History : The BMC story – Part Eight : 1966 – A spanner in the works

Carole Nash Classic Insurance Specialists

Ian Nicholls, AROnline’s historian-in-residence, recounts the history of the British Motor Corporation (BMC). He follows up his excellent run-down of the British Motor Holdings and British Leyland stories with an eight-part study of BMC from 1959 to 1966. 

Here, in the final part, we look back at 1966 – the year BMC became British Motor Holdings, and the landscape began to change for good…

On 13 January 1966, with Mini production at a standstill at both Cowley and Longbridge because of a go-slow at the tractor and transmissions factory at Washwood Heath, Birmingham, it was announced that Union heads and British Motor Corporation senior management were to probe the causes of strikes which had cost the group more than one million man hours in the final six months of 1965.

This was revealed at a meeting of the Executive of the Confederation of Shipbuilding and Engineering Unions in York.
 The carmaking unions agreed to discuss the strike problem with the BMC management, which complained about the number of production hours lost through strikes.

At the same time, attempts at normal working throughout the Midlands was being skewered by a gas shortage, a problem that had been ongoing for two months. If 1965 had been a year of triumph for BMC, 1966 would be a nightmare.

Gas and Monte blues

As well as strikes by small numbers of workers having a devastating effect and the gas shortages, there were also the stewards of the Monte Carlo Rally to contend with.

Timo Makinen and Paul Easter won again in a Mini Cooper 1275S, but were disqualified for headlight infringements, prompting BMC Deputy Managing Director, Sales, Lester Suffield to say, ‘We will have to take a long, cold look at the situation before we enter the Monte again.’

By 23 January, more than 150,000 men in the Midlands – a large proportion of them car workers – had been thrown out of work by the shutdown of gas supplies.
 Many of them were still being paid – for they were on a guaranteed 40 hour week. And the car plants faced another week without gas.

BMC was expected to lose about 10,000 vehicles – at a cost of £5 million – and they still had to foot a £500,000 wages bill for the 40,000 men already laid off. BMC Chairman Sir George Harriman blamed the local area Gas Board and said:
 ‘I think the Government should foot the wages bill.’

Harriman blames the Gas Board

‘We will be making strong representations. We are taking legal advice. We are liable to pay our employees for the guaranteed 40-hour week but this crisis has nothing to do with the employers,’ he added.

‘As the gas industry is nationalised, it all comes back to the Government. These wage bills could be crippling for some smaller companies. We would be bad businessmen if we didn’t try to get some form of indemnity.’

Sir George’s demand for compensation may have done the trick as by February the gas shortage story had disappeared from the headlines.

The new, but very familiar, big Morris

The Morris 1800 was announced on 2 March. The Morris version of the ADO17 was probably delayed until all the reliability issues with the Austin 1800, originally launched in October 1964, were resolved. Again with the luxury of hindsight, if BMC had axed the ADO38 Farina saloons at this point, it might have boosted demand for the 1800 from loyal BMC customers.

As it was demand for the Farinas was slumping in the face of the competition from the Ford Cortina and the autumn of 1966 would see the announcement of the Cortina Mk2 styled by Roy Haynes and the Vauxhall Viva HB, both much more modern-looking cars.

A week later, BMC announced that a new company was being formed to boost exports in Europe. It would be launched in Lausanne, Switzerland, as a subsidiary to handle all Continental orders. Sales chief and BMC Deputy Managing Director Lester Suffield announced the ‘imaginative’ plan in Geneva, where the Motor Show opened the next day.

BMC’s new European headquarters

‘With a single European headquarters we are determined to improve our sales and servicing on the Continent and market our products at more competitive prices,’ said Suffield. ‘It will help the buyer as well as us.’

BMC was at the time selling Europe about 140,000 cars and trucks a year, and believed it could push the figure up to 175,000 because of the new set-up, which would mean £125 million worth of sales in five years.

Switzerland as an EFTA member was probably BMC’s most lucrative market. The same month the Innocenti version of the Mini Cooper was announced.

Labour stays in power after General Election

Thursday 31 March 1966 was General Election day in Britain. The Labour Government was returned with a much larger majority of 96. This was probably the high point of Prime Minister Harold Wilson’s (above) political career. Although he would win two further elections, his electoral appeal never again transcended such a large section of the voting population.

