The Harold Musgrove interview is the one you’ve been waiting for. He was Chairman of the Austin Rover Group between 1982 and ’86, and now he shares his unique insight into his time right at the very top of the company – and details the model plans that could well have seen the company succeed in the 1990s.
In an exclusive interview for AROnline, ex-ARG Marketing graduate Simon Weakley talks to his former boss, who opens up for the first time about his 40-year career at Austin, from his engineering apprenticeship to his time as the company’s Chairman.
Setting the record straight
Meeting Harold Musgrove, the former Chairman and Chief Executive of Austin Rover Group (ARG) is a huge honour. He represents my era (1982 -1986) of working for the firm – he was at the very top, and I was near the very bottom, being a graduate trainee, sponsored to undertake a Business Studies degree with Coventry University.
Our meeting came about after I wrote a letter to Harold asking if, after all these years, he would be ready to give an interview and go on record about his career, his views on BMC, British Leyland, ARG, the corporate plan, the model strategy and, finally, his thoughts on what happened next and how things have turned leading up to the present day.
To my absolute joy, he was – he hasn’t given a detailed interview since his departure from ARG in the summer of 1986. An interview with CAR Magazine the previous summer did, though, give a good insight and provide a starting point to our discussions about Austin Rover’s plans while he was in change – and beyond.
And this proved to be an insightful interview. At 87 years of age, Harold is as sharp as he ever was. So, on a beautiful Monday morning in May 2017, he shared amazing insights into his early years, time at Austin-Morris, the industrial disputes, Metro launch and running the Government-controlled car company.
From RAF navigator to Austin Apprentice
Harold Musgrove’s long and fruitful automotive career began and ended at ‘The Austin’. After serving as an RAF Navigator with Bomber Command, he joined Austin as an engineering apprentice at Longbridge. As was common at Longbridge, Harold followed a family member – in this case, his uncle ‘Harry’ Musgrove.
In those early years, he made many friends and associates who would stay with him throughout his career at ‘The Austin’. ‘As well as my uncle Harry, and as a quirk of history, I found myself working alongside Derek Robinson. But he was never a full Engineering Apprentice, and it would only be much later that I’d end up having much to do with him,’ says Harold.
He was fast-tracked up the management chain and, following various jobs in the corporation after the formation of BMC in 1952, he ended upmoving to Scotland. ‘I soon found myself in a management role at the giant BMC truck plant at Bathgate,’ he smiles. ‘And that is where I found myself at the time of the BLMC formation of 1968.’
A much-needed focus on quality
‘The quality was already slipping at Leyland Trucks in Bathgate in the late 1960s,’ he says. The new Leyland diesel engine with its welded cylinder head was costing the company dearly in terms of warranty claims. ‘And that started to have an impact on sales and profits.’
It was a lesson that Harold was to take on board for the future. At Bathgate, he learned all about management at a turbulent time, and survived unscathed – in fact, he was identified as something of a trouble shooter. And that’s why he ended up moving upwards, and back into England.
‘In the early 1970s, I was moved to take up a position as Plant Director for AEC. The quality was much better than Bathgate, and AEC had a great reputation for both trucks and buses, and was popular with operators,’ he says.
Why weren’t the numbers adding up?
At the time, the plant was producing 165 fully made-up and 40 CKD trucks per week. Such was the company’s standing, to place an order it was money up front! AEC was so profitable, that it was considered the jewel in the crown of Leyland Truck and Bus.
And yet there was no impetus to increase production to maximise profit. ‘I asked my Managers at AEC what the breakeven for the factory was,’ Harold says. ‘And I had no response.’
‘Several weeks went by, and still I got no response. In the end, I challenged my Managers quite forcibly in a confrontation with the team. The reply came back: minus 20. They said they didn’t want to tell me because the figure didn’t look credible.’
In other words, supplying and selling spares was so profitable and a contract for maintenance with London Transport meant that the plant was profitable with no new truck or bus production at all! This alone highlighted how profitable parts of BLMC were, and how they were carrying other parts of the business.
Even though Austin-Morris made a good profit in 1972 under George Turnbull in the first full year of Morris Marina production, and in a boom year for car sales in the UK, the company was losing money. ‘I learnt the valuable lesson that spares were a vital part of profitability of a car or truck manufacturer.’
Moving on to be the Production Director at Austin-Morris
Fast forward to 1978 and Michael Edwardes was making his presence felt at BL. He was looking to promote talent and get rid of Managers that were not performing. In his book Back from the Brink, Edwardes describes how poor many BL Managers were, and how he used a series of psychometric tests to identify the characteristics he was looking for.
