and Special Products. Although Ryder recognized that BL had to ensure that each of the company’s marques should retain their independent identities, he maintained that the BL had to pool its resources. The way to do this was to reorganize car production to reflect the fact that Austin-Morris and the Specialist division would, by this time, need to become a ‘Single integrated’ car business meaning that all development and marketing would be shared.
Derek Whittaker, the former Managing Director of British Leyland’s body and assembly division, was the man that was charged with the unenviable job of putting these recommendations into place, getting the job of running the car division. Unlike some of his predecessors, Whittaker was a quiet man and a no-nonsense manager – and it was because of these qualities that he was chosen for this role. His first task was to ensure the smooth transition from the separate Austin-Morris and Specialist Division franchises into this unified entity. Whittaker would find that in the two years that was to head-up the car division was a rough ride – especially with regards to the mounting union unrest and the resulting lost car production.
Within the media, a lot of speculation had centred on the role that the Chief Executive of Jaguar, Geoffrey Robinson would play in the company now that it was under the scrutiny of public sector ownership. Many industry observers had him tipped for Whittaker’s job at the head of Leyland Cars, so it came as a surprise when the 37-year-old high-flyer was passed over. As a ‘Stokes Whizzkid’, who had joined BLMC from the IRC, when the 1970 Conservative government had disbanded the organization, Robinson, nurtured by Stokes himself, soon picked up the role of running the newly purchased Innocenti division in Italy.
Robinson would end up improving labour relations with the Communist controlled car workers as well as overseeing the eventual launch of the Bertone styled 1974 Innocenti Mini. When Robinson had seemingly completed his task of revitalizing the Italian offshoot, he returned to Britain, where he was quickly selected by Stokes to become the executive Chairman of Jaguar in Browns Lane.
A new face at the head of Jaguar in 1973, he may have been, but when he suggested that his ambition for Jaguar was to massively expand production following the onset of the 1973 energy crisis, his judgment was soon called into question. Also, rumours of financial ‘irregularities’ at Innocenti and Jaguar soon reached the ears of John Barber and an internal investigation was launched to delve into these allegations. To cut a long story short, there was enough doubt surrounding Robinson’s practices that he was asked by Barber to resign from his plum job, which he subsequently did, citing the appointment of Derek Whittaker as the Chief Executive of Leyland Cars in favour of himself.
To confuse the issue somewhat, in the wake of the Ryder Plan, the government had also launched an investigation into the British car industry, which was to be handled by an all-party House of Commons Expenditure Committee. The results of this well-researched white paper into the costing and future of the industry was most interesting, especially with regards to the findings of the Ryder report.
The report was critical of Ryder’s costing for the implementation of his plans:
John Barber had stated that the Ryder report had been written from the perspective that BL would be in receipt of an unlimited supply of finances from the government. It also stated that the report was almost written as a ‘what if?’ document and as such, it took Alex Parks and Donald Stokes a great deal of effort to keep Ryder’s feet planted firmly on the ground.
The white paper was also critical of Ryder’ s projection that BL would hold on to a 33 per cent share of the UK market and also, 3.9 per cent of the European market (by 1985)
The commission thought that Ryder had not carried out sufficient research into the future sales projections of BL and certainly did not plan a contingency against the event of a price war in Europe or increased car prices in relation to consumer incomes. The committee also disagreed with Ryder’s recommendations as to how the management structure would work in the newly-rationalised organisation and levelled the criticism that Ryder relied too much on management personalities and not enough on sound management structure. The White Paper may have been openly critical of the Ryder report and posed some serious questions of the validity of it, but in the end, the Ryder report had been accepted by the House of Commons three months before the publication of the White Paper, so its findings were entirely academic.
Ryder had recommended the expansion of the company – to build themselves out of their financial mess, but it still did not address one of the most pressing matters: the unpopularity of the company’s products.
As a result of all this uncertainty, and the fact that British Leyland’s market share had fallen so dramatically since its formation in 1968, morale was understandably low within the company. As a result of this, Ryder embarked on a whirlwind tour of the company’s factories in order to rally the employees. It was a brave plan, as these were dark times for the company, with Union militancy rampant in just about all of BL’s car plants and the belligerence of the production line workers running at unprecedented levels. As Sir Michael Edwardes subsequently noted, the effect on the morale of the company’s employees was actually the opposite of Ryder’s hopes: it devalued the company’s local management and made no impact whatsoever on the motivation of the work force.