The following day, BMC management and union leaders, worried by the damage caused by unofficial strikes in their factories, circulated a statement to the 70,000 workers in their pay packets.

The management and national leaders of nine unions had met the previous month under the auspices of the Motor Industry Joint Labour Council to review industrial relations in BMC.

BMC urges its workforce to remain calm

The joint statement said: 

’We want you to know how concerned we are at the rate of these losses, which are damaging to the firm and its home and export trade and which inflict hardship on employees and their families.

‘We are determined together to reduce these losses and so achieve the continuity of production and regular employment which are essential to the prosperity of the firm and its employees. The company has undertaken to do its best to ensure that every grievance is dealt with quickly and carefully in accordance with the recognised procedure and to strengthen its consultative machinery.

‘The union leaders emphasized the importance of members consulting their Shop Steward and Senior Shop Steward before taking any action which may jeopardise the earnings of their fellow workers and the production of the company.’

The numbers are in – and they’re not good

On 14 April, BMC also announced its interim financial results. 
Gas shortages and strikes seriously held back production. 
Consequently, profits plummeted: falling from £11,600,000 to £7,149,000 (before adding in the first contribution from the newly-absorbed Pressed Steel, £4,855,000, or deducting depreciation, £6,678,000).

In the first 28 weeks of 1965-66 the aim was to produce 521,537 vehicles, an increase of 61,000 over the same period of last year. In fact, actual production was 435,750 units. A difference of 85,787 cars.

Gas shortages in the West Midlands prevented BMC from producing 23,120 vehicles. Strikes among suppliers resulted in the loss of an additional 24,700 units. And labour troubles at BMC’s own plants meant good-bye to a further 35,300 units.

Sir George Harriman, Chairman of the British Motor Corporation, said:
 ‘This loss of output has had a most adverse effect upon the company’s profits.’

‘Future prosperity for all’

The BMC statement said: ‘The advantages expected from the additional capital expenditure incurred to provide new facilities and absorb cost increases have been defeated by persistent stoppages. Proper procedures exist for the settlement of disputes.

‘Unions and management alike have recently reaffirmed their determination to see that these procedures are observed for the future prosperity of all.’ – a BMC statement

Pressed Steel-Fisher is formed

On 11 May BMC announced it was reorganising its production facilities for cars and commercial vehicle bodies. 
The body activities of four BMC subsidiaries – Fisher & Ludlow, Nuffield Metal Products, Morris Motors (Bodies Branch) and Pressed Steel Company – were to be integrated into a single organisation: Pressed Steel-Fisher.

Those Fisher & Ludlow activities unconnected with vehicle bodies (domestic appliances, vending machines, plastics and materials handling equipment) would stay as a separate company, Fisholow Products.

Prestcold (above) was to continue as a division of Pressed Steel-Fisher.
 The reorganisation of vehicle body activities would be the responsibility of Joe Edwards, now a Deputy Managing Director of BMC and Managing Director of Pressed Steel.

Edward Price, Deputy Chairman of Fisher & Ludlow, would be Deputy Chairman and Managing Director of Fisholow Products.

Management changes

The following non-executive Directors of Pressed Steel were to resign: Mr A. Abel Smith (who also resigned from the BMC board), Lord Ashburton, F.E. Cairns, R.T. Pemberton and Henry Tiarks.

The BMC announcement brought an angry reaction from George Evans, the National Union of Vehicle Builders’ area organiser, who said in Birmingham: ‘There have been no consultations with the unions about this. The unions will demand top level talks with BMC to find out what this will mean. We shall have some very sharp things to say about it.’

Evans added:
 ‘The company has been remiss in not telling us what it intended to do.
The employers must have known that union officials would be flooded with inquiries from the workers.’

The strikes begin…

Five days later the National Union of Seamen began its first national strike since 1911. It was widely supported by union members and caused great disruption to shipping, especially in London, Liverpool and Southampton.

This was the start of a series of events that would bring about the demise of BMC. Two years hence it would cease to exist. The Seamen’s Strike caused havoc with the export-minded British motor industry. On 23 May, the British Government declared a state of emergency a week after the nation’s seamen went on strike.