‘Like all BL Managers I had to take these psychometric tests. I told the testers that I knew the pattern of questions and explained how it worked. The tester admitted that I was right and I was the first Manager to spot the pattern. It helped get me the job at Austin-Morris,’ Harold smiles.
‘Ray Horrocks had been brought in to run Austin-Morris, the volume cars division, and I was approached to become Engineering Director of Austin Morris. This gave me responsibility for all the Austin-Morris plants, and to oversee the launch of the Austin Mini Metro.’
Not all sweetness and light
‘What I found at Austin-Morris was a mess – both in terms of industrial disputes and production slippage, but also quality of the product. From being a profit-maker in the early 1970s, Austin-Morris was by then losing many millions of pounds a year,’ he recalls.
With this corrosive situation going on in the background, getting the Mini Metro into production at the new West Works was going to be a huge undertaking – and he had just two years to launch it. BL wasn’t exactly setting the new car market alight with new product launches, either – the only product actions since 1976 had been the launch of the O-Series engine, the revised Princess 2 with improved paint, trim and quality, and a mild facelift for the Marina.
‘Despite contrary suggestions made at the time, the very worst plant for quality was Seneffe in Belgium,’ says Harold. ‘I made the decision to close that, not least because production capacity was too great for the lower sales of Austin-Morris cars.’
And then there were the industrial issues
‘On my first day in the job at Austin-Morris, I was handed four pages of disputes going on across the company. Previous Austin-Morris Managers had simply accepted this as situation normal, and things had got steadily worse since the Ryder Report and formation of Leyland Cars,’ he recalls.
It was bad. Poor quality, disputes and production shortage were simply considered insoluble. ‘I was determined the situation was going to change. It was vital that Metro was launched on time, on budget and with a quality never before seen in an Austin-Morris car – and in production numbers that made the plant highly profitable from day one.’
Just how much they would need to change soon became clear to Harold. ‘One day in 1979, I was being driven to a meeting at Longbridge. I was passing Drews Lane (above), a plant I’d not yet visited. So, I asked my chauffeur to pull into the factory to do one of my random visits to see what was happening.
‘It was about 1.00pm, and when I got inside the plant it was completely quiet. No staff, no production, nothing. Over at one end of the factory, I spotted 10 men doing some work – but this was out of a workforce of more than 2000.
‘Eventually I tracked down the Plant Manager and asked if there was a dispute going on I wasn’t aware of. The Plant Manager looked at me as though I was stupid, and replied, “no, they’ve gone home for the day”.’
It gets worse. Harold continues, ‘I asked the Plant Manager what those 10 men were up to. “Oh, they are staying back on overtime. They’re not actually working because they’ve finished for the day – they finish just before lunch once they have hit their production figures”.’
Harold is now getting animated as he remembers this farce. ‘I was beginning to think I was on another planet to this guy. “So how long has this been going on” I asked. “Oh, for many years,” said the Plant Manager. “So, you’re telling me that the staff are paid until 5.00pm, only work until 12.00, and then go home on full pay?”’
‘I’m fuming by now. ”Yes,” says the Plant Manager. “One of the chaps comes back at 5.00 and it’s his job to clock them all off”. Immediately, I get on the phone to Ray Horrocks, who is in a meeting in London and relay the story. Ray said: “Stay there Harold, I’m on my way up to Drews Lane”.’
‘Within two hours, Ray was at the plant. I waited at a desk for him, just eating my sandwich. Neither of us could believe a situation like this was allowed to continue, and the Plant Manager was left in no doubt that this was unacceptable – and staff should work until 5.00pm.’
The fun begins
Sadly, it didn’t end there. The Shop Steward for the plant was summoned (a ‘Communist’ in Harold’s words), and was told that there would be no management backing down on this one – a normal day shift pattern would resume.
‘The Shop Steward sucked his teeth and said that it would be difficult. “The men had sent their wives to work, and had arranged child care around this 12.00 finish”,’ Harold recalls. ‘The Shop Steward said that, in the past, management had backed down on this. “You’re not like the others, are you?” he said to me. And with that, he went off to consult with the other Shop Stewards, saying that he’d get it sorted if he was given three weeks.’
Harold knew this would be complex. But he wasn’t going to back down on this. ‘Ray and I promised to return and put our case to the union Shop Stewards at the plant,’ he says. ‘Three weeks later, when the meeting is convened, there’s huge hostility, abuse, swearing and threats. Ray was for sliding away by a back door, but I said no – we stay here until it’s sorted one way or another. If it isn’t, the plant closes with immediate effect.’
With some deft negotiation on both parts, an agreement was reached. With Harold’s commitment, it was only going to go one way – eventually agreement was reached and the Drews Lane dispute was settled without a strike. The Chief Shop Steward had been as good as his word.