British Leyland future models under the control of the government
The National Enterprise Board was given the task of overseeing the running of British Leyland, and report back to the government on its progress, whilst ensuring that Ryder’s plans for the company were being implemented. Sir Don Ryder was made the first chairman of the organization – and so ensured that he could see his plans through to their conclusion.
A partial nationalisation of BL was proposed by Ryder, whereby the National Enterprise Board would allocate large sums of money over the next four years in order to guarantee the company’s survival. Existing shareholders would only be offered 10p per share for their holdings with a nominal value of 50p – this was down from a peak of 80p in the post-merger euphoria. The Government’s shareholding was increased with every succeeding year, but they never owned 100 per cent of BL.
Whilst these traumatic events were unfolding, work continued on the next wave of cars to replace the ageing Triumph Dolomite and the Morris Marina. To say that morale was falling at the Longbridge and Solihull design offices is a great understatement, but the need to continue with the new model programme as recommended by the Ryder Report was of paramount importance. Had the events of 1973/74 not taken place, by 1978, Austin-Morris would have by all rights had a supermini (ADO74) and the replacement for the Marina (ADO77) to sell and things might have not have looked quite so bad.
Logically enough, plans for the Marina replacement, or ADO77 as it was known internally, were initially drawn up in 1972, had been developed as a direct response to the Ford Cortina. The planned car was intended to match Uncle Henry’s mid-range car inch for inch, which made for an altogether larger car than its predecessor. It employed the yet-to-be-released O-Series engines in 1.7 and 2-Litre forms and used a version of the BLMC modular gearbox, dubbed the 66mm.
By the summer of 1975, work on this car was well advanced when it was decided by management that there was a real risk of competition between this and Solihull’s next car, the SD2. Not only that, but the newly launched ADO71 also occupied a similar place on the marketplace, offering 1.8 and 2.2-litre versions. That the strategists had not identified the fact that these three cars were going to be in direct comparison with each shows just how the company still saw themselves as a multi-marque operation, even though dropping sales volumes would force them to rethink during the Edwardes era. Not only that, but this overlap of future models caused by poor planning proved to be a rather a costly exercise in terms of finances and human resources – and probably proved to be a reason why neither of the cars would actually survive into production.
In all probability, the ADO77’s chances on the market would have been limited anyway and not only because of the potential clash with the Princess – European rivals were moving, wholescale, over to front wheel drive and although BL were wrong to surrender the fleet market entirely, it would not have been a good long term strategy to launch a car as conservative as the ADO77 onto the market, by the late 1970s.
The parallel project undergoing development at Solihull, the SD2, was also a conservative car by the standards of the class. It was a wholly logical downscaling of the SD1 concept; a Five-door hatchback with shovel nosed styling and side swage lines, like the Rover 3500, this time running on a modified version of the TR7’s running gear.
Whereas the larger, David Bache designed car had been judged an unqualified success, the SD2 looked less than happy, being somewhat truncated in appearance. The surviving SD2 prototype at Gaydon is badged as a Triumph 1500 at the front and a Leyland along the flanks – one can imagine that the 1500cc version of this large bodied car would have been somewhat less fun to drive than the 2-Litre version that was also being planned for.
At this point in time, however, work was rightly stopped on these two competing mid-sized cars, especially when neither car shared any componentry; Austin-Morris and Triumph debating the relative merits of the O-Series versus TR7 slant four engine. It was an absolutely unjustified luxury for a Company in such dire straits to embark on parallel projects, so in September 1975, resources were pooled and co-development ensued at last. With this change in direction, the idea that Austin-Morris and the Specialist Division were separate entities in any greater depth than sales and marketing was destroyed forever – it was now Leyland or bust.
In this climate of austerity, work was begun on the TM-1 (Triumph-Morris) and as with the SD2 and ADO77 predecessors, it would be a conservative, rear-driven car. TM-1 never amounted to much more than a paper project (the plan was for basic models to wear the Morris badge and more expensive hatchback version to be sold as a Triumph), because events were already overtaking the concept: the Princess would represent the company in the 2-litre class – and to have a competing rear wheel drive car was a luxury that Leyland could no longer afford.
Fortunately, common sense prevailed and the project was scrapped – and with it the idea that British Leyland would design uniquely engineered Austin and Morris models. By this time (1976) a more realistic plan was beginning to materialise of what was required in any future model range presented by the company. Spen King and David Bache began to work on a front wheel drive hatchback, referred to as the ADO99, but which would eventually become known as the LC10 – a car that would subsequently prove to be rather important in the future of British Leyland.
