History : The complete BMH story – Part Three

Carole Nash Classic Insurance Specialists

PART THREE : 1968 – THE MERGER

BMH-BMC&Jaguarpeople1966
BMC and BMH people in 1968. Left to right: Lester Suffield, Ron Lucas, Joe Edwards, Sir George Harriman, Sir William Lyons, Alec Issigonis and Pressed Steel Managing Director John Lutyens

In January 1968 production of the Mini at Cowley ceased so from then on all UK production was centred on Longbridge. Part of the rationale behind this was to free production capacity for the ADO14 BMC 1500 saloon. However, the ADO14 was delayed and launched in 1969 as the Austin Maxi.

With overseas manufacture of the Mini increasing, export markets could be supplied from these plants. No doubt the freeing of capacity at Cowley enabled BMC to ramp up ADO16 1100/1300 production, which was about to attain the zenith of its popularity.

The merger talks resumed on 8 January 1968. That day a meeting was held to discuss the merger of the Leyland Group and British Motor Holdings. Among those present were Sir George Harriman (BMH), Sir Donald Stokes (Leyland), Sir Frank Kearton (Chairman of the Government’s Industrial Reorganisation Corporation (IRC) and Courtaulds) and John Pears (Cooper Brothers).

The location of the meeting is unknown.

Sir Frank Kearton was of the view that BMH was heading for the rocks and that Sir Donald Stokes was the man to take the helm of a merged company. At the meeting Kearton accepted that there had been a very great improvement at BMH and drew the inference that Sir Donald Stokes managerial experience was limited.

The object of the meeting was for Sir Frank Kearton to get to know the main players and create a friendly atmosphere. The next day Sir Donald Stokes met the Prime Minister Harold Wilson at the Triumph plant on snow-covered Merseyside. Stokes expressed his frustration at the slowness of the merger negotiations and confessed he was thinking of making a bid for BMH. The Prime Minister advised him to exercise patience.

The fact that this meeting took place, revealed in Graham Turner’s 1971 book ‘The Leyland Papers’, only served to re-enforce the view that Harold Wilson was in cahoots with Sir Donald Stokes to hand BMH on a plate to Leyland.

On the same day the Leyland Board met to discuss their options as outlined by Lewis Whyte. They were to remain independent, merge with BMH on the condition that Stokes was Chief Executive or make an outright bid for BMH.

On 12 January Sir Frank Kearton lunched with Joe Edwards of BMH at his Courtaulds office in the City of London. Afterwards Sir Donald Stokes ‘phoned Kearton to discuss the meeting. Then Sir Frank Kearton ‘phoned Sir George Harriman. What was actually said between Edwards and Kearton was disputed and Edwards then ‘phoned Sir Frank to re-iterate that he was willing to work with Stokes, but not for him.

On 14 January 1968, a Sunday evening meeting at Sir Donald Stokes flat in St James, London was planned between senior Leyland and BMH executives. In the event only Sir George Harriman of BMH turned up to meet the Leyland men who consisted of Sir Donald Stokes, John Barber, Lewis Whyte and Sir Siegmund Warburg.

Also present were Sir Frank Kearton of the IRC and John Pears of Cooper Brothers. Joe Edwards of BMH refused to attend the meeting, preferring to dine with Lady Harriman at the Hyde Park Hotel, which BMH used as their London base.

The Leyland men eventually travelled over to the Hyde Park Hotel and persuaded Edwards to come with them back to Stokes’ flat in St James. Sir Frank Kearton told Edwards that Leyland would make an all out takeover bid for BMH the next day if he (Edwards) did not agree to the merger. At around 1.00am in Sir Donald Stokes’ St James, London flat, Joe Edwards (BMH) reluctantly agreed to the BMH-Leyland merger.

Joe Edwards had to accept that the Chairman, Sir George Harriman, had no stomach to fend off a bruising takeover bid by Leyland. The other BMH Directors were not against the merger. Alec Layborn thought a merger was essential, Ron Lucas did not object while Sir William Lyons was only concerned for the autonomy of Jaguar. Lyons was, in fact, already doing business with Leyland, the truck maker supplied cylinder blocks for the Jaguar XK engine.

At 10.00am there was another BMH-Leyland meeting held in the offices of the Industrial Reorganisation Corporation. Among those present were Sir George Harriman, Joe Edwards and Ronald Lucas from BMH and Lewis Whyte from Leyland.

Sir George Harriman now revealed that BMH’s profit forecast had now dropped from the £20m. figure given in November 1967 to 12m.based on a UK market share of 35 per cent. Joe Edwards blamed this on industrial disputes in late 1967.

At 4.00pm the relevant parties met again. Ron Lucas of BMH had altered BMH’s profit forecast again. This time it was £16.2m., again based on a UK market share of 35 per cent. For 1968-69 the profit forecast was £35m. with an out put of 919,000 vehicles.

