The Ryder Report
ollowing a disastrous couple of years in the marketplace, by the end of 1974 BLMC was on the brink of bankruptcy. Its financial backers – the City banks – had become very nervous about its future, and persuaded Lord Stokes to approach Tony Benn for financial assistance. Tripartite talks were held between Stokes, Benn and the bankers, and the result was that the Government agreed to guarantee BLMC’s growing overdraft with the banks in exchange for a hand in running the operation. The body chosen to undertake this task was the National Enterprise Board, and its newly appointed Chairman, Sir Don Ryder was tasked with reporting on the company and listing recommendations for its future.
Ryder had been plunged in at the deep end by the government. He was given little time to make sense of the mess that had arguably been building up since 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.
· A range of cars that comprised 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 was called, “British Leyland: The Next Decade”, 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) he managed to produce this document in double-quick time. Ryder actually passed it to Tony Benn on 26th March 1975, a mere 14 weeks after the original commission! Tony Benn approached the cabinet for approval and they backed Ryder's plan wholeheartedly. But 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, and this would prove, in effect, be the undoing of the 1974-79 Labour government. The report immediately sparked off a round of high-profile resignations, most notably headed by John Barber (to be replaced by Alex Park).
When The Ryder Report became public on 23rd April, it had appeared in record time – rushed almost 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 should 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 million would be required from the government, along with £260 million worth of working capital. These numbers must have made eye-watering reading for Tony Benn, but this paled into insignificance beside the 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 27th 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 Stokes was undoubtedly a super-salesman and an audacious negotiator. Because of the direct involvement of the Prime Minister, Stokes was made the Non-Executive Chairman of the Company – effectively a figurehead, just as Wilson had envisaged.
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, on which Ryder based a great deal of his forward projections, was that BL would maintain a 33 per cent share of the market in UK. 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 – under the all-embracing title of “Leyland Cars”. 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 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 a smooth transition from the separate Austin-Morris and Specialist Division franchises into this unified entity. Whittaker would find the two years for which he was to lead the car division to be a rough ride – especially with regard to the mounting union unrest and the resulting lost car production.
Ryder had recommended the expansion of the company – to build themselves out of their financial mess – but this still did not address one of the most pressing matters: the unpopularity of the company's products.
The National Enterprise Board was officially given the task of overseeing the direction that British Leyland was going in, and ensured that Ryder's plans for the company were being implemented. A partial nationalisation of BL was proposed by Ryder, whereby the National Enterprise Board would allocate large sums of money over the following four years in order to guarantee the company's survival. Existing shareholders would be offered just 10p per share for their holdings with a nominal value of 50p – down from a peak of 80p in the post-merger euphoria. The Government's shareholding was increased with each succeeding year, but contrary to popular belief, they never owned 100 per cent of British Leyland, they were ever only a majority shareholder.
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