Hugh Hunston examines the background to the marriage proposal that was probably always a non-starter
Yesterday’s announcement that news of a marriage between Ford and Austin Rover will not even reach the engagement stage has come as no real surprise to motor industry pundits. Talks prompted by the government, keen to find a private buyer for the remaining British volume car concern were only exploratory and set against a background of a European car production excess capacity of 2,000,000 units a year.
It was this factor which made many industry insiders question both the wisdom and the logic of Ford acquiring Austin Rover. Richard Feast, European editor of the influential Detroit industry publication Automotive News, commented: ‘Everyone talks to everyone else in this business. But I think Ford’s conversations about Austin Rover were prompted, not by Ford’s Detroit or European management, but by the British government acting as brokers. Ford have to look at any property which has a for sale sign outside it. I think they were just going through the motions. ‘
The only solid reasons for Ford wanting Austin Rover within their global empire could have been the use of the state owned firms market share to help fight off General Motors British sales threat, or the exploitation of names like Triumph and MG to create a marketing niche for Ford, Although Ford head the manufacturing new car sales league with 26% of the market compared to Austin Rover’s 18%, they could have used traditional established badges in the same way as their Lincoln and Mercury divisions operate in the USA.
Last year the upper echelons of management from Ford of Europe and the giant Fiat auto group spent several months discussing a major production and corporate merger aimed at saving costs, rationalising output and ranges, and creating one of the world’s biggest automotive powers.
In the end they never got further than holding hands and the courtship foundered. If it had succeeded the marriage would have led to major workforce reductions and possible plant closures. It is little surprise that Austin Rover executives and trade unionists united in their hostility towards the thought of Ford control. After recent years in which the Austin Rover model range has been hammered into a cohesive form, the workforce drastically reduced and sophisticated computer and robot technology installed at Cowley and Longbridge, Austin Rover personnel found it galling that Ford, perceived as the enemy should benefit from that transformation.
It now remains to be seen if Honda, the Japanese car builder, will now make a bid for increased involvement with Austin Rover, extending to a controlling interest. Since Austin Rover started building ‘cloned’ versions of Honda cars in Cowley in 1980 with Triumph Acclaim badges on them, the relationship between the two similarly sized firms has deepened.
The Rover 200 series, with increasing numbers of British components, followed the Triumph and in June the Rover 800, previously dubbed the XX, will be launched. It is likely that Whitehall’s decision to abort the Ford talks was strongly influenced by the effect Ford’s involvement would have had on the Rover 800. The car is seen by Austin Rover as their lifeline to a stronger export presence, including the lucrative U.S market.
Honda, aware of Ford’s 25% stake in Mazda, would not have been enthusiastic about continuing a reciprocal agreement whereby they build the Rover in Japan for the Japanese, Australian and Far East market, while British workers put together the Honda Legend version for sale in Europe.
At the moment Ford badged Mazda’s sell in Australia, the Far East and some Mediterranean countries. For Mazda 626 read Ford Telstar and 323 read Ford Laser. Had Ford taken over Austin Rover, the Maestro replacement codenamed YY developed in conjunction with Honda seemed doomed to remain on the drawing board. Ford themselves would have had to decided whether the same stable could hold the Metro, Maestro and Montego alongside the directly opposing Fiesta, Escort and Sierra. Rationalisation would have been inevitable.
Despite Austin Rover’s genuine recovery there is no lengthy queue of prospective buyers or, preferably, partners. PSA, the Peugeot Talbot Citroen Group, have already agreed to supply gearboxes for the Metro replacement, but a European combine seems unlikely.
The Paris controlled group is only now emerging from the traumas of absorbing Talbot. A closer link with Honda seems likely with perhaps British component suppliers also involved in an exercise of logical self preservation. But if Honda take a more active part in Austin Rover, it will be interesting to see the parliamentary reaction to Japanese involvement.
There is already a strong feeling that the Nissan plant due to come on stream this summer already provides a potentially destructive bridgehead into the British and European market from its Washington, Tyne and Wear base. The first 12 month production is for 24000 cars with predominantly Japanese components, while phase 2 is likely to go ahead, building up to an eventual double shift potential of 240,000 units a year.
This is with the very latest in technology and a hand picked workforce drilled in the Japanese work ethic, operating without the inertia inherent in established plants. Not to mention generous regional development aid. It is no co-incidence that the Swindon engine plant where Honda engines will be built has sufficient room to establish a unit capable of churning out complete cars.
Richard Feast commented: ‘It seems ironic that there was no great storm when the Japanese moved into Britain with ultimate control from Tokyo. Ford have 75 years of European car building experience and a strong European base, which is more than can be said for Nissan or Honda.”