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 second part, we look back at 1960 – the year the BMC Mini really started to find its feet – and the time that its maker really needed trading stability…
In January 1960, BMC announced the Mini Van (above). This commercial derivative of the Mini would survive in production until 1983. When did you last see one, though?
The announcement was overshadowed, though, by wider political events: 0n 3 January the British Government signed what was known as the ‘Stockholm Convention’ in the Swedish capital to set up the European Free Trade Association (EFTA). This was an alternative trade bloc for those European states that were unable or unwilling to join the-then European Economic Community (EEC), which later became the European Union.
Joining Britain in EFTA were Austria, Denmark, Norway, Portugal, Sweden and Switzerland. This treaty established the progressive elimination of customs duties on industrial products, but did not affect agricultural or fisheries products. The main difference between the early EEC and the EFTA was that the latter did not operate common external customs tariffs, unlike the former: each EFTA member was free to set up its customs duties against, or its individual free trade agreements with, non-EFTA countries.
Exports to Europe opened up
The upshot of this was that it enabled BMC to sell its vehicles to six other European nations without fear of the prohibitive trade tariffs that it met when exporting to the seven nations of the EEC. Of the EFTA members, Sweden was the only other nation with a large motor industry.
The creation of EFTA, effective from 3 May 1960, created a larger market in which BMC could sell some of the extra vehicles it planned to produce. However, EFTA did not include the larger economies of France, Italy and West Germany which were firmly ensconced in the EEC.
The realities of BMC’s expansion plan dawned on the 2000 residents of Cofton Hackett, a village on the industrial fringe of Birmingham. BMC had proposed to extend the Austin factory at Longbridge on 51 acres of Green Belt land. The residents of Cofton Hackett were not best pleased by the news.
BMC – going for expansion
It was reported that George Harriman, the Deputy Chairman and Managing Director of BMC, had met Reginald Maudling MP, President of the Board of Trade, and was believed to have offered to direct part of the group’s expansion to new areas such as Scotland and Wales, provided that the Government sanctioned a further extension of the Longbridge factory.
Government policy was normally strongly opposed to further industrial development in the Birmingham area, where the lowest level of unemployment in Britain was combined with a high degree of industrial congestion. The Board of Trade granted industrial development certificates to firms there only when the applicants could prove that an extension was wanted for an integrated industrial process that could not be located away from existing plant.
The Austin factory, which covered 250 acres and employed more than 20,000 workers, was already by far the biggest in Birmingham. BMC had now applied to the Board of Trade for a certificate to allow them to expand the factory on adjoining land at Cofton Hackett which they already owned.
Moving away from the Midlands heartland
An added complication was that this land has been zoned by Worcestershire County Council as part of a proposed green belt which had yet to be approved by the Minister of Housing and Local Government. BMC had objected to the inclusion of their land in the restricted area, claiming that it was needed for the natural expansion of their factory.
On 18 January, Harriman visited Bathgate in West Lothian, Scotland, prompting speculation that the company was on the verge of announcing a new factory to be located in the area. On 21 January, BMC gave more specific details of its £49 million modernisation plan after a month of negotiation with the Government.
The company revealed that, over the next two years, it would spend nearly £21 million on building and equipping new factories to establish more than 11,000 new jobs in three areas of high unemployment: Merseyside, Scotland and South Wales.
Curing unemployment by social engineering
The British Motor Corporation’s scheme was regarded at the time as an outstanding contribution to the policy of encouraging industries to go to areas of high unemployment. BMC was not the only motor manufacturer with expansion plans. Ford, Rootes Group and Vauxhall were all looking at substantially increasing their production capacity. In addition to the three new factories, BMC announced that another £26 million would be spent on extensions to their existing factories in the Midlands and at Oxford.
The ‘package deal’ with BMC was the first of the motor industry’s big expansion schemes to be concluded and the Government had achieved its main aim of diverting new capacity to areas where the social and economic need for it was most acute.
George Harriman, the Deputy Chairman of BMC, said: ‘We may as well be frank. It was our intention to expand alongside our existing factories, but the Government wanted us to go to areas of high unemployment. After considerable negotiations conducted in a very cordial atmosphere, we have reached what I hope will be a successful conclusion.’