Ron Lucas admitted BMH had 60,000 vehicles, probably ADO16 and Mini Mk2s that could not be moved because of component shortages and transport difficulties. The merchant bankers for both BMH and Leyland met on 16 January 1968, the location unknown. Also present were George Turnbull and John Barber from Leyland and Ron Lucas of BMH.

Leyland held a board meeting. Shortly after it began, they were then joined by Sir George Harriman and Alec Layborn of BMH.

At 6.15pm the full boards of both BMH and Leyland met at the IRC’s offices for more discussions. By 9.00pm all issues separating BMH and Leyland seemed to have been resolved and Sir Donald Stokes made a conciliatory speech. Sir Donald Stokes tried to appease the still hostile Joe Edwards by pointing out that he (Stokes) was a salesman and he would need Edwards help in the task ahead.

Edwards replied: ‘Donald, I’ll never forgive you for what you did last night,’ and walked away.

Presumably Edwards was referring to Leyland’s terms, which was to merge on their conditions or face a hostile takeover bid for BMH.

On 17 January 1968 the big merger was announced and a bright new future dawned. At the offices of Cooper Brothers in London, the BMH and Leyland men signed a document called ‘Heads of Agreement and Principles of Management Structure.’

At 1.45 pm the Stock Exchange was informed of the merger and at 1.55pm the media was let in on the secret. The name of the new grouping was the British Leyland Motor Corporation (BLMC) from the outset, Sir George Harriman would be Chairman and Sir Donald Stokes would be Deputy Chairman, Managing Director and Chief Executive.

Headquarters of the new group would be in London. Under the merger terms, the new corporation would acquire all the issued ordinary shares of BMH and Leyland – the joint market capitalization at the time was £410m on the basis of one new share for each ordinary share of the two companies.

The market valuation of the Leyland Motor Corporation was around £217m and £193m for BMH at the time, revealing that the truck maker was in the ascendancy. Sir Donald Stokes firmly rejected the suggestion that he had been over generous.

‘We would almost certainly have had to pay more with a take over bid,’ he said.

In the days that followed both Sir George Harriman and Sir Donald Stokes spoke fine words about the future. It was recorded that, on 3 February, BMC were holding stocks of 51,000 vehicles, mainly due to components shortages. On 6 February, BMC axed another relic as the last Austin A35 van was produced on this day at Longbridge.

However, there was more trouble ahead for BMC and it arrived in London on 9 February from South Africa in the shape of Jack Plane, a Leyland Director. Two days later Jack Plane visited Sir Donald Stokes in his flat to express his doubts about the BMH profit forecasts.

On 12 February BMH and Leyland held a ‘dummy board’ meeting, possibly at the Leyland Berkeley Square offices. Six Directors attended from both sides plus Leyland Secretary Tim Addison. After an orderly start it became acrimonious…

Joe Edwards was angered by the glowing publicity Sir Donald Stokes had been receiving in the press and at the meeting finally snapped. He was reported to have said: ‘Donald Stokes, you are a bloody fool. In last Sunday’s press, you had more publicity than any King or Queen in my time, but you ought to know that there are scores of executives at BMH who hate the sight of you even though they’ve never met you.’

Sir George Harriman supported the view that there was considerable animosity within BMH to Stokes, who some saw as a publicity seeker. The Jaguar Chairman, Sir William Lyons, noted: ‘Whilst the BMH board has full regard for the image which Sir Donald Stokes has built up as a very successful exporter of commercial vehicles… Sir Donald has not in the opinion of the BMH board the expertise to virtually go it alone.’

After the meeting closed, the BMH Finance Director, Ron Lucas, gave his frank viewpoint to some of the Leyland Directors about his company’s financial problems, believing that the merger was signed and sealed, which it wasn’t.

Lucas said that, ‘practically none of the upgraded engines for the Mini were ready.’

1968-morris-mini-1000-mk-ii-photo-323555-s-1280x782

He was referring to the 998cc engine used in the Mk2 Mini 1000 (above). Most of the Leyland Directors reassembled later in the day, with Sir Donald Stokes taking the view that Leyland should pull out of the merger. Lewis Whyte and John Barber advocated further investigation.

At 9.15am the next day John Barber of Leyland ‘phoned Ron Lucas of BMH to get the latest BMH profit forecasts, but was told to ‘phone back in the afternoon.

Later Sir Donald Stokes, Lewis Whyte, Dr Albert Fogg, Jack Plane, John Barber and Tim Addison of Leyland met at the offices of Warburg’ to discuss whether they should pull out of the merger with BMH. According to John Barber, during the half year ending on 10 February 1968, BMH’s weekly production had fluctuated between 11,500 and 14,000 which would result in a loss of some £2m. This and other gloomy forecasts led to a press release, calling the merger off, being drafted.