Strikes start to cripple British Leyland
Sir Michael Edwardes joined the NEB in January 1976 and found that it was an initially bizarre situation that any suggestions he took to Ryder with regards to the running of BL were dismissed by him because he felt that Edwardes’ role of Industrial adviser was somewhat different to his role as consultant within the NEB.
By 1976, Leyland were suffering from crippling disruption through industrial action and the man that had hand-held the company through merger and now into government administration, Tony Benn, had now departed. He was to be replaced in the Trade and Industry role by Eric Varley and with this new Minister came a much tougher line on government spending. He made it plain to Ryder that the government were not prepared to continue writing British Leyland blank cheques and were now expecting very real and positive progress by the company.
The response was further strikes across the company and in 1976 alone, the following plants fell victim to serious stoppages: Llanelli, Canley, Solihull, Drews Lane, Browns Lane, Longbridge and Cowley. In the first five months of 1976, for instance, this inaction amounted to the loss in production of 60,000 cars. As events drew on, the industrial action became increasingly severe – the Union leaders that felt that they were representing the best interests of their membership were surely bringing the company to its knees. The situation was grim and looking back, these strikes were the worst the country had seen since the General Strike of the 1930s.
In an interview with Autocar, Derek Whittaker made it quite clear where the company’s troubles lay: ‘The most important single thing is continuity of production. (Given industrial peace) I feel sure that we can turn the company round in two years. We are well into our ten year plan and I am confident that that the continuing targets year by year outlined in the Ryder report can be achieved and exceeded’.
Because of the continuing industrial blight, however, the aims of these plans were moving further and further away from reality. For the first time since the formation of the NEB, the government began to seriously harbour the idea that British Leyland would have to close – still an unthinkable prospect – and knew that radical action was now the only way to cure the ills of the company.
What was also very obvious was that the recommendations brought forward by the Ryder plan were failing in the worst possible way. Varley took the opportunity to lay down the law to Ryder made it clear that the government would be freezing their financial aid to the failing company. The crunch time came when the company’s toolmakers went out on strike for four Months and because of this, the BL Board sensibly stated that they would not consider asking for further government aid until the strike was broken.
The toolmakers strike was possibly the most damaging of all the strikes that befell British Leyland because of the fact that it seriously interfered with the production of the new and promising Austin-Morris 18-22 Series and the Rover 3500. Solihull would inevitably lose the most because of the strike: When the Rover 3500 was launched, it was greeted with a rapturous reception from the World’s motoring press, receiving the European Car of the Year 1977 award – and as a result, interest in it from the buying public was immense. When it was launched in Europe in February 1977 – during the middle of the toolmakers strike – dealers across the EEC could only stand by and watch uselessly as customers interested in buying the SD1 came and went because they had no cars to sell.
Derek Whittaker appealed personally in a letter addressed to every single member of the company’s workforce, explaining that their inaction was costing the company lost sales and lost profits at this most sensitive time in the company’s history – he implored for them to come back to work. What the workers did not know, though, was their inaction was also damaging the future prospects of the company: In response to the question whether the ADO88 was still on-stream, Ryder stated that, ‘there was a doubt when we had the toolmakers’ strike….’
Reading between the lines, had the Toolmakers remained on strike, the programme would have been cancelled – and surely, that would have meant, in the medium term, that Austin-Morris would have ended up without the Metro in 1980 and as a result, would have probably not survived the early 1980s.
When the strike finally ended and the toolmakers did return work after some four months, the company actually enjoyed a strike-free three months and so (rather questionably) the NEB undertook yet another review of the company. Because of this review, the future of the ADO88 was assured and Ryder alluded to the fact that in order to stick to his plans for the future, there would have to be no more industrial action by the Unions.
As a result of the ceasefire between the unions and the management, the BL Board felt confident enough to ask the government for a further £100m of aid – the problem was of course, that the damage had already been done. New cars such as the TR7, Princess and Rover SD1 – all promising cars – soon lost their novelty on the market place because dealers could not supply cars and those that did get sold were subject to, shall we say, variable build quality.
Time was again running out – the government through the NEB was losing patience. The Post-Ryder regime at British Leyland may have been successful in getting the new (Stokes-era) cars on to the market place, but they were in no way dealing with the industrial problem. Strikes were the cause of collapse of the Ryder plan – and with it, the last realistic hope that the company could remain a volume player. A new broom was needed and it was needed desperately.