Coming to blows with Derek Robinson
Another notorious episode that year was the sacking of Derek Robinson, the Communist union convenor at Longbridge. His dismissal had been partly down to Michael Edwardes, but Harold had a ringside seat to the affair, and was ultimately responsible for the dismissal through Human Resources.
‘In the run up to his dismissal, Robinson had been away on sick leave. There had already been a ballot of staff accepting what became known as the Edwardes Plan. Robinson had issued a pamphlet calling for resistance to the plan, and it was this gross misconduct that led to his dismissal.
‘When he came back off sick, Robinson could not believe he had been sacked and called for a ballot of members on Cofton Park to support his reinstatement. I consulted the Personnel Director, who had the novel idea of issuing banners in support of the Edwardes Plan, as he had read that Roman battalions had standard bearers with slogans galvanised support among fellow soldiers.
‘The plan worked, and at the meeting the banners were everywhere. The vote went 75 per cent in favour supporting my dismissal of Robinson, and 25 per cent in favour of him.’
The launch of the Austin Mini Metro
With all this going on, Harold had been overseeing the difficult task of pushing the Metro towards production. ‘The name Metro had been chosen in a ballot by the Longbridge workforce from a choice of three: Match, Maestro and Metro,’ he recalls.
‘Metro was the overwhelming choice. Because it was envisaged that the Mini would have a limited life after the launch of Metro, it was called Mini Metro to gain some kudos and continuity from the much-loved older car. Like the Morris Mini Minor before it, it soon became just the Metro by 1983,’ Harold says.
The Metro was to be built at a new purpose-built facility called West Works. At a cost of £200 million and the size of 21 football pitches, the new state-of-the-art facility was designed to produce 6000 Metros per week and make extensive use of robots for body welding, assembly and painting of the ‘shells.
‘The Metro had come off a long gestation period, starting as ADO88,’ he says. ‘It had then been restyled on the authority of Michael Edwardes after performing badly in clinics. The final shape was much more pleasing, and already signed off by the time I arrived. However, I was unhappy with some of the detailing that could be changed, such as grille, bumpers, badges and wheel trims.
‘I put the Metro on a turntable and studied it for hours from every angle. I eventually had Bertone come and have a look, and together we changed certain things. Not the basic body-in-white, but badges, bumpers and trim to improve the car. We tied squaring off the rear window line but it looked no better so we left it as it was.’
A British car to beat the world
The TV commercial, ‘A British Car to Beat the World’ summed up the mood of the time. It helped allow the Metro to command headlines in the tabloids, a fact that Harold was particularly proud of. ‘It wasn’t necessarily best in class,’ he says. ‘But its packaging was the best, and the 60/40 split rear seats were a first.
‘The Metro was just what the market wanted in a world where private buyers didn’t have a lot of cash. Tony Ball was still Sales Director of Austin-Morris and, just like he’d done with the Mini before it, he did a good job of launching the car.’
The Metro was far from perfect, though, and Musgrove was acutely aware of its shortcomings. ‘It was a quality car, but I was never happy with the transmission-in-sump arrangement. But without a new engine, there was nothing I could do. I was under pressure to do a sports car off the Metro, but with that engine and gearbox, it was never going to happen’
Upping the quality and profit
However, he was happy with how it was screwed together. ‘I had a lot of influence on production and quality, and for my efforts of getting the car into production – and to a quality standard – I won Midlander of the Year in 1980.
‘Production soon built up to 4500 per week. People often wonder why 6000 per week was never achieved at West Works. It’s true that Trevor Taylor, the new Sales Director, and Michael Edwardes both kept pushing for that figure to be achieved, but I resisted.
‘Remembering my Bus and Truck days, I wanted the Metro to be sold from pre-orders, not stock. BL had a history of building too many cars, then discounting them after they had been stood in fields. I wanted Metro to sell from pre-orders where deposits had been taken. That way customers were getting the exact specification they wanted and colour and trim combination and were more likely to pay list price or near to that.’
The tactic certainly worked. Discounting was minimal in the early days and, ‘despite the usual belief that small cars meant small profits, Metro was highly profitable.’ This was a vital lesson learned, and so effective that it wiped out all the losses at Austin-Morris.
‘I have figures that prove the Metro was one of the most cost-effective cars to build in the world – and the most efficient on Europe. It took just 34 man hours to build a Metro at about £6 an hour for labour. I can tell you that the gross profit on Metro was 45 per cent.’
Up at one end, down at the other
Sadly, this profit was eaten up by losses in the rest of Austin-Morris. Cowley was losing huge money in 1981, due to under-production. The Metro could have sold in higher volumes, but only if Austin-Morris had discounted the car.
