Andrew Cornelius discusses the Rover car operation against a backdrop of poor sales performance and mounting public criticism
‘We’ve got capacity to build 750,000 cars a year and are selling only 450,000. That is the key question we have to address. Andy Barr, a survivor of the latest shakeout at Rover, the former BL motors group, and head of the Austin Rover manufacturing operations was speaking from his office at the Cowley works in Oxford as news filtered through that the group’s UK market share had slumped to 16 per cent last year against the 19 per cent projected.
The news could hardly have come at a worse time for Mr Barr and Austin Rover’s 38,000 strong Midlands workforce at Cowley and Longbridge, in Birmingham. Rover’s latest corporate survival plan, including a request for further state-aid, is currently being considered by ministers who are in no mood to continue bailing out a group which has swallowed £1 billion of taxpayers money since 1980. Debate over the contents of the plan has been fuelled by opposition MPs, who are demanding a government statement when parliament returns next week, although no decisions are expected until next month. A ginger group of Tory MPs in the west Midlands fearful of constituency job losses in an election year has also campaigned for the maximum possible injection of state cash for Rover, but also selfishly argued the case for investment at Longbridge, rather than Cowley.
‘In recent weeks the speculation has been whipped up out of all proportion,’ says Mr Barr, who has helped argue the boardroom case for Austin Rover.
‘I have said my piece,’he says, ‘now it is up to the Rover board and ministers.’
However, in a keynote interview on the way forward for Austin Rover Mr Barr revealed that Austin Rover’s losses for 1986 were likely to top £120 million; immediate action was needed to cut the groups fixed costs to bring capacity into line with sales ; he would like to retain the basic configuration of the existing Cowley and Longbridge plants. A major new sales initiative is needed to improve UK market share by improving the groups image and ending the association with the old BL group.
This will mean that the Austin name will be dropped in favour of Rover and individual model names like Metro and Montego; a decision on where the new AR8 mid-range car which has been jointly developed with Honda will be made will be included in the corporate plan ; and efforts to forge closer links with suppliers like GKN and Lucas will continue. A visit to Cowley also confirmed that senior executives there would be ‘devastated’if any attempt was made by Mrs Thatcher to revive her plan for Austin Rover to be taken over by Ford or General Motors. Mr Barr would not be drawn on the issue but unions and senior management at Cowley are adamant that Ford would use the takeover as an excuse to wipe out UK carmaking capacity.
The mood at the Cowley plant which is at the centre of much of the recent speculation is strangely removed from the fierce scrutiny of possible options by politicians and the media. Mr David Buckle, the local transport workers unions district secretary, claims that the management at the plant have no idea what is going on and are ‘bloody terrified’about the contents of the plan. Most people at the Cowley plant confirmed his first point, but responded to the second by arguing that they were used to such speculation.
‘You have to be (terrified) if you work here,’ said one manufacturing executive.
‘We just keep our heads down and keep working at it,’ said another.
The worry for the 11,500 strong Cowley workforce is that much of Austin Rover’s excess capacity exists at the 250 acre Oxford site which was the home of Morris Motors in days gone by. The entire plant has recently been given a lift by an £80 million investment in the production lines for the new Rover 800, which was jointly developed with the groups Japanese partners Honda. However, the key question is whether there will be further investment at Cowley to bolster production of the Rover and Montego which are made there and also to replace the poorly received Maestro which is likely to be phased out during the next few years. Mr Barr gave the barest hint that he would prefer to see the AR8 go to Cowley, when he pointed out that the Longbridge workforce would get any new engine work which came up for grabs, because there are no engine making facilities at Cowley.
‘That will take a lot of the edge off the employment fears there,’he said while stressing that this was a matter for the corporate plan.
If the AR8 does go to Longbridge, David Buckle fears for the future of a Cowley plant dependent upon the Rover and Montego. Most speculation has centred on the possibility that the survival plan includes a proposal to axe the south assembly plant at Cowley, which houses final assembly for Maestro and Montego.
This option would have the attraction of wiping out capacity while retaining the basic configuration of the Cowley plant, as Mr Barr prefers. It would also channel future investment into the dramatically revamped Rover 800 assembly plant, which has been gutted and rebuilt to provide the maximum flexibility in new model production. Yet, even in the showpiece Rover 800 plant cannot escape the reality that it is producing only 1200 cars a week including the Legend cars produced from Honda and the Rover Sterling models for the north American market, against a potential capacity of double that.
The Rover 800 track is quiet, well lit and clean, with railway style electronic information boards, Ceefax-style television information screens and station-buffet style Pick-Quick refreshment areas. And as robots weld car bodies, lasers check the robots, life for those still working on the line appears to have been improved dramatically. And, contrary to outside perceptions there is virtually no sign of Honda engineers around the Cowley plant, even though the Honda Legend is built there.
And although relations between the two companies are apparently excellent at all levels there is little day-to day contact between the two companies at manufacturing level, although the bond is said to be strong and certain to continue at the engineering and development level. The visit confirms that Austin Rover’s manufacturing management appears to have done all it can to persuade the government to stick with the business and its existing management. But Mrs Thatcher’s commitment to getting the business off the taxpayers back runs deep.
‘We are all committed to making this business profitable,’ Mr Barr says.
It sounds like music to Mrs Thatcher’s ears. But cynically, union leaders like Mr Buckle, suspect that the government decisons on the corporate plan will have much more to do with winning marginal seats in the Midlands than with any real concern about the future of the group, which is still supplied by 800 component companies throughout the UK. Mr Barr is confident that the group can fight through its latest crisis.
‘We have to hold our existing 450,000 sales and build from there,’
he says. He echoes chairman Graham Day in arguing that the group was fighting its image of years ago.
‘There is an image of us that does not exist,’he said. ‘We have had a vote of confidence from Europe and North America, but not from our home market.’
What worries the Austin Rover team is that ministers, too, may have a warped image of how things really area. Mr Barr is quick to argue the case for sticking with Austin Rover. Productivity is now on a par with any rival plant in Europe. Quality has improved dramatically with warranty claims halved in the space of four years. 1986 was virtually strike-free, he says, and absenteeism is well below the industry average at 5 per cent a year. The anecdotes around the factory tell the tale. Mr John Briffitt, manufacturing director in day to day control of the Austin Rover plants reckons that at the height of union militancy to Sir Michael Edwardes turnround of the company he spent 70 per cent of his time dealing with industrial relations problems.
‘These days,’ he says, ‘it is about 20 per cent.’
And to drum the point home Austin Rover is at last abolishing the title of Industrial Relations Office.
‘That’s not what they do any more,’ Mr Briffitt says.
In future the IROs will be known as personnel, or employee relations officers, he says. The other startling trans formation â€” at least on the Rover 800 lines at Cowley â€”is the changed working environment. Gone are the days when workers clocked on with a brown card. Nowadays the Cowley workforce are given plastic bar coded identification cards, similar to those given to management. Gone, too, are the panic stricken foremen rushing round in white coats plugging gaps in the production line. Absenteeism at Cowley is in line with the average for all manufacturing industry at about 5 per cent, helped by a new two-year pay deal partly linked to absenteeism and aimed at harmonising blue and white collar working conditions.