Some 30 years ago, at 1:30pm on 2 February 1993, what was then Europe’s largest commercial vehicle maker, Leyland DAF Limited, was placed into Receivership – Messrs. John Talbot and Murdoch McKillop of the Accountants, Arthur Andersen and Co., were appointed as Joint Administrative Receivers the following day.
It had only been six years since the formation of the company born from a merger between DAF NV of Holland and our very own Leyland Trucks Limited. Leyland and DAF had previously worked in partnership years before these events in an engineering capacity.
DAF had used the Leyland 0.400 and the 0.680 engines in its trucks at a time when the firm didn’t have the resources to develop and design new power units. As demand grew, DAF were given the 0.680 unit licence to build themselves.
What was Leyland-DAF?
Leyland DAF had been formed when the UK Government decided to sell off Leyland Trucks Limited. The three top bidders were DAF NV, General Motors Inc. and the USA-based PACCAR Inc., which also owned Foden trucks. It was said that it was more of a merger than a takeover, yet it was DAF which had the whip hand and it was very much a reverse takeover, DAF being a much smaller concern than Leyland.
The promise of Ministry of Defence contracts and the access to an industry-leading parts and dealer chain sealed the deal and the new company started trading back in 1987. The product range was by far the most comprehensive in the marketplace offering anything from a small panel van right up to maximum capacity tractor units.
Freight Rover was also included in the deal, thus the van side was re-branded as Leyland DAF vans. The first casualty was Watford-based Scammell Motors with the brand being killed off and the plant closed in 1988. DAF was very much an engineering-led company, the CVT transmission used in a passenger car was one of the firm’s legacies – a DAF invention.
Bring on the Dutch
The Dutch company, led by the Van Doorne family, was a caring and good employer, and looking back it seems easy to understand why more hadn’t been done to reduce the duplication of product between Leyland and DAF. The range in 1988 was simply huge and, from 16 tons, upwards you could pretty much have either a DAF vehicle or a Leyland in every weight category – madness by today’s standards.
As the next decade loomed into view, things took on a different turn. The massive European and UK recession hit a sucker punch to truck manufacturers and to boost sales all the continental manufacturers went on the price offensive against each other.
Rationalisation kicks in
The first casualty was Scania in Sweden which was forced to sell off its aviation and car (SAAB) divisions to raise life saving capital. Worst affected was the ‘heavy’ truck sector which DAF was very much a part of in mainland Europe – and, by 1991, DAF was forced into taking a loan from a Dutch investment company.
Two years later, DAF found that it was no longer able to meet its liabilities, the loans were called in and the company went into Administration. Plans were in place to reorganise and, hopefully, save the company before official receivership took place, but it was news here in the UK that broke which sped up the bankruptcy.
The BBC was contacted by a member of staff at the Washwood Heath van plant to say that workers had been stood down owing to brake and hydraulic components running out and not being replaced owing to Automotive Products placing them on stop with accounts. It was then found to be the case that other Leyland DAF plants were suffering from sporadic parts supply issues.
Gathering up a management buy-out
As you can imagine, it didn’t take long for all hell to break loose and for the full ugly picture to develop. Straight away there was a battle for survival in the UK.
The merger contracts had been drawn up and engineered six years earlier to state that, should anything financial go awry, the Dutch Government would only shore up its own side of the business, not the Leyland side as well.
Jo Gilchrist, who was one of the British Plant Directors, was spurred into action to form a management buy out (MBO) of Leyland Trucks. It was hoped the deal could include the van side of the business which at that time was fairly healthy but funds wouldn’t allow. The deal only included the trucks and parts divisions.
LDV takes shape in Birmingham
Down the M6 in Birmingham, Leyland DAF vans was also going through its own rebirth. The business’ own long standing boss and Plant Director, Alan Amey, with a consortium of private investors and banks, successfully created its own MBO, calling itself the LDV Group in order to create and retain some brand familiarity with customers moving forwards.
Other divisions within Leyland DAF were also saved, including the test track and axle manufacturers just to mention a few. Within months of the collapse, PACCAR bought DAF Trucks from the Dutch Government and Leyland Trucks Limited continued to produce vehicles to be sold through the existing Leyland DAF network.
However, in 1998, Leyland Trucks was sold to PACCAR bringing the two companies together under the same ownership for the second time in five years during which time the UK-based company had gone from strength to strength being a consistent market leader in certain weight sectors for more than 25 years.
The Leyland name was dropped from the branding at the same time as the PACCAR takeover, but the UK plant still trades as Leyland Trucks Limited – the only surviving truck manufacturer in Britain.
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