By Edward Townsend
Mr Alex Park, British Leyland’s finance director, gave a warning to MPs yesterday that if the company was limited to the £50m overdraft extension guaranteed by the Government it would have to cut back on capital investment plans. He told the trade and industry sub-committee which is inquiring into the motor industry that the £50m facility was being seriously eroded by inflation.
The Government’s financial assistance is allied to the investigation of British Leyland’s longer term prospects being carried out by a team headed by Sir Don Ryder, the Cabinet’s industrial adviser.
At yesterday’s sub-committee hearing, Mr Park said the next two or three years would be tough and lean and they had to ensure they did not lose their nerve to the longer term prospects which certainly would be fruitful. Lord Stokes, BLMC chairman and chief executive was clearly irritated yesterday by MPs’ questions on the company’s profitability. He retorted at one stage: “I do object to the way this word ‘viability’ is bandied about. British Leyland has made a profit consistently until this year.”
Lord Stokes said the company had been unable to obtain overdraft guarantees on the open market. Inflation and lack of confidence had made it “virtually impossible to raise the money for any big manufacturing company at the present time”.
Institutions’ view: The institutions, which have had discussions with the board of British Leyland, will not challenge the present management at the annual meeting next Monday, it was disclosed yesterday. They gave a warning that this did not mean they were happy about the ways the company’s affairs had been handled. The British Assurance Asso- ciation said in a statement that the institutions had decided that “‘no useful purpose will be served by rejecting the directors’ report and accounts at the annual meeting or opposing the re-election of the retiring directors “.
R. W. Shakespeare writes:
Engineering union leaders and a representative group of 12 senior British Leyland shop stewards are to meet in York today to discuss further moves over the company’s financial crisis. This follows last week’s meeting with Sir Don Ryder at which the unions urged full nationalization of Britain’s largest motor firm.