Planning output for a million a year
In a nutshell, BMC planned to raise its annual output of vehicles from 750,000 to one million within two years by extending its car and light commercial vehicle production in the Midlands and by moving the manufacture of heavy commercial vehicles and tractors from Birmingham to Scotland. It planned to build a new factory costing £8.8 million and employing 5600 people at Bathgate in West Lothian.
Another new factory, costing £7.5 million, was to be sited between Llanelli and Trostre, near the sheet steel manufacturing resources of west South Wales. This plant, which together with an extension of the existing radiator factory at Llanelli would employ 4200 workers, was intended to give pressings and major sub-assemblies for the corporation’s Midland car factories.
The third of the new factories for the labour surplus areas would be a £4.2 million plant at Kirkby, near Liverpool. employing 1500 workers. BMC intended to move the domestic appliance production of its car bodies branch, Fisher and Ludlow Limited at Castle Bromwich, which made sink units, washing machines, spin dryers, vending machines and refrigerators.
BMC was also to build a new works at Swynnerton, in north Staffordshire, for the packing of knocked-down sets of vehicle components for assembly overseas. This establishment would employ 1000 workers.
The new factory buildings on Merseyside and in Scotland and Wales would be erected for BMC by the Government at a cost of £9.5m on a 15-year amortisation basis. The new plant would provide about 75 per cent of the extra area required by the corporation for expansion, the rest coming from extensions costing £26 million at its existing factories including Longbridge, Washwood Heath and Erdington, Birmingham and Oxford.
The rest of the £49 million expansion scheme would be on overseas projects. Labour then engaged on processes to be transferred to the new areas would be redeployed in the reorganization of car and light commercial vehicle output. ’We shall provide a job in the reorganisation for every one of the 56,000 men we have on our books at the moment,’ said George Harriman of BMC.
Behind the PR spin was the reality that BMC could not build anything like the 750,000 vehicles it claimed it had the capacity to manufacture in 1960.
Strikes affect car output
Shortly after the announcement, BMC car production was brought to a standstill by a two-week strike of 55 electricians at the Washwood Heath plant, resulting in at least 32,000 workers being laid off. On 3 May 1960, the day EFTA came into being, BMC officially arrived on Merseyside when two 24-ton mechanical graders ploughed through a 50-acre wheat field which would become the site of a new £3.23 million Fisher and Ludlow domestic appliance factory.
On 9 May, Lord Nuffield, the President of BMC, made one of his rare public appearances, when he attended a luncheon at the Royal Automobile Club to receive the Dewar Trophy on behalf of the British Motor Corporation – this was awarded jointly to both BMC and Alec Issigonis for the development of the Austin Mini Se7en and Morris Mini Minor.
Lord Nuffield said that these cars had shaken the world, and George Harriman said that more than 35,000 of them, valued at £10 million, had already been exported, including 5000 to the United States.
New blood for BMC management
On 13 May, BMC announced the appointments, under its expansion policy and establishment of new factories, of four new Directors, including two appointments to the board of the corporation. Bill Davis, an ex-Austin apprentice, joined the board and became Director of Production for the Austin and Nuffield groups, and he also joined the Austin Motor Company board after serving as a local Director.
The other board appointment was Robin A Stormonth-Darling, a partner in the firm of Laing and Cruickshank, and a Director of Austin. In addition, two other ex-apprentices joined the Austin board. They were Richard D. Niven, who became Director of Production of BMC and James W.R. Penrose, General Sales Manager since 1954, who became a local Director.
The new BMC plants on Merseyside and in South Wales would be controlled by Fisher and Ludlow, of which Edward Price was Deputy Chairman. On assuming the extra responsibilities he relinquished the offices of Joint Secretary of BMC and Director of Austin. In the heavy commercial and tractors section, Keith H. J. Sinnott, an ex-Wolseley apprentice, was appointed Managing Director of the new BMC subsidiary which was to operate the factory at Bathgate in Scotland.
Production rises sharply
Shortly after this, Sir William Lyons of Jaguar Cars demonstrated how to expand production capacity without being forced by Government to build a factory hundreds of miles from the centre of operations. Jaguar bought out the bankrupt Daimler concern almost on its Coventry doorstep.
