Ian Nicholls takes us back 50 years to the press conference at which the public announcement that BMC and Jaguar had joined forces to become British Motor Holdings was made.
Fifty years ago, on 11 July 1966, Sir William Lyons, the Founder and Chairman of Jaguar Cars, agreed to sell his company to the larger British Motor Corporation to form British Motor Holdings.
The full details are described in this site’s British Motor Holdings story, but July 1966 was perhaps the zenith of the British-owned motor industry, and no one could possibly imagine that, a decade later, it would be a basket case, strike ridden and dependent on taxpayers’ money even to pay the wages bill
In the financial year ending July 1966, BMC achieved a profit before tax of £34 million and produced around 890,000 vehicles, including 703,576 cars. Jaguar in 1966 produced 25,936 cars, and that does not include the firm’s commercial vehicles such as Coventry Climax and Guy.
At first glance, of the two new partners, it was Jaguar that appeared to be in trouble. The much-vaunted E-type was not very profitable, its most advanced saloon, the big Mark 10, was selling in paltry numbers, and the Rover and Triumph executive saloons had eaten into sales of the compact Mk2 saloon and its spin offs, the S-Type and 420.
Although the purchase of Daimler in 1960 had enabled Jaguar to transfer its engine production to the former’s factory at Radford, the extra space created at Browns Lane only seemed to raise annual production by 5000 cars a year by 1966. Jaguar seemed to have flat lined by 1966, a growing reputation for quality issues counteracting its flair for engineering excellence.
Hope for the future lay with the XJ4 saloon project, which became the XJ6, but Jaguar needed BMC’s money to get it into production. This was a time when other luxury British car brands were disappearing – Alvis and Armstrong Siddeley come to mind – and Daimler only survived thanks to Sir Wiliam Lyons astute purchase of the company in 1960. The escalating cost of developing new models proved too much for some British concerns, and Jaguar had no intention of joining them.
In July 1966, the British Motor Corporation was at its peak. The return of Joe Edwards in the role of Managing Director was the start of a process of rejuvenation for the company, to rid it of the malaise that afflicted its ranks and introduce new management processes. BMC was arguably producing the best family cars in the world in the form of the Alec Issigonis-designed front-wheel-drive range. The Mini and ADO16 were all conquering, and even the flawed 1800 had been knocked into shape by the summer of 1966.
However, despite this apparently rosy outlook, BMC’s fate was probably already sealed. All these exciting models had been developed at great expense with the prospect of selling copious quantities to the expanding European market. Unfortunately, in January 1963, President Charles De Gaulle of France decided to veto Britain’s application to join the Common Market, then comprising around 200 million people. BMC then found itself unable to sell to the major European countries at a competitive price, and the required volumes needed to remain self sufficient were simply unobtainable.
If asked who was to blame for the demise of the British-owned motor industry, I would not hesitate to nominate Charles De Gaulle. The exclusion from the Common Market also exposed BMC to domestic credit squeezes, which crucified UK car sales and led to brutal lay offs of workers, which in turn poisoned industrial relations. Credit squeezes were not unique to Britain, but the beauty of the Common Market was that the large single market offset somewhat slumps in member countries’ respective economies.
BMC was also finding itself under pressure from Ford of Britain, which had no choice but to focus on the UK market. The Ford Cortina was aimed at the burgeoning fleet market, at purchasers who had no interest in buying high technology cars that were space efficient and went around corners like they were on rails. They wanted cheap and reliable cars, not an exhilarating driving experience.
Ford effectively grabbed this sector of the UK car market for themselves and held onto it for at least two decades. In July 1966, BMC had saturated the UK car market and its only realistic prospects for further expansion lay with Britain gaining a tariff free access to the Common Market – like Jaguar it had plateaued.
The BMC-Jaguar merger was announced on 11 July 1966 but the optimism was soon dashed when the Labour Government under Harold Wilson was forced to announce a credit squeeze in response to a damaging national seaman’s strike.
How this played out is described in this site’s British Motor Holdings story. Suffice to say, BMC’s nightmare scenario played into the hands of the Government and the Leyland Motor Corporation which were all to ready to listen to financial analysts, many of whom had no industry experience. Had BMC had the moral strength to hold out until the summer of 1968, when their production was booming, they could have held the upper hand in merger negotiations.
It was an unfortunate chain of events that led to a misdiagnosis of the problems confronting the British-owned motor industry and the wrong medicine being administered. To mark this anniversary, here is a description of what happened on 11 July 1966, as AROnline takes you back five decades.
A Jaguar board meeting discussed the BMC takeover, the location unknown. The formation of British Motor Holdings was officially announced later in the day at the Great Eastern Hotel, Liverpool Street, London, EC2. The assembled media was told:
‘The Chairman will be Sir George Harriman with Sir William Lyons as a Director. Jaguar Cars Limited will continue to operate as a separate entity and with the greatest practical degree of autonomy under the chairmanship of Sir William Lyons.’