‘The Government must protect the vital interests of the nation. This is not action against the National Union of Seamen,’ said Harold Wilson, the Prime Minister.

Changes at the top of BMC

Then, on 9 June, it was announced that in view of the extended responsibilities arising from the growth of the group, BMC had decided to separate the offices of Chairman and Managing Director.

Accordingly, Sir George Harriman, the Chairman and Managing Director, was appointed executive Chairman and Joe Edwards was appointed Managing Director. Joe Edwards would continue as the Managing Director of Pressed Steel Company; he had become a Deputy Managing Director of the corporation following the recent merger.

Until 1956, Leonard Lord had come to see both George Harriman and Joe Edwards as possible successors. Now they would run BMC together. Joe Edwards had a record of wielding the axe during his previous tenure at BMC, and seemed to have the ruthless management streak that Sir George Harriman and some later British Leyland managers lacked. Could he give a new direction and impetus to BMC?

Joe Edwards’ appointment: too little, too late

Joe Edwards later said: ‘I found that nothing had happened in the twelve years I had been away. The company had unwound. It was the Lord -Harriman regime just staggering from one thing to another.

‘The company had unwound. It was the Lord-Harriman regime just staggering from one thing to another.’ – Joe Edwards

There was no forward thinking. There was no question of getting hold of new people. They did not believe in training management. The management was just not equipped to run that size of company.’

Certainly, when researching the background of many of the BMC executives, one gets an impression of Edwardians still running the company with a smattering of Great War veterans thrown in. This compared with Ford’s more youthful university-educated executives. But in fairness, Ford of Britain was run by Sir Patrick Hennessy, who had spent the period from 1914 to 1918 in uniform.

Harriman: he who brought much good to BMC

BMC Engineer Ron Nicholls later defended Sir George Harriman. ‘It was his courage that produced the Mini. You make your own judgement about Harriman. But he’s the man – albeit under the direction of Leonard Lord – who brought Issigonis on board, who recognised that he couldn’t beat Ford at its own game and that he had to do something else.

‘He figured that he could change a car only every seven years, so he said to Issigonis “I’ve got to have a car that can hold Ford at bay for seven years. I believe it has to be full of technical innovation to be able to do it. We can’t compete with Ford with a Ford Popular. We’ve got to produce the technical bit. We’ve got to sell that way.”

‘He committed the company to that idea, and supported Issigonis through thick and thin. He made every one of his Managing Directors, whether in production or engineering, or wherever they were, toe the line.’ – Ron Nicholls on George Harriman

‘This is what we’re going to do. Alec Issigonis has a damn big job to do. We don’t know whether he’s going to be able to do it, but you’re going to be able to help him. If you don’t there’s the door. You’ve got to judge George Harriman on that. And my judgement is that he was a very brave man.’

This is where we end this story as the next chapter is covered in this site’s British Motor Holdings story.


In conclusion…

Was BMC the unwieldy badly-managed giant that many UK-centric pundits have made it out to be? That’s unlikely, for it was probably no more badly managed than many of its continental rivals. Because we know it would all end in tears, we look for stories of ineptitude and incompetence, and in a large organisation such as BMC, such tales are easy to find.

We do not dig so hard for such material in apparently successful organisations.

I argue that BMC saw itself as a European manufacturer and it was badly caught out by external events. The rejection of Britain’s application to join the EEC by France threw a spanner in BMC’s works. It was the one major British motor manufacturer with everything to gain by early EEC entry.

Stymied by not being in the EEC

However, as related above, BMC faced steep trade tariffs when selling to EEC members, 31 per cent in the case of Italy. BMC cars were probably no more badly built or as unreliable as any other European manufacturers’.

Negative comparisons would come later when Japanese imports took off. But in the expanding EEC car market, which was the place to be, BMC cars were considerably more expensive at a time when they were at their most cutting edge. It was more a case of bad timing rather than mismanagement.

Locked outside the EEC, Britain acted as a car laboratory to the major European manufacturers. Front-wheel drive added customer appeal, but needed high volume to be profitable.

Fortunately for the EEC manufacturers, an expansion in European car sales between 1965 and 1970 enabled that volume to be achieved. France increased its production by 57.89 per cent, Italy by 64 per cent and West Germany by 77 per cent. In contrast, poor old Britain, locked out of the Common Market, saw its car production actually shrink by 4.7 per cent.