‘The quality wasn’t perfect, but was far superior to anything else we made. The Volkswagen Polo was the class benchmark, and the Austin Metro matched that car’s quality standard, with a resultant drop in warranty claims,’ Harold smiles.
‘So successful was the Metro that, in 1981, it accounted for more than half of our sales. However, that was still only 200,000 cars per year. In Europe, BL had such a bad reputation that Metro sales were affected – Italy was a strong market, due to the Innocenti connection, but France, Germany and Scandinavia were quite poor. We were still very dependent on the UK market – a risk that in future years I was determined to change.’
The honeymoon didn’t last, and BL needed to keep the Metro fresh to maintain sales. ‘I was particularly impressed with the 1985 changes, and the five-door version,’ he says. ‘Roy Axe did that one, and neither Ford nor Vauxhall had a five-door then. I had a hand in the revised dashboard, making it sweep round.’
Harold is realistic about the Metro. ‘It was mainly its ageing running gear that let the car down. Sales started to slide from 1986 onwards, but the five-door version was £500 more, and made more profit for us, by accounting for 50 per cent of sales.’
As for faster Metros, Harold accepts this was a weakness. ‘After I closed Abingdon which was losing £750 a car, I knew we had to keep MG. Alan Curtis wanted to buy the MG brand and I said no, you can have the factory but not the MG brand.’
This was the vehicle that propelled the Metro into the hot hatch market. ‘We never gave a thought to using the Cooper name. Why pay John Cooper royalties when we had MG to use? In hindsight, a Cooper S might have made more sense, but ARG was weak on marketing, and I had no marketing experience.’
The Formation of Austin Rover Group (ARG)
While the Metro was gaining traction, big changes were happening to the structure of the company. The year of 1981 would prove pivotal for BL – Cowley was being readied for the introduction of the Triumph Acclaim, as well as the Austin Ambassador and Rover SD1 Series 2.
Although Austin-Morris was starting to improve, Jaguar Rover Triumph (JRT) had been disbanded. Edwardes could see no future in a division losing millions with no new products on the horizon. It was a luxury that could not be justified.
Canley also needed to go. The pound’s strength against the dollar made selling Triumph in the USA unprofitable and its models were in decline. Yes, the TR7 (below) had come good late in life, but it was too late, and sales in the UK and Europe were too small to justify its continuation.
The Austin Rover Group was formed out of the ashes of JRT. Rover was retained as the premium brand with Austin as the strongest volume brand. MG would be the sports brand of Austin, and Vitesse as the sports brand for Rover.
‘Vanden Plas was retained at my insistence,’ says Harold. ‘We used it used across the portfolio in the way Ford did with Ghia. I had come from the Austin Motor Company, and Edwardes had almost by default backed the volume strategy of Metro, Maestro and Montego. None of which could carry either the Triumph or Rover brands convincingly – so, for now, Austin it was,’ he says.
The mistake of losing Austin
‘I think Austin should have been retained, though. We had improved products, and had an image that was no worse than that of Ford or Vauxhall then. I also saw the value of both MG and Vanden Plas – so much so, that I fought John Egan for the right to keep the Vanden Plas name in the aftermath of the Jaguar sale in 1984.’
The formation of the Austin Rover Group was good for Harold Musgrove, too. He was promoted to Chairman and Chief Executive of the Cars Division. ‘The challenges it brought were the creation of a coherent model strategy,’ he says. ‘We needed a range with similar characteristics of style, produced using the latest production technology. It needed to be built to a quality standard not achieved before, and with international appeal.’
No pressure, then. ‘The Allegro, Princess, Ital and SD1 were not quality products that could be retained for long. The yet-to-be-launched Acclaim, Ambassador, and Rover SD1 Series 2 were all stopgaps. Even the Metro had limited shelf life. I believed one of BL’s biggest weaknesses was poor frumpy styling, and a lack of model identity.’
The first viewing of Maestro
It seems difficult to believe now, but Harold was late to the party – disastrously late. ‘I was first shown Maestro at a clinic in 1981, and I was appalled by it. I ‘phoned Ray Horrocks immediately and said it had to be stopped. He said it can’t, we have already ordered the body tooling and it has to go ahead.’
This was a similar experience to Roy Axe’s first sighting of this vital new car. Like the ex-Chrysler Designer, Harold knew it wasn’t good enough – with frumpy styling, poor detailing and zero showroom appeal. ‘About the only good thing about was the packaging,’ he says. ‘Typically Austin, and superb.’
More disastrous were its engine plans. ‘I asked what engine it would have, and they said just the 1.3-litre A-Series. I asked whether there would be a 1.6-litre or 2.0-litre, to which they replied that the O-Series can be made to fit, but it wouldn’t be ready in time. I knew we had a problem when our competitors had a 1.6-litre engine and we didn’t.’
