HARD LABOUR !
By Roy Mackie
British Leyland Motor Corporation has been clobbered again , and as usual the car giant’s labour problems are to blame. As the group’s shares slid to a new low for the year on the stock market yesterday it became clear that the strike at the Jaguar plant , now ending its 10th week , is taking a severe toll of profit hopes for the year.
Whispers that the dispute is hitting the group even harder than was feared took BLMC shares down a further Ip last night to just under 36p. Earlier this year they were as hign as 56p. So it seems certain that chairman Lord Stokes’s forecast in June that 1971-2’s profits would be close to last time’s £32,400,000 will not be achieved. Stock market hopes of £30 million now appear unobtainable and, with the group’s year due to end in less than 30 days, profits of £25 million are more likely.
The problem is that although Jaguar is a relatively small part of the whole BLMC operation, in normal circumstances it is probably the most profitable. Profit margins on luxury cars are much greater than on the more popular Austin and Morris models. And the Jaguar dispute is believed to have cost almost £20 million in lost sales so far.
Tragedy for 57-year-old super-salesman Lord Stokes is that the strike has come at the time of a marked recovery in the company’s fortunes, and when the whole structure of its labour relations is being improved. In the past few years much progress has been made in converting the outdated piece-work systems into more sensible daywork schemes.
The Jaguar setback closely follows the miners’ strike, which is estimated to have cost the group £8 million in profits. However, BLMC managed to side-step the worst effects ofthe docks strike. Europe, the major market for exports. Is served by the roll-on-roll-off operations which were not affected by the stoppage, and advance deliveries have kept the U.S. supplied. At home production of the Marina is approaching 5,000 cars a week and all are being sold.
Apart from Jaguar, recent months have been relatively strike-free and none of the group’s key components or equipment suppliers have been hit by disputes. Although BLMC has lost some of its U.K. market share to foreign competition in the last year or so, it is still working at peak capacity. In the first half of the year sales were almost 300,000 cars compared with the 256,000 in the same time last year.
The truck market has been depressed, but there are signs of a revival in demand. The slide in Leyland’s share price has been caused to some extent by a lack of confidence, due to the publicity given recently to the Jaguar strike and partly by a trickle of small selling. There has been no large scale selling of the shares. Which means big shareholders still have confidence in the company’s future. And on the stock market last night the general opinion was that the shares could now be at bargain basement level.