THE LEYLAND ROAD TO RUIN
By Paul Potts
When Mrs Thatcher test drove the new Rover in Downing Street, she was impressed by the car’s design, smooth handling and comfort , but not by the price. The Prime Minister later told friends that, much as she liked the blue Rover, it was too expensive for her and her husband Denis. So if the millionaire Thatcher family is not prepared to cough up £19,000 for a top-of-the-range car on which the Rover Group is building its future, who will? The question was being asked more urgently yesterday after the latest Rover Group horror story unfolded before the company’s main investors , the taxpayers.
At first glance, the £70 million half-year operating losses appear just another poor year for the nation’s number one albatross. But the blunt truth is that Britain’s last remaining motor company is broke, totally dependent on Government cash and in real danger of complete collapse. Over the past 10 years the former British Leyland, turned Rover Group, has burned £2,300 million of taxpayers’ money. On top of that there are £1,500 million ot loans underwritten by the various governments, which are again the ultimate responsibility of the taxpayer.
“It is the black hole of tho nationalised industries into which a fortune has been poured, with no visible effect on it whatsoever,” was the damning verdict of one Thatcher aide. It is a failure which Mrs Thatcher feels personally after eight years of being in a position to push through the radical solutions she passionately believes are long overdue.
The Thatcher misery has been compounded by the successful surgery applied to other nationalised Industries such as coal, steel, and , hopefully , British Shipbuilders. Over the years, as Mrs Thatcher has juggled practical politics with economic reality, she has often clashed with Trade and Industry ministers about the best route for BL. Even well-known hardliners like Sir Keith Joseph and Norman Tebbit have opted for using the public purse to keep the dying car giant on its feet, rather than watch it crash to the floor. The political consequences of doing what the strict monetarists demand has, in the end, proved too much for even their tough stomachs.
The dilemma is acute. Shut the Rover Group and the Government wipes out half tho manufacturing base of the West Midlands, and with it a good number of Tory seats. The first Cabinet minister to try to stop tho annual surrender was Leon Brittan, who paid a heavy price for similarly sticking to his guns in tho Westland saga. He then watched in dismay from the backbenches as his successor Paul Channon, who also wants action, was forced by a collective loss of Cabinet nerve to abandon every single one of his initiatives to rationalise BL. First to the wall was the merger plan between BL and Ford which, surprise, surprise, was leaked to the Opposition by the very management responsible for driving the company into the ditch.
Then came the ill-fated takeover bid by the American General Motors for Leyland Trucks , again a victim of Tory hysteria and Cabinet cowardice for which thousands paid later with their jobs. The harsh fact that the Rover Group needs over 20 per cent of the domestic market, yet is struggling to hold onto 15 per cent, has been ignored in the political dogfight, insists another right-winger. And it is no consolation to Mrs Thatcher that Jaguar, the one bit of British Leyland she did manage to sell off, has been turned into such a stunning money-spinning success by private enterprise.
The appointment of new group chairman, Graham Day, from his troubleshooting role at British Shipbuilders is seen in Whitehall as the last throw ot the taxpayers dice. Day has been given total freedom to rescue what many experts believe is a lost cause, his whirlwind removal of three key executives and other management changes is just the start.
Motoring Editor David Benson writes :
Clearly it is not all gloom. Figures show that the Rover Group is holding up as well as, it not better than, most of its nationalised counterparts in other countries. And things are looking up on the productivity front. As chairman Graham Day says. Industrial relations performance has been excellent across the Rover Group, with 99.8 per cent of working time dispute-free. The factories at Longbrldge and Cowley are now among the most modern in the world and are turning out cars equal in quality to any in the world. Productivity in these plans compares with the best in Europe.
The purist of quality has, however, contributed to some of tho disaster in tho Austin Rover division this year. The long awaited Rover 800 range was brought in nine moths late. It has achieved a production rate of only 500 per week, although the factory has a capacity for 1,500 a week. It was also deliberately overpriced at.its launch in July, to depress sales until the line got up to capacity.