Barber then ‘phoned Ron Lucas of BMH for the latest figures. Lucas was now more optimistic. He claimed BMH could break even on a weekly production rate of 12,800 per week.

Sir Donald Stokes then ‘phoned Sir George Harriman to arrange for John Barber to travel to Longbridge to examine BMH’s finances. On the same day as the men from Leyland were pondering the wisdom of a merger with British Motor Holdings, another press interview with one of the main players appeared. Sir George Harriman, Chairman of British Motor Holdings, spoke to The Times newspaper. He took the opportunity to defend his company.

‘One of the main points of criticism – misunderstanding if you like – has been that we have too many models, have been lacking in market research and so on. That’s all bunkum. Nor has due credit been given for our export performance and what had happened before devaluation.’

Harriman did not question the need for greater rationalization of models, once the merged company got into its stride. ‘Certainly rationalization comes into our plans. We shall do as much as we can, in line with the competitiveness of the product, which is what we have been doing within BMC.’

He was asked about engineering and future model plans: ‘We haven’t yet got down to discussing the details on which everyone is speculating. Certainly anything on the engineering side will take two or three years to work out, but we have very close technical links and will be using all the brains available.’

Harriman stoutly defended badge engineering: ‘One must differentiate between badge-engineering and marques. Austin, Morris, Riley, Wolseley, MG, Jaguar, and so on, are marques. If you take certain markets, South Africa, for instance, they prefer the name Austin in the family car line.

‘In Australia they prefer Morris, in the United States MG. So the marques are desirable, and in certain export markets where licences are issued, they are issued to specific names or marques. New Zealand is a good example, where the licence is for Wolseley. There’s nothing strange or illogical about this. One need only look at General Motors to see the equivalent: Buick, Cadilac, Chevrolet, Oldsmobile, Pontiac – this is exactly the same thing. The only advantage in having one name is perhaps in its repetitive impact, but you still came down to individual names for models.’

Sir George was asked that with BMH employing more than 120,000 people, worldwide, including 106,000 in Britain, working in 32 factories with a total manufacturing capacity of 1,100,000 vehicles a year, could the merger lead to redundancies?

‘It should not create a single one. We are hoping to get away on an expansionist programme. The whole idea of a merger of this nature is to expand. If we don’t expand, we are not going to be competitive with the Americans, the Continentals or the Japanese. It’s as simple as that, and the point where we come back to the Governments policies as affecting the motor industry and the country in general.’

On 14 February, John Barber travelled to Longbridge. With him were Walter Boardman of Standard-Triumph and Gerry Wright, Leyland Motors new Chief Accountant, who came from Ford. At Longbridge they found every spare piece of ground was filled with incomplete vehicles, a legacy of the Mk2 ADO16 and Mini component shortages.

After examining BMH’s books, they travelled back to London to a meeting of senior Leyland Directors. They were joined by Sir George Harriman and Ron Lucas of BMH, together with their financial and legal advisers.

According to figures agreed by John Barber’s team and BMH, even if BMH managed to produce 15,000 vehicles a week between then and the end of July 1968, the best result that BMH could hope for was a profit of £4.8million, half the previous forecast.

BMH again blamed labour troubles for this. Leyland’s Directors decided as a result to recommend the abandonment of the merger having discussed BMH’s finances. However, time consuming wrangles over the wording of a press statement enabled last ditch efforts to save the merger to take place.

At 11.30pm Sir Donald Stokes had an emergency meeting at Sir Siegmund Warburg’s flat in Belgrave Square, London. Also present were Michael Verey, BMH’s financial advisor from Schroeder Wagg and Sir Frank Kearton of the IRC. Kearton told Stokes that, if the merger agreement collapsed, then the IRC would support a Leyland takeover bid for BMH. This forced a climbdown by BMH, represented by Michael Verey, who provisionally agreed to Leyland demands that Sir George Harriman stood down after six months as Chairman of the merged company.

Sir Donald Stokes left Sir Siegmund Warburg’s flat at 2.45am. Later this day at the Leyland headquarters at Berkley Square, London, Stokes  reported the events of the meeting to Leyland men Dr Albert Fogg, Jack Plane, George Turnbull, John Barber and Tim Addison.

In another room in the building, Michael Verey and other Schroeder Wagg men met the BMH board to also discuss the nights meeting. Sir William Lyons, BMH board member and Jaguar founder decided to act as a mediator between the two sides. At 11.15pm Sir William Lyons along with Michael Verey met up at Sir Siegmund Warburg’s flat in Belgrave Square, London with Sir Donald Stokes and John Barber.