But Musgrove would have some lack on that. ‘I was talking to Ray Gatrix, the Purchasing Director for Longbridge, and said we needed a 1.6-litre engine for the LM10. He said he might be able to help me there: he’d been told to scrap the E-Series engine and destroy all the tooling, but he had kept it all in storage at Longbridge.
‘So, we dusted it off and redid the engine as a 1.6-litre, and put it in the Maestro as the R-Series. We got our 1.6-litre engine after all!’ That’s why the S-Series came only 12 months later in Montego, and 15 months in Maestro – because it was a development of the R-Series that was never meant to be!
‘Another consequence of the late adaptation of the R-Series was that the success of the MG Metro caught everyone by surprise, and it was felt that a MG Maestro was needed as well. This was rushed into production with twin Webers.’
Merging Solihull with Longbridge
By then, JRT Engineers and Stylists had been merged into Austin-Morris, and Musgrove was dealing with David Bache, the man responsible for both Maestro and Montego. It’s a matter of public record that Harold did not get on with Bache at all, and explosive meetings followed around styling issues for Maestro and Montego.
Harold wouldn’t be drawn the whys and wherefores: ‘It’s public knowledge that Bache was sacked at one of these styling meetings, and I ended up with a hunt for a new Styling Director. Through some of my contacts, it became known that Roy Axe was planning to move his family back to the UK, and it seemed ideal to approach him for the chief styling job at ARG.
‘Horrocks was involved in the negotiations and he took me to one side, and said to get Axe we’ve got to pay him more than me! I said okay, if that means we get him then so be it. I didn’t care, I wanted the best, and he knew Roy could deliver – so a deal was done, which included us building a new Design Studio at Canley.’
The miracle that wasn’t
Launched as the ’Miracle Maestro’ the car sold well in its first year, but it became clear that this was not going to be success Metro had been. Harold and Roy Axe had been right – as Lee Iacocca once said you can sell an old person a sporty car, but you can’t sell a young person an old person’s car.
Despite Mark Snowdon from Product Planning proving that on a number of measures Maestro was a success its sales were modest and short-lived. It might have had the interior space of a Sierra or Cavalier, the price of an Escort, and the comfort of a larger car but, like so many BL cars before it, it just didn’t hit the market bang in the middle of the lower medium segment.
Montego and 1984
‘The Montego was a good car, and Roy Axe did an effective job tidying it up for production. He had more time to influence the Montego style. The interior was nice, with a new one-piece dashboard, and appealing-looking instruments – although you had to pay for an HL and beyond to get them,’ Harold reckons.
‘The exterior was quite pleasant, if a little dated,’ he says. ‘But this appealed to conservative fleet users and buyers, who still couldn’t cope with the Sierra. It was much larger than the Cavalier, which was an advantage.’
He thinks its faults were limited to those about how it was sold. ‘ARG was poor at marketing, and I was not a skilled marketing person. It wasn’t until I recruited Kevin Morley from Ford that ARG marketing really improved. It’s a real shame that the early Montego didn’t benefit from Morley’s expertise, because by 1987 Montego was very smart indeed.’
It did the numbers – but not enough
The Montego sold well, certainly much better than Maestro – and at higher prices. However, there was one ace in the Montego range – the estate version was truly a good car and sales reflected that. Launched in October 1984, it became the best-selling estate car in the upper medium sector, and by some margin.
‘Ah, yes, the Montego 2.0 Vanden Plas EFI Auto Estate,’ Harold smiles. ‘This was a truly great, the best in the ARG range.‘ The problem was that not many buyers got to drive the top models and the base versions were a world away in terms of desirability.
‘It was the case – again – that the Montego was so much better than BL products from the past. It took buyers time to catch up with the new reality. But it suffered from that image, and many buyers had already decided that they would never buy an ARG product – based on past experiences.’
But it wasn’t all bad
The Montego might have been 1984’s star new Austin, but it was a notable year for another very important car launch. The Triumph Acclaim’s replacement, the new Rover 200 arrived in July 1984, and was a new departure for the Rover marque.
Here was a small Rover, when Rover still had residual upmarket connotations, despite quality problems associated with the SD1. It was pure Honda, but with ARG interiors, colour keyed bumpers and different colours and badging.
Soon this upmarket little car was outselling the Maestro, making inroads into the fleet market and outselling the Ford Orion. By the end of 1984, ARG had three new mid-liners: two hits and one big miss. ‘I realised by this stage that any replacement for these cars had to be built-in association with Honda – and only the Metro replacement should be a purely in-house effort,’ Harold says.
