By Brvan Appleyard
Working hours lost at BL because of internal disputes fell by 52 per cent last year and by a further 30 per cent in the first quarter of this year, Sir Michael Edwardes, the chairman, revealed at the company’s annual meeting in London yesterday. Sir Michael also announced the appointment of Sir Austin Bide, chairman of Glaxo Holdings, as non-executive deputy chairman in succession to Mr Ian MacGregor who is joining British Steel.
Mr John Mayhew-Saunders, chairman of John Brown, is to join the BL board as a non- executive director. Sir Michael said that the TUC’s Day of Action was a further example of external pressure which the company could do without. However, only two out of 57 plants could not start production as a result.
Sir Michael, commenting on last year’s trading loss of £122.2m before tax, said BL was “not the sole author of its misfortunes “.
He pointed out that the road haulage and engineering strikes between them subtracted £60m from profits, 10 million hours from production and resulted in 70,000 lost vehicles. In addition the steel strike diverted management effort from the recovery programme. The second problem last year was the dramatic drop in the company’s competitiveness in overseas markets ; Sir Michael blamed the strong pound, high inflation and high interest rates which also made the United Kingdom a highly profitable market for foreign manufacturers.
He said BL calculations showed that profit margins for French and German manufacturers exporting to the United Kingdom had doubled and those for the Japanese had quadrupled. Last year’s growth in the home market has eased off with April car registrations down to 115,000 against 162,000 last year. Abroad, margins have been reduced to the point where BL is barely covering overheads. But within BL Sir Michael was encouraged by the plant ballot for the recovery plan, the 5 per cent wages deal and the improved industrial relations.
Closures and rationalizations had been achieved with impressive speed and the new model programme was going according to plan; the new Mini Metro was on schedule for its October launch. More collaborative ventures are being planned to follow up the Honda deal and Sir Michael sees these as keys to the company’s recovery.
He stressed that the possible change in obligations on the National Enterprise Board to report to the Government made absolutely no difference to the BL board.
On the future Sir Michael said the external factors were unfavourable so it would be impossible to judge 1980 in terms of profitability; the most critical test was whether the recovery programme could be continued within the cash flow targets. BL is expecting its suppliers not to agree to inflationary wage settlements.
The BL workforce had shown restraint and it would have a right to feel aggrieved if its competitiveness was damaged by British suppliers passing on higher prices to cover high wage settlements. He pointed out that BL could turn to overseas suppliers. Sir Michaei said all car making nations were in a contest of survival with Japan being the only exception to the pattern of cuts, losses and redundancies.
He said: “Japan is exporting its problems and unemployment along with its cars and it is a moot point how long the West will accept the resulting imbalance of trade.”