Below are extracts from the press conference
Sir George Harriman: ‘I would like to say that whatever I say now should be considered as a joint statement between Sir William Lyons and Sir George Harriman. Obviously, we can’t both talk at the same time. Sir William has asked me to say a few words and no doubt he will be saying a few words subsequently… We feel the products of Jaguar Cars Limited are complimentary to those of BMC. One thinks of their range as what I call ‘selective motoring’ and that fits into the BMC range…
‘What Sir William and I would like you to emphasise is that this is a joining of forces. We think that it could be a new word instead of ‘takeover’ or ‘merger’. If you could use the words ‘joining of forces’, gentlemen, I think both Sir William and myself would be very grateful. Finally, I would say at this point, gentlemen, how thoroughly gentlemanly and how, dare I say, British has been the co-operation and the frankness of the discussions which Sir William and I have had over the past weeks to enable this merger, shall I call it, or joining of forces, to have the success it has today.’
Sir William Lyons: ‘I would like to add that this is something that Sir George and I have talked about for a very long time. I, as having…’
Frederick Ellis (Daily Express): ‘Could you speak up, sir!’
Sir William Lyons: ‘I, as having control of an individual company, of course, naturally have had some reluctance to any question of a merger but, frankly, I have quite convinced myself that this is not only in the best interests of Jaguar but in the best interests of shareholders and the interests of the country to join forces with BMC. I believe it is going to prove to be a most valuable partnership and I am quite delighted it has come about.
‘I would also like to say that I have nothing but admiration for the way Sir George has conducted the discussions with me. We have both been able to see eye to eye on all matters, and I am sure that it is going to be a very, very happy joining of forces, as Sir George has said.’
William David (Guardian): ‘Sir William, I remember on a number of occasions when we have interviewed you, you have said, ‘You will not see a bid in my lifetime’. You say that lately you have become convinced that it would be in the best interests. Can you tell what kind of reasons inspired you?”
Sir William Lyons: ‘I do not consider this a bid…’
Frederick Ellis (Daily Express): ‘Could you really speak up, sir’
Sir William Lyons: ‘I don’t consider this a bid. This has been a negotiated transaction to establish a larger and more powerful organisation from which the joining forces will benefit. I don’t regard it as a bid at all; I think Sir George would agree with this.’
Sir George Harriman: ‘This is why I stressed, Sir William, the joining of forces.’
Frederick Ellis (Daily Express): ‘Can we anticipate that there might be a Mini-Jaguar?’ (laughter)
Sir George Harriman: ‘I don’t know. Did you anticipate the mini-skirt at any time?’ (laughter)
Sir William Lyons: ‘…because I believe it is the right thing to do. There are no potential implications of any kind. This is just what is wanted to put the British motor industry in a position to compete abroad.’
Sir William Lyons was also quoted as saying: ‘I feel this is in Jaguar’s best interests. I think it is going to be a very valuable partnership.’
‘I have been keeping over half the voting shares to avoid being taken over by an American company.’
BMC Finance Director Ronald Lucas told the media the total value of the offer was £18.2 million. At the time of the merger BMC, as Great Britain’s biggest vehicle manufacturer, held 42 per cent of the UK market, represented by an annual production of about 890,000, then running at 19,500 units a week.
BMC was also planning a big expansion, intending to spend £42million on new plant and equipment over the next four years, as well as £10 million a year on modernising their existing plant. By 1970 they planned to be turning out more than 1,300,000 vehicles a year.
On the export side, Jaguar Cars shipped $20 million of vehicles to the United States in 1965, and BMC put its earnings at $55 million to $60 million a year. Highly significant in the European sales war was the then current rate of investment by BMC’s main adversaries, American-owned Ford, who had invested more than £200 million, since 1962, and General Motors Vauxhall (14 per cent of the market), which planned to spend £50 million on new equipment by 1970.
Pressed Steel Fisher appointed the following: Mr. J. R. Stanfield, already a main board Director, became General Manager of the Midlands division and would be responsible for the Castle Bromwich and Ward End factories; Mr W. H. Bicknell was appointed a main board Director and, as General Manager of the Swindon division, would be responsible for the Swindon and Llanelli factories; Mr S. A. J. Frampton also joined the main board as a Director and became General Manager of the Cowley division.
He would be responsible for the Cowley and Coventry factories; Mr F. McMullen was made a local board Director and, holding the appointment of Financial Director, would be responsible to Mr John L. Lutyens, Deputy Managing Director.
The following divisional directors appointments were also announced:- Mr B. J. Breakwell, Director and Factory Manager, Coventry Mr S. A. Honey, Director and Factory Manager, Llanelli; Mr P. G. Manton, Director and Factory Manager, Castle Bromwich; and Mr H. Roberts, Director and Factory Manager, Ward End.