Archive : The cost of so many strikes

By John Coyne

Strikes cost British Leyland, Britain’s biggest exporter, £30 millions to £40 millions in lost profits last year, and sent the group’s profit tumbling from £40.4 millions to £3.93 millions. Revealing this yesterday, the company added that , because of the profits fall and its hard pressed financial position , it is not paying any final dividend to its 300,000 shareholders.

Most of the labour disputes occurred on the Austin Morris and manufacturing side of the business, and the £3.93 millions profit was made up of a £15.95 millions loss here , offsetting a £19.88 millions profit from the specialist car (Jaguar , Rover, Triumph), truck and bus, and special products divisions andfrom British Leyland International.

There was not a single month in the group’s financial year to end-September last when factories were in full production for any sustained period, and 178,000 vehicles were lost by the strikes , as against 100,000 in the previous financial year. Overall, the group produced slightly fewer vehicles at just under a million units , but price inflation sent the year’s turn-over up from £970 millions to £1,020 millions.

The reason profits slumped so dramatically in the wake of lost production of under 18 per cent, is that the motor industry is a notoriously highly-geared industry, which only starts making profits when it is operating at more than 75 per cent capacity. Once fixed overhead costs have been covered, everything is pure profit after raw material and labour costs have been paid for. Without the strikes , the group would have had a turn over of £1,150 millions, and on this extra £130 millions of production, profits of between £30-£40 millions would have been made.

Much of the group’s own labour troubles can be held to be a direct result of the merger of Leyland with British Motor Corporation in 1968. The merger left a sprawling group with 200,000 workers at 70 plants throughout the country, and great difficulties were met in trying to Impose a uniform pattern. Each factory had its own traditions and customs which made the men resentful of change, hence the problems of moving forward from piece rates to new pay structures. There were no fewer than 270 internal stoppages last year.

Keith Adams

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