The executive car conundrum
Harold‘s ambition for ARG was to turn it into successful international carmaker, and make inroads into the US market. ‘I looked at the success of Jaguar in the USA, and the pound had fallen back, which selling there highly profitable.’
The car to do that should have been the SD1’s replacement. Here was a car that bloomed late in life, but which should have been easy to improve upon. ‘I didn’t like the Rover SD1. It was well-known for being a poor-quality product. We had a win a Spa, but the car had been disqualified because of changes to the engine. So, I ordered the winning car, which was still covered in mud, to be shipped to the Frankfurt Motor Show, and put on our stand with a banner saying, “First over the finish line”.
‘BMW tried to get the show committee to order us to take it down, but the committee sided with us and it stayed.’
But ARG and Honda were already working on its replacement – the Rover 800. This project suited both partners – Honda wanted an executive car for the USA, and ARG needed a replacement for the dear old SD1. sales which for them was their most important market.
On to the XX – Rover 800
‘Project XX had been signed off by Michael Edwardes, and should have enabled ARG to re-enter the US and other markets with a range of highly desirable cars. From that, ARG would finally become profitable, and viable as a medium-sized producer.
However, as Harold recalls, there were problems in deciding which partner should do what. ‘We were good at suspension, so naturally, we were asked to do it. We proposed a cheaper McPherson strut front suspension layout, but Honda insisted on double wishbones. We ended up having quite a row, and eventually the Chairman of Honda rang me and said his company would pay the difference in cost for the wishbone set up across all the cars built. So, we went with that.’
Harold says he had a hand in the style of the interior. ‘I wanted a cockpit look and feel, and the wraparound fascia and door cards that integrated were my idea, so that there was no bare paint on show. We achieved that but, in hindsight, we could have gone for an even greater wraparound feel.
‘I also wanted the rear of the car to have style like a lady’s behind – one that draws the eye. We wanted it to be a high-style car, with true desirability and international appeal.’
But there was a surprising turn of events. ‘When the Chairman of Honda saw the finished cars side by side, he became very angry with his team,’ Harold recalls. ‘The Chairman said we had the better car. He liked our style a lot more, and asked how we’d done it. But, of course, the Legend was designed primarily for the American market. But Honda’s car looked bulbous, whereas ours looked sleek.’
Who so you think you are? ‘Sterling’ Moss?
In terms of branding, Harold recalled how the Rover SD1 had been such as disaster that the dealer network in North America and came up with the name Sterling after Sterling Silver. This was seen as a British mark of quality. ‘This was a gamble as Sterling had no brand association, but it was felt that a clean break was necessary, MG wasn’t appropriate, and Triumph was already a dead brand.’
‘As an aside, Stirling Moss was speaking to me one day, and asked how much in terms of royalties were coming his way. After all, Austin Rover should pay him for using his name. I replied, “how do spell your name, Stirling?” The royalties were never paid!’
Harold recalls very specific sales targets. ‘The aim was to sell 100,000 XX Rovers a year worldwide including UK, Europe, North America, Japan and Rest of World. This failed to happen for two reasons: firstly, the planned derivatives were never launched, and Sterling 800 failed to meet its ambitious US sales targets.
‘It should have sold 50,000 units a year, but its best year only managed around 22,000. This was still a vast improvement on the 1000 SD1s sold in 1980.’
There were other factors, of course
Harold had yet to mention the Q word: quality. That was always a factor. ‘We had sophisticated testing equipment installed at Canley, and the first Strike 1 gearboxes were failing our quality tests. We complained there was a problem, but Honda said nothing was wrong,’ he says.
‘But when the Strike 2 batch of gearboxes turned up they passed. We told Honda this and they denied any changes. So, I suggested we use the Strike 2 gearboxes in our 800, and they use the batch of Strike 1 gearboxes in the Legend. They dispatched 20 Engineers and withdrew the Strike 1 gearboxes.’
So, as Harold noted, even Honda quality was not always perfect. Honda Engineers were good though and Harold noted that they always followed the book. If a thing was designed a certain way that was precisely how it was to be fitted. ‘Quality designed in, in other words, not made to fit or comply after the event.’
Extending the range
Harold looked at some pictures of 800, and agreed that, had the coupe been launched earlier and with a convertible as planned, then sales would have been higher. ‘The proposed Rover 600 hatchback was launched, but by 1988 it was renamed the 800 Fastback by the marketing team under Kevin Morley.
‘UK sales were strong and the car became the best-selling executive car in the UK in both 1987 and 1988 – quite an achievement considering SD1 only sold 15,000 cars in 1984 and 1985. Europe was still a problem and, apart from Italy, the car didn’t sell in the expected volumes, as ARG still had an image problem, so bad that in Germany it was on a par with Fiat in the public’s minds.’
