Killing Leyland with kindness
Michael Grylls MP
MPs of all parties admire the achievements of Sir Michael Edwardes, chairman of British Leyland. He has brought back respect for management and he has cut over-manning by 18,000 jobs.
But he has still to prove that he can run a profitable motor car company. If the public were asked whether the Government should put more taxpayer’s money into BL, the answer would be a resounding ” No ” . As so often, the public would be right. Yet, we are told, “without more money BL is dead”.
This is simply not true. Since it was rescued Leyland has had hundreds of millions of pounds from the Govern- ment. Yet, despite this largesse from the taxpayer, it built 400,000 fewer vehicles last year than it did seven years ago, and its United Kingdom market share has slumped from 32 per cent to 16 per cent.
Where has all the money gone?
Some has been spent on new plant and machinery; Leyland today has some very modern factories. But much has gone simply to meet losses due to strikes ? The core of BL’s trouble is low productivity. In 1972 it was six vehicles per man year; in 1978 it was down to four vehicles per man year.
Continental companies achieve twenty vehicles per man year and the Japanese attain twice that figure. A year ago the National Enterprise Board told MPs that Leyland’s productivity was expected to rise by 18 per cent. In fact it dropped by 3 per cent. Yet, if Leyland were to get back to 1972, productivity figures it would be generating good profits and the taxpayer would be let off the hook. Unbelievably, despite Leyland’s poor performance, its workers today are demanding an extra £1250 a year, a bit cheeky when the company is seeking further money handouts from the long-suffering tax payer.
The Prime Minister says that the Government will not finance excessive wage claims from the public sector. Surely any wage claim from an ailing company such as BL is excessive? This is another reason for Parliament to refuse BL further cash. Leyland has suffered enough from easy money from the tax payer. Governments have clutched at every straw to justify more money, despite the company’s making fewer vehicles and negligible profits. Success is always “just around the corner”.
The truth is that today Leyland needs nothing but that most difficult of remedies for a politician to prescribe. It needs to be left alone. it needs the shock treatment of standing on its own two feet like any other business. Many of its problems lie in outdated and over-priced. models. The much heralded new Mini-Metro may not, after all, be a certain winner. Apparently, Leyland is less than confident, having cut the production lines down from three to two, reducing output of Metros from 6,000 to 4,500 per week. Sir Michael plans to spend nearly £770m on completing the. Mini-Metro, the BL/Honda, the LC 10, the new Rover and the 4×4 Range Rover.
The dilemma is whether BL can afford to spend such large sums. Can a company that is so sick justify such spending? If BL has investment projects. to finish, let it go to the City. Better still, let it pay for investments out of profits earned by making more cars. If cash is needed now, let it sell off part of its business, that is what a private company would do in similar circumstances. Land Rover Ltd, a successful export earner, would be a prime candidate for being sold to the private sector. The workforce at Solihull might be greatly relieved to be “on their own “.
Every parent knows that you can kill with kindness, and that might just happen to British Leyland.