BMC announced that it had achieved a new peak production record of 650,577 vehicles during the 1959-60 financial year, which ended on Sunday 31 July 1960. The figure, which was provisional, showed an increase of 35 per cent over 1959’s total of 486,048, and of 30 per cent over the previous record in 1957-58. The company also announced that the number of vehicles exported to the North American market – 110,340 – was considerably more than had been anticipated.
By September, BMC was claiming that Mini production was running at 3300 cars a week. The in-house magazine, BMC World, that month published an interview with the Chairman, Sir Leonard Lord. He was asked about selling to Europe. ‘It certainly isn’t easy to sell cars in Europe, which is extremely price-and-quality-conscious, and has its own big car manufacturers; but we have just got to do it, as a corporation and as a nation,’ it said.
Embracing European trade
The editorial piece continued: ‘As you know, six countries (France, Western Germany, Belgium, Italy, the Netherlands, and Luxemburg) have linked up in a “Common Market”. They will gradually get rid of all tariff barriers between each other, but keep up a common tariff-wall against the outside world.
‘Britain could not join because it would have meant putting up a tariff against the Commonwealth as part of the “outside world”; but we have joined, with six surrounding countries, in a Free Trade Area, in which, while there will be free trade between them, each country will keep up its own tariffs against other countries outside.
‘BMC welcomes this, because the “outer seven” area includes in the Scandinavian countries some of the best European markets. We want to see a link-up between the Common Market and the Free Trade Area. We have made a manufacturing arrangement with Innocenti of Milan which will enable our cars to be produced inside the Common Market – and sent to countries like Austria that are in the Free Trade Area. The Farina styling of our cars has proved popular, and proved that we were right in keeping in line with European taste and trends.’
More Mini variations
On 16 September another variation of the Mini platform was announced, the estate, based on the van announced in January. The new model was available as the Austin Seven Countryman and the Morris Mini Traveller.
By the autumn of 1960, a slowdown in sales in the USA was affecting the British motor industry with MG and Triumph being the first to feel the pinch. The climate was not helped by one of the British Government’s periodic credit squeezes.
It was reported at the time that production at BMC’s sports car factory at Abingdon in what was then part of Berkshire, had been cut by about half but no one had been laid off. A 60 per cent cut in the production of MGA bodies for Abingdon had led to between 200 and 300 men at the BMC Morris bodies factory at Coventry working for only one and a half to two days a week.
It was understood that, instead of two lines producing the MGA at Abingdon, one was now being used for the assembly of Morris vans. One of the two Austin Healey Sprite lines was being used for the production of the Morris Traveller. The Austin Healey 3000 line was still in operation, but production was about half what it was.
At the time BMC was continually afflicted with niggling stoppages which, for a time, restricted its production ceiling anyway, thus delaying the need for short-time working at its big plants, and unlike Standard-Triumph International which was by then, financially speaking, on the rocks and heading into the embrace of Leyland Motors.
On 28 September, BMC announced estate car versions of the ADO9 Austin A55 and the Morris Oxford giving them the names of Countryman and Traveller (above). As October began BMC continued its attempt to get permission to build a factory at Cofton Hackett.
More trouble in the Midlands
Eric Blain, who appeared for BMC at an inquiry, suggested that a disputed area of some 46 acres at Cofton Hackett should be allowed to stay in the Green Belt on condition it was agreed that special consideration should be given if this land was needed for ’the reasonable requirements of expansion’ of the neighbouring Austin motor works.
Opening the case for BMC, Mr Blain said that, if the 46 acres were included in the Green Belt, the future development of the Austin works would be jeopardized if not positively prevented. There was almost a firm commercial programme for this land and the factory it was hoped to build would be a vital link in the chain of national prosperity.
The production of vehicles at the Longbridge works had risen to 324,127 in 1959. This was half the corporation’s total output and the expansion programme envisaged that a million vehicles a year would be turned out by BMC, half of them at Longbridge, and that the value of exports would rise from an existing figure of £128 million per annum to £220 million.