Stokes made it clear that the proposal that the merger was off unless Sir George Harriman resigned came from Sir Frank Kearton of the IRC and not from him (Stokes) and that this was wrong. However, it was then made clear that the price of the merger was Sir George Harriman’s resignation!

Sir William Lyons then reluctantly agreed to explore the possibility of Sir George Harriman resigning. At 9.15am on  16 February 1968 Sir Donald Stokes ‘phoned Sir Frank Kearton at his Courtaulds office to place on record that at no time did he push for Sir George Harriman to resign or be moved to a ceremonial non-effective position in the merged company.

At the Berkeley Square headquarters, the Leyland Directors decided to push for Sir George Harriman’s resignation, led by Jack Plane.

Sir William Lyons and Sir George Harriman arrived at the Leyland HQ where they were ushered into an office by Jack Plane who strongly lectured them on the state of BMH’s finances and told Harriman,’…to get the hell out of it.’

Sir George Harriman seemed to have taken Jack Plane’s verbal assault calmly. Both he and Sir William Lyons knew they had to accept Leyland’s terms or face the possibility of a hostile takeover bid. Later that day Stokes wrote to Harriman that Leyland could not go on with the merger due to the state of BMH’s finances.

That evening the BMH board, judging that a take-over bid was in the offing, decided to agree to the merger on existing terms. Sir George Harriman’s friend and former Leyland Chairman Lord Black arranged another meeting. It took place on Sunday morning, 18 February at Jack Plane’s flat in Arlington House, London.

Also present were Sir Donald Stokes and Sir Frank Kearton of the IRC. It was at this meeting that Harriman agreed to step down as BLMC Chairman at around Motor Show time 1968. Later that evening another meeting was convened at the Hyde Park Hotel, where the BMH board were in conference, having been informed of Sir George Harriman’s decision to step down as Chairman.

Leyland made it clear that it was also unacceptable for Harriman to remain on the board, which came as a shock to the BMH men. Despite the efforts of Sir William Lyons, Harriman agreed to resign from the board, believing it to be in the national interest, with effect from 1 November 1968.

Sir George Harriman then collapsed and had to be taken to a London clinic. The agreement that resulted in the formation of the British Leyland Motor Corporation was ratified the next day. Joe Edwards and Alec Layborn of BMH had to go to the London clinic where Sir George Harriman was recuperating to get his signature.

The first BLMC board meeting occurred on 16 February. Sir William Lyons demanded and got reassurances of Jaguar’s continued autonomy within BLMC. Reading all this in retrospect, one has to admire Sir George Harriman’s lack of public rancour in all these merger negotiations when confronted by the sheer arrogance of the Leyland Directors who raised the stakes at every opportunity.

The hawkish Lewis Whyte was joined in the later stages by Jack Plane, in pushing for total control of the merged company and encouraging Sir Donald Stokes into biting off more than he could chew. Stokes himself probably believed some of his own publicity. In the book ‘The Leyland Papers’ by Graham Turner, the Leyland men wanted it put on record that they had not bullied BMH into submission, but they clearly did.

Harold Wilson, Tony Benn, Sir Frank Kearton and the Industrial Reorganisation Corporation were certainly taken in by the Stokes publicity machine and only the passage of time would unravel this unintentional conspiracy. They seemed to forget that it was not Sir Donald Stokes who knocked Standard Triumph into shape, but Sir Henry Spurrier and Stanley Markland, who were no longer on the scene.

Leyland had bided its time and had refused to agree to a merger until the share price was in their favour. BMH had agreed to a merger because it was in the national interest, Leyland agreed to a merger because it was in their interest.

On 22 February the British Motor Corporation was reportedly tightening management control at Longbridge. BMC had begun a full-scale reorganisation of its biggest production unit, the Longbridge group of factories employing 23,500 men and women on making Austin cars.

Manufacturing had now been re-grouped into four separate units, each with its own General Manager. The new groupings were broadly based on vehicle assembly; north and south engineering works, cast works and the new £16million engine plant nearing completion at Cofton Hackett.

It was hoped that by shortening the chain of command the new moves would improve labour relations. A team of job evaluation experts were being trained at Longbridge. It faced the enormous task of trying to sort out the maze of rates and gradings, which formed the root cause of Longbridge’s appalling labour relations record.

The fact that BMC was making changes to its organisational structure suggested that they thought it would be business as usual, despite the merger with Leyland. The British Motor Corporation still behaved as if it was business as usual, seemingly oblivious to the merger that had just taken place. In late February it announced a high-level reshuffle of BMC Directors’ areas of responsibility as part of a streamlining process before completion of the BMH-Leyland merger.