Mini production only topped 300,000 in 1971 and 1972, but such figures would be common place for the early 1970s’ new generation of European front-wheel-drive cars inspired by the Issigonis baby.

Disappointing production volumes

As for the 1100/1300 (above), production only topped 242,000 in 1964 and 1969, paltry by later European standards. If BMC needed to manufacture 200,000 per annum for the model to be profitable, then this was barely enough.

BMC was leading the world in technological terms, but had reached the limit of what it could sell in its relatively restricted market. And all the progress that had been made since 1959 would be undone by the July 1966 credit squeeze, leading to the media and politicians to question its entire business strategy and making unfair comparisons with Ford of Britain.

As noted above, until the Escort arrived in 1968, Ford was not the paragon of industrial efficiency the pundits made it out to be.

Did Donald Stokes unwittingly assist BMC’s demise?

Much of the excepted narrative of this period is the Leyland narrative, so regularly propagated in interviews by Lord Stokes (above) in his long life. This is that devoid of new models, market research and able management, BMC UK market share slumped to 27 per cent and it lost £3 million in the 1966/67 financial year.

AROnline’s British Motor Holdings series of articles exposes that myth for what it is – an economy with the truth. Yes, BMC did lose £3 million and, at one stage, market share did drop to 27 per cent. However, all this occurred because of the July 1966 credit squeeze, which hit all the British motor industry hard, even Ford, which only made a £2.6 million profit.

Nobody thought Ford of Britain was in trouble. In the 1965/66 financial year BMC had made a pre-tax profit of £34 million, its best ever, yet in the hysteria of 1967-68 it was conveniently forgotten.

A weakened BMC was seized upon by Leyland

Leyland, bolstered by export sales to Third World countries, seized the opportunity to pounce and became the senior partner in the merged British Leyland. Had they delayed a year then the window of opportunity may well have passed as the UK car market recovered.

Much effort would be extended over the next four decades in trying to return BMC/Austin Morris to health and much criticism has been directed at the triumvirate of Leonard Lord, George Harriman and Alec Issigonis.

They were certainly guilty of poor cost control and market research, but the rude health that Lord Stokes and later the British Government aspired to, had been reached in the 1964 to June 1966 period.

Were Issigonis and Harriman actually misguided?

Alec Issigonis at the opening of the 'Elephant House'

And the men who made that situation possible were the same maligned trio of Lord, Harriman and Issigonis (above). It was their vision to pursue the high-technology route that pushed BMC car production from 431,247 in 1959 to 727,592 in 1965, an increase of 68 per cent.

In this period, and perhaps for the only time in the history of the automobile, a British company was setting the pace in technological development. The decision to proceed with the Issigonis front-wheel-drive cars has often been blamed for the demise of BMC, but how long would the company have lasted if it had not explored that avenue?

Would the public have continued to buy its uninspiring products which were protected from imports by a 30 per cent trade wall, or would it have withered and foundered against the Ford onslaught earlier than actually happened?

Leyland tries to ‘do a Ford’

Lord Stokes and his Leyland team went into BMC with a mission to rescue it from what they, the IRC and the Government thought was the mismanagement of the executives whose vision had made it a global force in the first place.

What did they actually do?

The first thing was to sideline Alec Issigonis and replace him with Harry Webster from Standard-Triumph. By changing the jockey, Austin Morris kissed goodbye to flair and innovation, the reason why so many people were buying the cars in the first place. By 1968, Alec Issigonis was well aware that the next generation of BMC front-wheel-drive cars had to be cheaper and easier to manufacture.

The Leyland men prioritised a fleet car – the Morris Marina – over a Mini and ADO16 replacement. When the Marina was eventually launched in 1971, it sold well for about two or three years then faded rapidly. Many of its sales seem to have been at the expense of the 1100/1300 series, production of which ceased at Cowley to make way for British Leyland’s Cortina beater.

Ford was a tough nut to crack

And the Marina made little or no sales impression on the Ford Cortina which evolved into the larger Mk3, showing that BLMC’s ex-Ford Product Planners had in fact misread the market.