Longbridge to get a makeover
Many of the present buildings at Longbridge were out of date and a big rebuilding programme faced BMC, together with the need to increase parking space for employees’ cars. Mr Blain emphasized that a settlement along the lines he had suggested would leave BMC, the County Council and those with local interests who were objecting with the same rights if the corporation in future submitted a plan for a new factory.
However, in the event, Longbridge never ever came near to producing half a million vehicles a year, 376,000 was as good as it got and bizarrely one of the best years was 1997, near the end of the plant’s life. On 12 October 1960, BMC announced it was introducing short-time working in its factories in five days time. BMC production was being cut by 12.5 per cent – 2000 fewer vehicles a week – but production would still be higher than it was 12 months before.
The company blamed an easing off in demand, caused mainly by ‘a general pause’ in world trade, a partial return to seasonal trading, hire purchase restrictions and the coincidence of those restrictions with expanding production in the motor industry generally.
…and production continues to falter
Every effort was being made to keep intact the experienced labour force on whose skill the corporation relied. Production of some models, including the ADO15 Austin Mini Seven, the Morris Mini-Minor, and all heavy commercial vehicles, was, in fact, being increased, but there had been a ‘flattening out’ in the demand for 1.5-litre models and the bigger cars.
A corporation spokesman said: ‘It is anybody’s guess how long these difficulties will last. We hope there will not be any redundancies, and our great aim is to keep everybody employed.’
Although 38,000 workers in BMC would continue on a five-day week, 20,000 would go on to a four-day week and 3500 on to a three-day week. There was no question of slowing down the £49 million expansion plan announced earlier in the year and aimed at stepping up production to one million vehicles a year in two years.
Ironically, on the day the short-time working began, more than 8000 employees were idle because of unofficial strikes in Midland factories. Production of the ADO15 Austin Mini Seven at Longbridge and the Morris Mini-Minor at Oxford had ceased. The production of tractors and commercial vehicles had also stopped because of strikes. These were the vehicles for which demand remained buoyant.
However, these disputes were soon resolved.
Issigonis shares his secrets
On 25 October, The Daily Mirror published an interview with BMC Designer Alec Issigonis, who explained his design philosophy. ‘We have got to produce cars that will carry a given number of passengers in comfort, but will occupy less road space than contemporary cars. People need a certain amount of room to be comfortable and you cannot cut down on that. The only things left that can be rearranged to save space are the engine and transmission.’
On 9 November, it was announced that BMC had signed an agreement with Sava, the Spanish motor firm, to cooperate in vehicle manufacture. The agreement, announced by Sir Leonard Lord, covered the next ten years. Sava, which manufactured commercial vehicles at Valladolid, would increase facilities there to achieve the substantial volume of production required by the agreement and would soon be manufacturing BMC vehicles. The BMC-Sava trucks would probably be available for delivery in Spain in early 1961, so it was reported.
The next day further drastic cuts in the working hours of British Motor Corporation production workers were announced. From the next Monday, 14 November, about two-thirds of the corporation’s 61,500 workers would be on short time, most of them on three days.
Further working-hours cuts
Some 23,500 BMC employees had been on either four or three-day working since 17 October and the company stated that about 60 per cent of them were now to lose a further day. About half of the 38,000 who had been able to continue on a full five-day week would go on to four days. The reduced production did not affect the corporation’s successful ADO15 Mini, its van and estate car versions.
An official referred to ‘the tremendous demands for the commercial vehicle versions of the small cars’. Workers at the Morris Motors cars branch, Cowley, Oxfordshire, and the MG factory at Abingdon, Berkshire, were going on to a three-day week.
The same day as the new BMC production cut backs came into force Sir Henry Spurrier, the Chairman of Leyland Motors contacted Alick Dick, the Managing Director of the ailing Standard-Triumph International, to discuss a takeover bid. Leyland had specialised in targeting export markets for their trucks and buses and was therefore not as dependent as the likes of BMC and Standard-Triumph International on the home market and the consequences of a domestic credit squeeze.
The numbers are in…
On 21 November, BMC released its yearly report for the 1959-1960 financial year. It produced 669,123 cars and lorries, which boosted BMC’s turnover to £346 million. It made a pre-tax profit of £32,983,884 which after tax was reduced to £13,431,965. BMC made a profit of £49.29 for every vehicle it made.