Sir Alec Issigonis
Sir Alec Issigonis

The moves centred on the decision by Alec Issigonis, BMC’s Technical Director, to devote himself full-time to more creative and forward looking concepts of research and development. Alec Issigonis had asked to be relieved of executive responsibilities for the operational and administrative aspects of the corporation’s engineering functions. He would continue as Technical Director, answering to Joe Edwards as Managing Director, and would advise the board on long term vehicle research projects. This was the moment that Alec Issigonis went off to develop the 9X Mini replacement.

Mr Issigonis’s previous executive responsibilities were to be divided among three other BMC Directors. The newly-appointed Director of Engineering, Charles Griffin, became the executive responsible to the Managing Director for all aspects of the corporation’s product engineering work concerned with vehicle mechanical units such as engines, transmission and suspensions. Charles Griffin previously held the post of Director and Chief Engineer, BMC, under Alec Issigonis.

These moves were not a consequence of the BMH-Leyland merger, but were undertaken at the direct request of Alec Issigonis, who wanted to concentrate on the far reaching engineering projects he had in the BMC pipeline.

Harry Webster

In April 1968 Harry Webster (left), the Technical Director of Standard Triumph, was instructed to draw up a plan for BMC volume cars as rapidly as possible.

Leyland had decided that Alec Issigonis, the Designer of two of Britain’s best selling cars, was not a fit man to lead BMC’s Design Team and supplanted him with Harry Webster from Standard Triumph. Joe Edwards of BMH was still refusing to work under Sir Donald Stokes.

At a meeting on 3 April at the Leyland Motor Corporation’s Berkeley Square HQ, London, between Alec Layborn (BMH), Lewis Whyte and Sir Donald Stokes (Leyland), it was decided that, unless Joe Edwards agreed to work with Stokes, he would be asked to resign.

The BBC’s then Economics Editor, Graham Turner, had put out a television news report suggesting that the new British Leyland Motor Corporation was looking for 30,000 redundancies in two years. The source of this information was Leyland’s Finance Director, John Barber, who chose man-power per car produced as the yardstick for assessing the efficiency of British Leyland. Barber thought that, in order to compete with its rivals, such rationalisation was imperative.

After the story was broadcast, shop floor management at British Leyland plants today had to reassure workers that reports of 30,000 redundancies in the new group during the next two years, were groundless. Sir Donald Stokes, the Chief Executive of British Leyland, said in response to the report.

‘It is going to take quite some time to interpret the studies and talking about closing factories and sacking people before we have even done that is stupid.’

In the 1980s Lord Stokes said: ‘We realised as soon as we took over that we needed a cutback of about 30,000, but it proved impossible. Just before we took over, GEC had taken over AEI and had a huge redundancy programme, and when we tried a similar programme there was a tremendous resistance from the unions.’

Stokes also said that the GEC takeover of AEI and the resulting redundancy programme had ‘created an absolute core of resistance among the trade unions to any job losses whatsoever and we just couldn’t face a strike because it would have resulted in an all out one. We had shareholders and we couldn’t take that strong a stand. You couldn’t go on with a public company resisting unions that were hell bent on confrontation in those days.’

Leyland, in fact, knew before the merger that rationalisation was required. Both Lewis Whyte and John Barber had studied the matter. Why did they enter into a merger when they had no stomach for the necessary surgery?

On 8 April, BMC produced the last MG Magnette after 14,320 cars were produced. Another ageing model bit the dust…

The stand-off between Joe Edwards and Sir Donald Stokes was resolved on 18 April. Joe Edwards, the BMC Managing Director resigned all his appointments with the new British Leyland group. A statement from the Berkeley Square headquarters of British Leyland said: ‘By mutual agreement Mr JR Edwards, Managing Director of BMC, will relinquish his present directorships of British Leyland Motor Corporation, British Motor Holdings, BMC Ltd., and Pressed Steel Fisher Ltd., with effect from 30 April. Mr. Edwards has agreed to act as a consultant to the British Leyland Board and will give special attention to advising Sir Donald Stokes on various aspects of the new organization at home and abroad.’

Joe Edwards consultancy fee was £6000 a year. Sir Donald Stokes, Managing Director designate of British Leyland, said: ‘There has been no ill feeling between us. The whole business has been negotiated on a very friendly basis. I am very glad that someone with Joe’s tremendous knowledge of BMC and Pressed Steel – the biggest units in the new group is going to give us the benefit of his vast experience as a consultant.’

Four days later The Times newspaper revealed that the BMH-Leyland group had decided to postpone the launch of the ADO14 BMC 1500 saloon until 1969.

ado14dev_05

Up to early February 1968, Sir George Harriman, the Chairman of BMH, was setting October 1968 as the date for introducing the new front-wheel-drive model, designed to slot between the 1100/1300 saloons and the bigger 1800s.