‘I might not have liked the Rover SD1, but the Vitesse was impressive because of what it had become. It would have stayed on until about 1988 if I’d still been in charge. It would have been a low-volume halo car, and sold until the 800 Vitesse was launched. Instead, all SD1s were phased out from showrooms by the beginning of 1987.’
The Five-Year Product Plan: 1986-1990
Would Harold spill the beans, and share previously-unknown product information with us? Austin Rover was on the up in 1986, but clearly it needed to maintain its momentum into the 1990s. What new things might we find out from Harold Musgrove?
‘In order to be viable, ARG would need to sell 600,000 cars per year. This would take Cowley and Longbridge to full capacity, and with a richer model mix to make the company viable for privatisation – as this was top of the agenda,’ he says.
‘To achieve this, our team proposed a three-platform model strategy. One car would have been an in-house product, while the other two would be joint ventures. These were the AR6 Metro replacement, a mid-range car to replace Maestro, Montego and Rover 200, and Project XX.’
First up: the Austin AR6
Harold confirms a number of important facts about where this project had got to when it was finally cancelled. ‘By 1985, it was a steel-bodied car in three- and five-door forms, with further derivatives planned. You have to design the derivatives from the outset.’
This had moved on somewhat from the original plan hatched in 1983. Product Planning originally mooted a bonded aluminium shell, but that would end up being dropped on cost grounds. It was to have added derivatives designed in at the outset, and these included the convertible MG Midget and a coupe that looked like the Honda CRX designed for global sales.
The engines would be K-Series in 1.1-, 1.4- and a 1.4-litre Turbo forms. ‘There would be no three-cylinder version, due to the increased weight of the all steel bodyshell,’ Harold confirms.
Suspension would be conventional steel sprung on cost grounds, not Hydragas, as on the Rover Metro, despite was what learned later, making that into a class-leading product in this department.
What were the badges?
The branding would be Austin Metro, MG Metro, MG Metro Turbo, and luxury version would have been the Vanden Plas. The MG Midget name would have been used for the convertible and possibly coupe. North American sales of the MG versions would be a priority, especially the MG Midget.
‘I did not agree with the later process of Roverisation. The man with an 800 does not want to see a Rover Metro on the drive next door at a third the price. It devalues the brand. BMW has gone down that route today, and it’s having to advertise a lot more now than it used to.’
‘One huge regret I had was no Mini version was considered. The power of the Mini brand just wasn’t realised back then – MG, yes, but not Mini. A high-style Mini derivative should have been considered but wasn’t. This was a missed opportunity that could have further enhanced the AR6 platform and shared costs with another model with international volume appeal.
‘Sales forecasts suggested volumes of 5000 per week from the West Works. The increase in volumes over the original Metro would come from North America and Europe thanks to the all-important additional derivatives,’ Harold reckons. ‘Pricing would be higher than the original Metro to reflect the larger size and better specification. However, this was a volume car, and the efficiency of West Works was to be maintained and the profits substantial.’
‘When the car was cancelled in late 1985, I knew the game was up,’ Harold says sadly. ‘Without AR6 we could not get to the 600,000 volume to make a good profit.’
AR9, AR16/17: The Montego-based Rover
We showed Harold images of the AR17 to remind him of the plans Roy Axe had in place. ‘This would not have happened under my watch – we would not have done that one. We wanted double wishbone suspension up front, not a strut set-up and steeper rake to the windscreen. It would have been a joint venture with Honda, not the Montego route.’
The reason for that was that the mid-range replacement for Maestro/Montego and Rover 200 should have been a joint venture with Honda. As part of the three-platform strategy that model would almost certainly have been the new Rover 200/400 that did eventually get built – but with slightly more ARG content, especially around the fascia.
In the product plan, the XX-generation Rover 800/600 would have been replaced around 1991/92, but with an all-new platform in a joint venture with Honda. It would have been an all-new car, and not the facelifted Rover 800 of 1991 that actually emerged with the T-Series engine.
When spelled out like this for the first time, in terms of model strategy, volume and derivatives, the Musgrove plan looks elegant in its simplicity.
AR6, three- and five-door hatchback, plus a coupe and convertible MG Midget for 300,000 sales per year by 1988. The mid-range joint venture with Honda, with three- and five-door hatch, four-door saloon, coupe, convertible and estate, for 200,000 sales per year by 1989. Finally, the XX replacement joint venture with Honda for a four-door saloon, five-door estate, coupe and convertible for 100,000 sales by 1991.
To achieve this all three ranges would be sold in North America, Japan, Europe and RoW markets as well as the UK.
Would it have worked?