Sir George Harriman had deliberately avoided developing a purpose-built fleet car, perhaps with good reason. Ford had got in there first and in effect had the market sewn up. The Escort had further tightened their grip on fleet sales from 1968.

Ford had all the buyers’ needs covered, why did fleet buyers need to shop elsewhere? Perhaps all the Morris Marina actually achieved was to squander both resources and time in an area where Ford were superior. In 1968 Ford made a profit of £61.19 per vehicle, demonstrating the impact the new Escort had on profits in comparison with the outgoing Anglia.

All the rival fleet cars from BLMC, Vauxhall and Chrysler had to make do with the crumbs left on the table after Ford had had their sizeable chunk. The notion that there were conquest sales and profits to be made from fleet sales was an illusory fantasy.

Austin Allegro: BMC’s twitching corpse

Next came an ADO16 replacement, the ill-fated Austin Allegro. Much has been written about this car and I have not much to add. Suffice to say it used all the Ford-inspired market research, cost control and product planning methods that BMC had been slammed for not employing and it still spectacularly failed.

The only car that seemed to be an improvement on what went before was the 18-22/Princess series of 1975, which replaced the ADO17 Landcrab.

All these British Leyland cars suffered from serious quality issues, problems that the Stokes-era management had claimed they would stamp out when British Leyland was formed in 1968. Under-development was meant to be a thing of the past.

Ford cost control methods were introduced into Austin Morris, which might have been acceptable in the case of a fleet car like the Marina, but in the case of models like the Allegro and Princess, the lack of integrity in their engineering due to cost constraints caused serious quality issues.

Tight costing failed to lift the SD1

As related elsewhere, Ford Cortina-type costing methods were used to develop the Rover SD1 with predictable results. The Leyland men tried to turn the export-minded Austin Morris into a Ford clone and ignored what BMC had been good at.

Issigonis 9X

While all these ill-fated models were stumbling, British Leyland squandered the technological lead built up by BMC. Alec Issigonis had hoped to have a Mini replacement, the 9X, ready for production by the autumn of 1971, to be followed by a larger component sharing variant to replace the ADO16.

Instead, Issigonis was cast to the wind by a corporation which did not have the courage to fire him because of his celebrity. Eventually, he retired in December 1971, but remained as a consultant to British Leyland, probably more to stop rivals acquiring his services than any intention to adopt his ideas.

The consequence of this was that Fiat, Renault and Volkswagen exploited the demand for high-technology front-wheel-drive cars as the hapless British Leyland headed for bankruptcy, with even its once lucrative Truck and Bus Division ailing.

We lose, they win…

Once it became apparent that the Princess had failed to match up to expectations, by the time it appeared Britain was a member of the EEC, the Austin Morris division had shot its bolt as a volume car producer. Everything that BMC had achieved had been thrown away in less than a decade.

By the end of the 1970s Austin Morris was just another car manufacturer with an uninspiring range of undesirable models and playing catch up to the European giants.

By 1990 annual Longbridge and Cowley production had slumped to sub-1959 levels as the Rover Group came to rely on Anglo-Japanese co-operation simply to stay in business.

This was the year that the Mini began to be marketed as a nostalgic niche car, a reminder of the time a quarter of a century before, when BMC had led the world.

 

Ian Nicholls

Born in Bedfordshire but now residing in Norfolk, Ian Nicholls is an ardent BL enthusiast. Currently he owns a Jaguar and two classic Minis. A stalwart of the Norfolk Mini Owners Club for nearly a decade he is an enthusiast for all things Issigonis. A stickler for historical accuracy he has recently performed the marathon task of mining the online newspaper articles for all BMC>MG related stories. Ian is unable to help with technical queries – he pays other people to fix his cars!

8 Comments

  1. Interesting to note that even without the problems, BMC during the first 28 weeks of 1965-1966 would have been short of its production target of 85,787 cars by about 2667 cars in total producing around 83,120 cars. How much profit would BMC have made during that period?

    Curious to know whether Joe Edwards would have given the green light to Issigonis’s FWD cars or what changes he would have made had he been the one to succeed Leonard Lord instead of George Harriman?

    BMC in the end proved too much to swallow for an opportunistic Leyland, perhaps the latter would have been better off targeting Rootes earlier on instead and preventing the latter from becoming part of Chrysler.