According to The Times, there had been sharp conflict on whether the BMC 1500 could be launched in the autumn of 1968 in absolute confidence of its appeal and engineering reliability. The ADO14 was another stick used to beat BMC, but there can be no doubt that, even when it did appear as the Austin Maxi, it was underdeveloped and flawed. The ADO14 was delayed while Roy Haynes and his team embarked on a restyle.

Even before the British Leyland Motor Corporation had officially come into being, representatives of the 180,000 workers formed a joint organization, which promised an early show of teeth.

In Birmingham on 1 May, 250 Shop Stewards’ Conveners, representing the 80 factories run by British Motor Holdings and the Leyland group, set up the British Leyland Motor Corporation Combined Trade Union Committee. Joint Chairmen were elected: Communist Mr Dick Etheridge, Convener of Shop Stewards at BMC’s Austin factory. Longbridge, and Mr Eddie McGarry from Leyland’s Standard Triumph International at Coventry.

The plan was that the new body would meet once every six months, but domestic problems would still be left to the existing organizations in the separate factories or groups of factories. One of its first moves was to call for an early meeting with BLMC’s Chief Executive, Sir Donald Stokes, to discuss future plans including possible redundancies.

The combined British Leyland Shop Stewards would prove to be a thorn in the side of management for many years to come – that was a factor which the armchair analysts had not taken into account when they prognosticated on how to manage the British-owned motor industry.

It was recorded that BMC had reduced its stock of vehicles stored at its factories to 26,000 by 4 May. On 13 May British Leyland appointed Michael Shanks as Director of Marketing Services and Economic Planning. For the previous year Michael Shanks had been dividing his time between his job as economic adviser to Leyland and his role as special writer on industrial affairs for The Times newspaper. His new appointment was full-time. Shanks also worked for the Department of Economic Affairs as one of their senior industrial advisers.

During his stint at the Department of Economic Affairs, Shanks had been given the task of surveying the British motor industry. Speaking in the 1980s Michael Shanks said: ‘We were looking at the structure of British industry, particularly the problem areas. And the biggest crisis area was the British motor industry and particularly BMH.

‘It was the flagship of the British motor industry, enormously important and it was going bankrupt. It was going bankrupt because it had run out of models. It had very few new models in the pipeline. The models that it had were old, and not very effective, with the exception of the Mini – and it had an enormous dealer structure with far to many dealers trying to sell too few products.

‘You could see this huge company headed for the scrapheap – what did you do about it? You could either let it go or you could find somebody to take it over, and really the only candidate was Leyland, which was a much smaller company.’

The obsession by the pundits with all-new models was to lead to market share meltdown. On 14 May 1968 the new British Leyland Motor Corporation officially came into being and a brave new world beckoned.

Leyland’s merger with BMH in January was described tactfully at first as a joining of forces, but the new operating structure announced today was clearly dominated by Leyland management philosophies and Leyland men.

In the tightly controlled pattern set by American companies, such as General Motors, there were to be seven operating divisions, under Sir Donald Stokes as Chief Executive, linked by a central staff division to provide special services for the whole organisation.

The divisions were:

  1. Volume car and light commercial (BMC)
  2. Specialist car (Triumph, Rover, and Jaguar)
  3. Truck and bus
  4. Pressed Steel Fisher
  5. Overseas
  6. General engineering and foundries
  7. Construction equipment.

Although not widely publicised at the time, Sir Donald Stokes took over personal control of volume car division, which was still known as the British Motor Corporation.

Two key appointments were announced: Harry Webster, formerly Chief Engineer at Standard Triumph, became Executive Chief Engineer of the volume car division (BMC); and Keith Hopkins became Director of Public Relations for the corporation.

Harry Webster later said: ‘I was instructed by Stokes to try and get some cohesion into the whole group. Austin and Morris might have been joined together but it was still a case of never the twain shall meet. They still had two of everything. It was an impossible remit to try and get them singing from the same piece of music but it would have been futile to let them go on as they were. I realised that Charles Griffin was the mainspring there. My first move was to give him as much control as I could and sideline Issigonis by putting him into a separate organisation called Forward Research.’

Apparently, an absent Alec Issigonis had returned to Longbridge to find Harry Webster installed in his office. Stylist Dick Burzi, his own days at Longbridge numbered, found a spare room for Issigonis to operate from. For public relations man Keith Hopkins, this was further promotion for garnering the Leyland Motor Corporation with such a positive public image.

Stokes had now publicly committed himself to a policy of expansion in order to utilise British Leyland’s surplus labour force but, with the British car market having remained stagnant since 1965, such extra sales would have to come from exports.

In the 1980s Stokes reiterated his philosophy: ‘I don’t like firing people. I hate it. I didn’t agree to the merger of the British motor industry to get rid of people. I thought that we were going to create jobs.’