Harold Musgrove considered it essential that ARG had the resources and ability to produce a complete motor car from scratch and put it into production. That car was AR6. A car company completely reliant on joint ventures was not sustainable and, in his view, the country needed a viable volume car manufacturer to give employment and skills to a large workforce – indeed, he still believes that today.
Viability was at 600,000 units minimum with a move upmarket to enrich the model mix and make more use of the Rover and MG brand names, but not the complete Roverisation adopted by Graham Day which devalued the Rover brand to the point where it had no credibility as a BMW competitor.
The plan involved all three car lines being sold in world markets including North America and a lot of derivatives off the three platforms designed in at the outset.
That way the company was expected to generate £4bn of sales a year and a profit of about £300 million a year thus making it viable for privatisation around 1991 but not before. Harold appreciated Mrs Thatcher’s viewpoint that ARG had to be put back into the private sector but not the timescale that was eventually adopted and not the limited plan that went ahead.
What about the politics?
Harold was not quite so forthcoming about the then Government’s role in the Musgrove plan. But he did confirm that, ‘it was Mrs Thatcher’s inner circle that vetoed the AR6, and not Norman Tebbitt and the Department of Trade and Industry. They were very supportive.’
He did say that the K-Series was under enormous pressure. ‘They wanted us to cancel the new engine and get Honda to build a plant in the UK and supply us with Honda engines. I told the Chairman of Honda to tell them that Honda was not prepared to do that, which was probably true. So, the K-Series eventually got signed off.’
To put AR6 into production would have needed an additional £300 million and that was not forthcoming from the Government. However good Rover Metro proved to be in 1990, it never sold more than 100,000 units per year, way short of what was required to make the West Works and Longbridge profitable and viable.
When the AR6 was canned, Harold knew the company would not get to 600,000 sales per year. The performance of the facelifted Metro proved this, and ARG could not remain independent. That is the crucial decision that prompted Harold Musgrove to resign in 1986 after 40 years of service.
It wasn’t as rumoured, his relationship with Graham Day, whom he liked. ‘He was a nice guy, but he was no motor man. He didn’t even have a driving licence.’ However, the relationship wasn’t helped by one of Day’s early personnel decisions.
‘Soon after Graham Day arrived, he wanted me to sack my recent appointment, Kevin Morley. He said that he had great marketing expertise and didn’t need Kevin. He asked Harold to do the dirty work and Harold refused, leaving the company seven weeks later. He was there long enough to see the first fruits of his ARG product strategy, the launch of Rover 800 – but not the rest of it.
An aside, the approach by Ford in 1985
This was a short-lived affair resisted by Harold Musgrove and his team, but highly promoted by the Conservative Government as a way of getting rid of ARG from the public purse. ‘When Ford approached us, the Department of Trade and Industry was desperate for us to do a quick deal and sell. Ford wanted the relationship with Honda as a priority, as well as K-Series engine and our suspension expertise.’
As Harold adds, ‘One of the two big UK plants – Longbridge or Dagenham – would have needed to close. Probably Dagenham as it had worse industrial relations than us.’
However, the main reason was down to Honda. ‘The Japanese company would not work with us if Ford had bought us, so it would have not worked – as BMW found out nine years later.’ Honda would have pulled the plug and ARG would have unravelled very quickly. Without Honda, Ford would not have been interested as it would have cost too much to reorganise both Ford of Europe and ARG.
In any case, after Westland, the idea was dropped by the Government and the rest is history.
Harold Musgrove interview: in conclusion
Harold is clear what the conclusion is. ‘I would like to say that essentially I was proved right, with history and subsequent events. ARG was not viable unless it could produce 600,000 cars a year and own its parts division. Without AR6, the well-thought out model plan started to fall apart.
Project YY (later R8) with six derivatives gives a glimpse of the success that could have been there if AR6 had gone ahead and XX had been replaced in 1991. In 1994, R8 and its six derivatives sold 200,000 units at a premium price, just as Harold had envisaged. Under BAe, Rover was starved of vital investment just when it was needed and, when BMW took over, as predicted, Honda pulled out.
Cowley’s survival and the success BMW has made of MINI are really the last vestiges of ARG and a volume car with high margins not far removed from what AR6 was trying to do. It’s no coincidence that Harold Musgrove drives a MINI Clubman and still owns an original 1960 ex-press Austin Seven that he still uses at his holiday home in Cornwall.
You could say that, after 40 years, Harold Musgrove was Austin through-and-through and kept the hope of volume production and a wholly British-owned volume car maker alive up until the end of his tenure.
My thanks to Harold Musgrove for graciously giving up his time, the fascinating insights and the lunch we shared together – two Austin Apprentices from opposite ends of the company that gave Harold a career for 40 years and me a start in life that I will always be very grateful for. Thanks also to Ian Elliott and Keith Adams.
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