  2. The next part is the Complete BMH Story -Part One
    Click on the nice colour pic of Lord Stokes in a Rover P6 to find out more!

    • Was referring to BMC’s potential profits had they managed to build the 83,120 cars that were lost during the first 28 weeks of 1965-1966 as a result of Gas shortages in the West Midlands, Strikes among suppliers and labour troubles at BMC’s own plants.

  3. Don’t forget when British Leyland was created in 1968, this was by far the biggest vehicle producer in Britain and had 40 per cent of the new car market and it seemed the new company could be like a British General Motors, producing everything from a Mini to a double decker bus. How sad it was to see the optimism of this time evaporate during the seventies when the company became a national joke and market share dry up.

  4. I think BMC were very narrow visioned, even though they had invested in the FWD cars. OK sales were up after their introduction, but profits were not matched as the costs of the issues created by rushing new technologies to the market had hit them hard. In fact BMC’s failures to manage these issues actually helped the continental rivals as they could see were BMC were going wrong and did not fall down the same pitfuls. Also, if products had been based on customer opinion (as per Ford’s marketing team had used to great extent) and not Alec’s own interpretation then we may have had better focused products which would have better suited to the market other than the hotchpotch of models being made (1800 and Farina running concurrently).
    In addition BMC should have really foreseen that Britain would not have gained entry into the EEC – at the time it was know that Charles De Gaulle would not allow it’s entry. Instead of focusing investment in the UK they should have invested more in plants in the EEC, and therefore taken advantage of the huge market it offered it’s products.

    • I agree BMC should have had a better understanding of what customers wanted.

      The Farinas were kept in production because the 1800 ended up heavier & more troublesome than expected, but as in the main text they should have been dropped when the Morris 1800 was launched.

      Also Seneffe showed how a plant in the EEC could work well for BMC / BL & with some more investment even more so.

    • And for all that Harriman may have supported Issigonis and made everyone else at BMC toe the FWD line, the Corporation didn’t have the nerve to fully commit to the FWD range. Keeping the A40 and the Minor in production alongside dual Austin and Morris versions of the ADO16 must have lumbered BMC with unneccesarily high overheads and been a further brake on acheiving the high volumes that the low-margin FWD cars needed. It also robbed production capacity (even allowing for lost productions from strikes) so that the ADO16 was a hugely popular car for which BMC was effectively turning customers away because it could not meet demand. Would the introduction of the 1300, the estate and the two-door models (all asked for from the moment the model was launched) been any swifter if the old RWD models been out of the picture? And would development and testing been more regular and more thorough if the range wasn’t split four ways between Austin/Morris and FWD/RWD? Yes, the Minor/A40 were kept around to reassure cautious buyers but would they all have jumped ship if they didn’t have the choice? Some of them would, and the fleet buyers wouldn’t have looked BMC’s way, but the potential for greater growth and efficiency might have offset those lost sales in the UK.

      And again we come back to the rejection of the 9X as one of the big missteps. However much Issigonis played up to his lofty artisinal genius side in public, and however often he gave barbed arrows of wit against ever considering anyone else’s ideas to have any merit, he did take all the criticisms levelled at the Mini and the ADO16 on board. They were too complex to build, the suspension was an expensive and largely unnecessary complication. The Mini especially was pointlessly small and could be made much more practical and comfortable by expanding it slightly without losing any of its handiness, the box-in-sump layout was unrefined and prone to mechanical trouble etc. etc. And from a production standpoint the ADO15/16/17 trio shared worryingly little in the way of systems and components for three cars designed by the same person on the same basic philosophy. So for the 9X he designed a bigger, simpler car with seperate engine and transmission (and a highly efficient, forward-looking engine design as well), a more comfortable and space-efficient cabin, conventional suspension and to a scaleable platform design that could spin off an entire family of modern FWD family cars. Which is what every other manufacturer ended up doing in the decade that was to follow.

  5. Interesting link with the group’s later history is that the Gas shortage in Birmingham and Coventry originated from problems at the Lurgi coal gasifier plant which was situated at Hams Hall, which of course was the location of BMW engine plant which was originally intended to supply Longbridge.

    The plant which was mothballed with the arrival of natural gas from the North Sea stood for some time on the Lichfield road in front of the power stations.

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