Stokes was appalled by what he found in the BMC factories. Speaking some two decades later, he said: ‘Cowley itself was deplorable and although Longbridge wasn’t so bad, it always seemed to be half finished. I’ll give you an example. They had a foundry there, half of it had been modernized and the other half hadn’t and it shouldn’t have been there anyway.’

One industrialist closely concerned with the Leyland-BMH merger said: ‘When I walked into the Cowley works in 1968, I couldn’t believe my eyes. There were belt-driven lathes at a time when some firms were already using numerically controlled machine tools.’

It was all to easy to accuse BMC of under-investment, but the management would no doubt have liked to update Cowley instead of being forced by central government to use up their precious funds to build plants like Bathgate in Scotland. No doubt Bathgate had more modern equipment than Cowley.

On 22 May 1968 Roy Haynes of BMC wrote a memo to John Barber of Leyland, setting out his proposals for the ADO28 family of cars. This became the Morris Marina of 1971. Would BMH have produce a car like the Morris Marina? Quite clearly Roy Haynes believed in such a car – he had after all styled the Mk2 Ford Cortina – and why would BMH have lured him away from Ford if they were not prepared to listen to him?

Somewhere in the bowels of BMC, possibly at PSF Cowley, a photograph was taken on 30 May of a hatchback Mini Clubman, part of the ADO20 programme. The incoming Leyland executives created the myth that BMC executives had no new models in the pipeline apart from the Austin 3 Litre and ADO14 Austin Maxi.

This was not strictly true. Alec Issigonis was now working on his 9X Mini replacement, which also had a brand new engine design. What worked against the 9X was the sheer cost of bringing such a new concept to fruition and there have been claims that the production tolerances required for the new overhead camshaft engine were simply not attainable at the time.

However, there were substantially revised versions of established favourites, the Mini and ADO16 1100/1300 series. The ADO20 project matured into the Mk3 Mini and Clubman range of October 1969, but the car photographed today also had a revised rear and a hatchback resembling the later Morris Marina Coupe.

Another car on the stocks was the ADO22, a revised 1100/1300 with improved suspension designed by Charles Griffin. Both these cars featured updated styling by Roy Haynes and his team and clearly showed that they had been reading the car market. They took proven basic designs, retained the existing good points, improved them in other areas and clothed them in more modernistic metalwork.

The British Leyland management and the financial analysts did not appreciate that the Mini and ADO16 had strong brand loyalty from their customers and that new did not necessarily mean better.

In terms of production volume, in the 1967/68 financial year BMC produced 249,500 1100/1300s, the peak year, showing that the basic car was still far from losing its sales appeal, while Mini production for 1968 rose to 246,066. What this demonstrated was that customers wanted improved versions of tried and tested models.

Lofty England and William Lyons
Lofty England and William Lyons

Around this time another BMH project, Lofty England’s small Jaguar bit the dust. Lofty England (above) later said to Jaguar historian Paul Skilleter: ‘We actually got a mock-up under construction when we became part of BLMC.’

At a BLMC board meeting Loft England unveiled the small Jaguar project. ‘At the first of these meetings I was asked to set out our future model programme which included the small car… I was then told to drop it, since the BLMC plan was that Jaguar should produce only the top of the range cars and the small car I had proposed was in the Triumph area. So no more was done… pity!’

On 12 June 1968 500 British Motor Corporation distributors representing the whole Morris, Austin, MG, Wolseley and Riley distribution network crowded into the Exhibition Hall at Longbridge for a question and answer session on their future with Sir Donald Stokes, the Chief Executive of the British Leyland Motor Corporation. He promised them a completely new model policy for the next five years under the direction of Harry Webster, recently promoted from Standard Triumph to become Chief Engineer of British Leyland’s volume car division.

Sir Donald Stokes seemed to have also been of the view that what the volume car side needed were completely new models from the wheels up and not radical improvements and revisions of existing models such as the ADO22. Probably this was the moment that any hope of ADO22 reaching production disappeared. He then detailed the changes being made to the long-awaited ADO14 saloon whose delayed appearance had left such a gap in the middle of the BMC range.

Joe Edwards’ period as consultant to the board of British Leyland Motor Corporation proved short-lived. On 3 July, he announced that he was resigning from this position, ‘in order to take up other industrial interests.’ As he departed the scene, Joe Edwards is alleged to have said to Sir Donald Stokes: ‘It’s all yours now, Donald, the bloody lot.’

Stokes later claimed that his management team did not have the experience to run a company of 200,000 people but that, in their haste to assume total control of the merged motor manufacturer they had elbowed aside people who did. It has also been said that Joe Edwards should have stayed on but, as he advocated rationalisation and Stokes did not have the stomach for it, what would have been the point?

