By Anthony Rowley Business News Staff
Some form of government participation in companies the size of British Leyland was inevitable, Lord Stokes, the motor group’s chairman, told a stormy annual meeting of shareholders in London yesterday. But he emphasized that while Leyland was awaiting the Ryder report on the corporation, commissioned by the Government, the board was examining alternatives to government involvement.
He repeatedly dismissed suggestions from shareholders that Leyland should consider voluntary liquidation. He argued that shareholders would be better advised to support the group as a going concern pending any “takeover ” or other solution. He faced a continual barrage of criticism, including calls for his resignation, from many of the nearly 700 shareholders who packed part of the Europa Hotel in Grosvenor Square.
Lord Stokes who disclosed that he took a £17,000 salary cut last year successfully forestalled moves by Mr Alan Redvers Veale, a stockbroker, and others to move a vote of confidence against the board by pointing out that the Companies Acts and Leyland’s articles required prior notice of such moves. No such notice had been given. He disclosed that Leyland suffered a financial loss in the first quarter of this financial year. Although sales of cars and lorries had held up well during that period, production had been affected by disputes such as the ” totally unwarranted” strike at Coventry.
Leyland’s record of labour relations came under heavy attack from shareholders and the reappointment of Mr Pat Lowry, the industrial relations director, was agreed by the meeting only after a second show of hands and a count. Lord Stokes said: “Perhaps government intervention at a time when unemployment is becoming a reality will act as a catalyst for completion of the changes we have initiated. It is the Government itself which now has a unique influence on so many of our policy decisions, including industrial relations and wage negotiations, where the guidelines have largely been removed from the control of management.
“In today’s inflationary conditions, when finance is ‘required on a massive scale undreamt of in the past, I believe that some sort of partnership with government for enterprises of this magnitude is inevitable.”
He also disclosed the background to Leyland’s recent discussions with the Government. In July, last year, he said, he was summoned to see Mr Wedgewood Benn, Secretary of State for Industry, whose ” strong persuasion ” in a former administration had led to Leyland’s formation. Mr Benn said then that he would not interfere with Leyland provided its financial position was “viable”. However, he had wanted to be told if its investment position was threatened and that was exactly what happened once conventional sources of finance, including additional bank facilities, became closed to the group. In December, the Levland board again met Mr Benn and told him that the group was faced with substantial retrenchment, including plant closures and reduced employment because it could not afford investment in new models. The minister said that that would not be in the national interest and Leyland later received. government guarantees for extra bank loans up to £50m.
“We have not yet drawn on the guaranteed financial facilities and we are still discussing the necessary arrangements with the Government”, he added.
“In the meantime our previous plans are in abeyance, and we are looking at new alternatives which will depend finally on the cash resources likely to be available and the possible rate’ of inflation.”
Lord Stokes emphasized repeatedly yesterday that Leyland’s 230,000 shareholders would be consulted on the terms of any government involvement in the corporation and that their consent would be needed for any capital restructuring. He rejected suggestions that the group should consider splitting itself into more manageable organizations by selling certain subsidiaries.
“Our immediate task is to continue to aggressively run this business,” Lord Stokes added. The world’s motor industry, not just Leyland, was in deep trouble and, although the recession might last for three or four years, the motor industry would be the first to recover once the economy improved.