Archive : Rover adds to Leyland labour troubles

By Business News Staff

More serious labour troubles hit British Leyland yesterday when a walk out by 3,000 workers stopped all production at the main Rover assembly plant at Solihull. The group’s five truck plants in Lancashire,at Leyland and Chorley have been at a standstill for three days with 8,500 men and women on strike. The Lancashire workers are holding a mass meeting today, but last night there seemed little hope that they would do other than vote to continue the unofficial stoppage in support of a pay claim.

The management is insisting that work must be resumed before negotiations are reopened. The strike has stopped all production of buses. commercial vehicles, diesel engines and spares at the factories, four at Leyland and one at Chorley, and is delaying output worth £1m. a day, nearly two-thirds of it destined for export.

A company spokesman said yesterday: “We are not at this stage too concerned about direct financial loss. What concerns us much more is that if the strike continues we may miss delivery dates on export orders and this could lead to potential overseas orders being lost.”

Most of the strikers belong to the Amalgamated Union of Engineering and Foundry workers. They have appealed to their union to make the strike official but at its meeting on Tuesday the A.E.F. national executive did not put the matter to a vote, which is one way of avoiding either condemning the strike or being seen to support unconstitutional action. Rover’s troubles at Solihull began on Tuesday when 32 engine testers walked out over a pay dispute, causing a shortage of engines for the Rover 2000.

A third of the 900 men on that assembly line were told not to report for work yesterday. A rumour spread that the 300 had been laid off for one day to ensure that the plant was working at capacity today for a visit by Lord Stokes, chairman of British Leyland, and a group of Volkswagen executives, and a progressive walk out by 300 employees brought all assembly lines to a standstill. Increasing militancy of a small group of Rover employees, including some shop stewards, led to bitter complaints from workers last night that they were ” looking for any excuse to have a downer “.

Workers who went on strike last week at another British Leyland factory, the Fisholow plant at Coseley, near Wolverhampton, decided to return to work today after hearing that the proposed takeover by Redman Heenan of Worcester had been finalized.

WHAT the market could do without at the moment is professional caution. To get it from the normally ebullient Lord Stokes is a heavy blow. British Leyland’s first half profits have risen from £14.7m. to £19.3m. before tax on a sales increase from £404m. to £438m., no mean performance given that the accounting periods run to the end of March and that the pre Budget boom was well under way this time a year ago.

But the running has been made in the export market and sales and profits have been cashing in on the production and selling benefits already gained from the merger. So far so good. But Lord Stokes warns that government restrictions are beginning to take hold on the industry and that export competitiveness is increasingly dependent on keeping costs in check and production running. On the heels of a stoppage and a step ahead of tighter credit controls this could be read as a message of gloom, and the shares were 1s. lower at 13s. 3d. last night.

The merger, however, only went into effect for the last few months of 1967-68 and in the second half B.M.H. and Leyland produced profits in the region of £25m. The two together should, with the Maxi in production for the second half, manage at least £42.5m. before tax this year. That would make the prospective p/e ratio about l6/4 ahead of a longish pause in home market demand. It would also make the return on capital employed 15 per cent and the margin on sales 54 per cent before interest and tax. Leyland in its old form produced that return on capital in the lean years and a comfortably better margin on sales. Faith rather than logic suggests that the share price has its points.

Keith Adams

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