The departure of Joe Edwards was a watershed in the history of British Leyland. The media at the time was full of stories of the inevitable rationalisation to come, but Joe Edwards, perhaps the one man with the will to carry it out had now left the scene and Sir Donald Stokes had now baulked at the chance when challenged by the combined British Leyland Shop Stewards. It was a fatal error.

BLMC’s Finance Director, John Barber, later said: ‘Looking back, Donald Stokes was in many ways too kind a man to have taken over BMH. What it needed was a really ruthless rationalisation – models, people, the lot. He tackled it the kind way, setting up working parties covering every aspect of the company. He tried to do it in a consensus way and if you start off that way, you don’t get things achieved as rapidly as they are needed.’

In ‘The Leyland Papers’ Graham Turner had devoted pages to Sir Donald Stokes and his cohorts demolishing the BMH profit forecasts for 1967/68, which enabled them to obtain de-facto control of the new merged corporation and force the exit of Sir George Harriman. As it turned out British Motor Holdings pre-tax profits for the year ending 31 July 1968 were not far short of the £12 million Ron Lucas had predicted on 15 January.

In August 1968 Harry Webster announced a plan for future Austin and Morris cars: advanced engineering and conservative styling for Austin, emphasis on style, but conservative engineering for Morris.

On 5 August the Industrial Reorganisation Corporation gave the British Leyland Motor Corporation a £25m loan. The same day the BLMC board viewed three ADO28 prototypes: one by Pininfarina in two- and four-door versions, a two-door car by Michelotti and Roy Haynes’ two- and four-door proposals, the former being a fastback coupe intended to appeal to younger customers. Haynes’ basic style was chosen.

Two days later Sir Donald Stokes announced a £200m investment programme over the next four years on modernizing its manufacturing operations for an upsurge in sales.

In September British Leyland’s marketing men told Sir Donald Stokes that the forthcoming BMC 1500 (Maxi)  would be lucky to capture 4 per cent of the UK market, equating to around 1000 sales per week.

Sir George Harriman announced on 17 September 1968 that he would retire on 1 November 1968 as Chairman and a Director of the British Leyland Motor Corporation and would simultaneously retire from his directorships of other companies in the Group. He became President and Sir Donald Stokes became the new Chairman and Managing Director. This was, of course, pre-arranged and Harriman’s departure from the scene was a condition of Leyland agreeing to the merger.

Announcing his retirement, Sir George said: ‘The formation of a really effective British motor manufacturer has always been one of my ambitions and now that I am satisfied it is off to a really good start, I feel the time has come for me to make way for younger men.’

It was also announced the rump of the former BMC would become known as the Austin Morris division with Managing Director, George Turnbull, imported from Standard Triumph. His deputy was BMC man Bill Davies who became the sole Deputy Managing Director of Austin Morris. Filmer Paradise, the salesman whom BMC bought from Ford a few months before the merger, moved up to Director of Sales (home and overseas) for volume cars. The man who appointed him, Lester Suffield, a former BMC Deputy Managing Director, was relegated to the role of London Sales Director.

Jaguar XJ6 1968-73

The Jaguar XJ6 (above) was unveiled on 26 September. One of the most outstanding British cars ever made, the XJ4 project, as it was known internally at the factory, redefined the luxury car in terms of ride, refinement and handling and was regarded as a quantum leap. For many observers it became the best car in the world regardless of price.

The new car had cost Jaguar and BMH £6.5m to develop over four-and-a-half-years. At launch Jaguar made no secret of its intention to introduce new and additional power units such as V8s and V12 engines in the next two years.

On 1 November 1968 the new operating structure came into force and Sir George Harriman became President of the British Leyland Motor Corporation. Sir Donald Stokes succeeded him as Chairman. The rump of BMC became the Austin Morris division of British Leyland under George Turnbull and the British Motor Corporation disappeared into the dustbin of history.

During December 1968 Harry Webster and George Turnbull went to the Pressed Steel Fisher styling studio at Cowley to see a clay model of Harris Mann’s ADO67 proposal that became the Austin Allegro. They authorised continued work on the design…

Back to The complete BMH story – Part Two : 1967 – The knives are out

Forward to The complete BMH story – Part Four : The aftermath

Ian Nicholls

Born in Bedfordshire but now residing in Norfolk, Ian Nicholls is an ardent BL enthusiast. Currently he owns a Jaguar and two classic Minis. A stalwart of the Norfolk Mini Owners Club for nearly a decade he is an enthusiast for all things Issigonis. A stickler for historical accuracy he has recently performed the marathon task of mining the online newspaper articles for all BMC>MG related stories. Ian is unable to help with technical queries – he pays other people to fix his cars!

1 Comment

  1. I looks like things started to go wrong with the credit squeeze which caused the redundancies which caused the poor industrial relations.

    Making the ADO17 an 1800 class car instead of a 1600 one didn’t help either.

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