The following day it was reported that an application by the British Motor Corporation to put up a 450,000 square feet spare parts warehouse at Kidlington, near Oxford, at a cost of £3.45 million had been rejected by Oxfordshire County Council.
On 23 November, about 200 workers from the motor industry in the Midlands held a demonstration at Westminster. A resolution was passed calling for prompt reduction of Purchase Tax, the freeing of hire purchase restrictions and the setting-up of a national committee on the motor industry upon which the trade unions would be represented as well as the motor manufacturers and the Government. After the meeting , which was addressed by two Coventry MPs, Maurice Edelman and Philip Hocking, as well as Harold Wilson MP, the workers lobbied individual MPs.
Political intervention required…
Harold Wilson explained that the Parliamentary Labour Party had set up a special working committee, which was studying and preparing a policy for the motor industry. Initial suggestions were that either a development council, which would include independent members as well as both sides of industry, should be set up, or else a working party on the lines of those appointed by Sir Stafford Cripps just after the Second World War. Then it might be possible to look at the problems of the industry and its expansion.
George Turnbull, then Standard-Triumph International’s Divisional Manager, Car Production, was of the opinion that the regular credit squeezes initiated by the Government were hugely damaging to the British motor industry. Interviewed in the 1980s he said: ‘In those days it was just a little fiscal regulator. If the economy was overheated, put some more Purchase Tax on motor cars.
‘The Government was totally oblivious and if I was ever going to apportion blame for the parlous state that the British motor industry got into, you have got to put it at the door of the Government. I don’t care which complexion or which colour.
‘The reality is that they didn’t handle the industry in a sensitive way. It was the main primer for so many service industries; it was the main employer of labour; it was the biggest manufacturing industry by a mile and they treated it with derision. There’s no other word for it.
‘From one day from virtually full employment, I had got to sack 3000 men, which I did with great reluctance. It drove more and more men into militant unions for protection.’
A Mini success in a frustrating year
Thus, 1960 ended amid another credit squeeze. The real success story for BMC in the year had been the Mini. The company produced 116,577 in the year of which around 50,000 went for export. Compare this with the best year for Austin A35 production, which was 1958/58 when 81,930 were churned out of Longbridge, and one can see that customers were lapping up the Mini.
Maybe sales had been slow to start with, perhaps that was really down to inadequate dealer supplies, but the car was a hit by British standards, and this was way before the BMC Competitions Department had worked its magic with the Mini. The success of the ADO15 soon brought it to the attention of Ford UK’s Senior Product Planner, a native of Walsall, Terry Beckett.
He later commented: ‘We were very frustrated from 1959 onwards with the advent of the Mini. This was in view of the fact that historically, since the mid-1930s and the Ford £100 car, we had pre-eminence in that sector of the market by offering the lowest-priced car which we coupled with value for money service. I can remember in one month in 1960, the Mini achieved a 19 per cent market penetration. That was just one model.’
The Mini tear-down explained
One of the legends about the Mini is how Ford bought an example and took it apart down to the spot welds to see how BMC could sell it for such a low price – it has, though, never been stated whether the car Ford took apart was the basic or De Luxe model.
Terry Beckett recalled: ‘We then determined how much it would cost us to build it. On our cost analysis, which we thought was ahead of their’s, we really didn’t see how the car could be produced in this way to make a profit.’
According to Beckett, Ford calculated that BMC was losing £30 on every Mini it made. He added: ‘I could see ways in which we could take cost out of the Mini without in any way reducing its sales appeal… BMC could have priced it at £30 more, and not lost any sales at all. You can track the decline of BMC from that single product: it took up a huge amount of resources, it sterilised cash flow and it was a pretty disastrous venture.’
The notion that the Mini was a loss-maker has received widespread currency over the years, but more recently writers such as Chris Cowin have argued that, once annual production exceeded 200,000, the Mini made money. In 1960, when Ford dissected a Mini, the notion that a small British car would achieve that kind of volume probably seemed nonsensical, so perhaps, at that time, the Mini was a loss-maker.