An Industrial Invalid Revives
Retooled Jaguar leads Britain’s automaker back to health
For years it has been one of Britain’s largest welfare cases. The state-owned automaker BL PLC* (once known as British Leyland) lost more than $3 billion between 1978 and 1982 and has slurped up $4.6 billion of government handouts since 1975. Things are now looking brighter, since BL has just finished its best year in a decade. Industry experts estimate that the company will have cut its losses from a peak of $803 million in 1980 to $77 million for the first half of 1983.
The man who helped chart BL’s new direction is its former chairman, Sir Michael Edwardes, 53, a 5-ft. 2-in. South African whom the London Times called “Diminutive Dr. Death.” In 1977 Edwardes inherited a ragtag company that was racked with heavy losses, chronic labor problems, aging automobile designs, inefficient factories and low productivity.
Edwardes, whose previous job had been chairman of the Chloride Group, battery manufacturers, unceremoniously closed down plants and in five years chopped BL’s work force from 192,000 to 108,000, prompting union leaders to denounce him as a “bloody Hitler.” Using a mixture of threats and bluster, Edwardes cut through a thicket of antiquated factory-floor work habits. Meanwhile, he began to invest heavily in programmable robots and computers to help engineers design and manufacture autos. One result: output has risen in BL’s Austin Rover group from 5.9 to 14 cars per worker per year since 1979.
Edwardes left in November 1982, and will become chairman of International Computers Ltd. this spring. His legacy to BL includes a talented management team, among them his successor, Sir Austin Bide, 68, and John Egan, 43, who was recruited in 1980 from Massey-Ferguson, the farm-equipment maker, to head BL’s sputtering Jaguar division. In 1980 Jaguar was losing $1.5 million a week, and its sleek models had acquired a well-deserved reputation for shoddy workmanship and unreliability. Egan cut Jaguar’s work force by nearly 30% and helped improve labor relations by holding family gatherings at the factory. In 1983 Jaguar produced 28,000 cars, compared with o 14,000 in 1980, and this year expects to sell 17,000 cars in the U.S., compared with 3,000 in 1980.
Yet Egan warns that Jaguar must spend $300 million before 1989 to keep abreast of the best. Says he: “It’s no good for us to do with sweat and tears what Mercedes-Benz achieves with machines.”
One option for BL is to sell Jaguar.
General Motors admitted last month that it is considering making an offer. Despite its progress, BL is a bit player on the world stage dominated by the likes of GM and Toyota. Even at home it has only a 19% share of the market, compared with Ford’s 29%. To help cope with its giant competitors, the British firm has allied with Japan’s Honda.
The two companies jointly manufacture the perky Triumph Acclaim and are developing another model, code-named XX, that will be introduced in 1985.
BL must now hope for continuing peace on the factory floor. It can ill afford recalls, like a recent one for Jaguars with fuel-system woes. Yet Britain’s Conservative government remains optimistic abou BL’s prospects. It is currently mulling over plans to return BL to the private sector – a task that will be a lot easier once the automaker starts to trade some of that red ink for black on the bottom line.