History : The Austin-Morris story – Part Eleven : January to April 1974

Ian Nicholls, AROnline‘s historian-in-residence, tells the story of Austin-Morris, and its part in the downfall of the British motor industry.

Here, in the eleventh part, BLMC starts to the feel the pinch in the wake of the Energy Crisis, and the underwhelming launch of the Austin Allegro.


The Austin-Morris story: a very British revolution

Austin Allegro

On 1 January 1974, the Three-Day Week commenced. This was one of several measures introduced by the Conservative Government of Edward Heath to conserve electricity, the production of which was severely limited due to the overtime ban by coal miners. The effect was that, from 1 January 1974, commercial users of electricity would be limited to three specified consecutive days’ consumption each week and prohibited from working longer hours on those days.

On 10 January, Lord Stokes, the Chairman of British Leyland, appealed to his 170,000 employees to work with the management to pull the company through the worst crisis Britain had faced for nearly half a century. In an obvious reference to a recent militant statement by BLMC Shop Stewards, he wrote in the group newspaper British Leyland Mirror: ‘Everybody has to play a part and agree to a temporary bending of the rules. Some old customs and practices will have to go out of the window.’

Despite the crisis, British Leyland would still go ahead with the investment programme planned for the next five years, calling for capital expenditure of between £400 million and £500 million.

However, British Leyland was now facing a new challenge from shopfloor representatives in its 56 plants up and down the country. This followed demands by the unofficial, but powerful, British Leyland (Motor Corporation Combined) Trade Union Committee (BLTUC) for full five-day-week earnings in spite of the fact that only three days a week were being worked.

Shortage of electricity leads to fewer cars

At Cowley its 19,000 workers had been allocated Thursdays, Fridays and Saturdays as ‘power-on’ days. Its workers were therefore not required to report for work on a Monday. However, after a weekend meeting of between 2000 and 3000 ‘indirect’ workers – those not involved in assembly operations – about 300 men turned up at the plant on a Monday and staged a sit in until their normal shift ended at 4.00 pm.

The men said they objected to being shut out by the company and were pressing for the retention of a special agreement on lay-off pay. Longbridge was being run on a split basis with some operations taking place in the first half of the week and others in the second. After failure to agree on the four-day guarantee at a union/management meeting, the ‘indirect’ workers at Cowley met on 15 January and voted to ban all overtime.

In practice, this meant that Thursday and Friday shifts would be cut to eight hours and there might not be any Saturday working. Because these workers did key jobs, including electrical work and supplying the assembly areas with components, all other production workers would have to be laid off.

Three-Day Week complications

By 18 January the Three-Day Week operations at Cowley were halved because of internal labour disputes. No vehicles were produced on the night shift and the assembly lines would also be shut the next day, one of the plant’s ‘power-on’ days under the emergency regulations.

This meant that 8500 workers were idle, losing not only their normal pay rates but overtime premiums for weekend working. On 30 January, after a Government announcement of changes in the three-day working week arrangements, British Leyland decided to end the troublesome and costly Saturday shift working for the 19,000 workers at Cowley.

The entire Cowley complex, including both the body pressing shops and the car assembly areas, opened this Wednesday morning and planned to work until Friday night. The political crisis confronting Britain deteriorated. On 4 February the National Union of Mineworkers voted to go on strike.

1974 coal strike
The 1974 Miners’ Strike (Image: Rules, Fools and Wisemen)

The £3m-a-week loss maker

British Leyland was now reported to be losing £3 million a week because of the power crisis. Lord Stokes said that industry would face serious problems through the Miners’ Strike, but the Government had nothing to be ashamed of. On 5 February British Leyland announced that output of Morris Marinas at Cowley would be cut to a maximum of 4250 a week because of labour and parts shortages and an expected drop in the home market. However, while the Three-Day Week continued, output of the model would be cut to 2500 a week.

On 7 February the Prime Minister Edward Heath called a snap General Election to be held on 28 February 1974. He hoped for a fresh mandate from the electorate for his Conservative Party. The issue at stake as he saw it was ‘who rules Britain’, the Government or the trade unions. Three days later the National Union of Mineworkers began an all out strike.

Lord Stokes was in the news again on 12 February. At the Savoy Hotel in London the British Leyland Chairman was bemoaning his company’s value. His firm – ‘by far the largest exporting company of any kind in this country’ – was valued on the Stock Exchange at only £90 million, ‘the value of a single office block in the City of London. Which is more valuable to the nation: British Leyland or one office block?

‘The rules of the game may well have to be changed to alter a situation where share prices of major wealth earning companies are low, compared with some of the extravagant figures realised for less essential and less wealth producing activities.’ But Lord Stokes had to admit that his company could not make profits while working at only 60 per cent capacity in Three-Day-Week Britain. In the 1972-73 financial year British Leyland made a pre-tax profit of 51.3 million from manufacturing 1.131 million vehicles, a profit per vehicle of £45.35.

Economic headwinds start to kill British Leyland

At first glance British Leyland seemed to be making progress, but these calculations do not take into account inflation. Back in the 1967/68 financial year, British Leyland made a profit of £36 per vehicle, which taking inflation into account, was worth £51.63 in 1973. So, despite appearances and all the Cost Controllers transfused into British Leyland, its profitability was actually going backwards – and this was despite car production having increased 7.71 per cent in five years.

As related earlier, in real terms, the Mini was being sold at its lowest-ever price, which probably did not help matters either. Another black mark against British Leyland was that UK car sales were 50 per cent larger in 1973 than in the year of the company’s creation and this was its peak year of production. It was the best it could do and it was not good enough.

On the plus side, British Leyland had earned £744 million overseas in 1973. Lord Stokes’ critics responded by pointing out that Britain had to import a lot of fuel and raw materials to keep British Leyland’s factories going.

UK money starts flooding overseas

Meanwhile, the bankers, traders, brokers, insurance and investment people in those £90 million office blocks earned the nation at least £6 billion overseas in 1973. Simply put, British manufacturing industry offered a poor return on the investment compared with the services sector. The whole notion that the manufacturing sector was a bad bet and that nurturing the service industry offered the long-term prospects for economic growth came from this grim period of British history.

On the long term, Lord Stokes was confident that British Leyland was ‘in a relatively good position.’ Indeed, the accounts showed Lord Stokes had bought a further 41900 British Leyland shares, bringing his holding up to 81500, worth about £12,000 in 1974 prices.

Lord Stokes said: ‘If I had some more money I would buy more shares now.’ British Leyland shares now languished on the Stock Exchange at 15p each.

Meanwhile, work on new products begins

Austin-Morris began work on a revised ADO20 Mini Clubman estate in February with the intention of launching it at the 1976 UK Motor Show. The battery was moved to the engine compartment and the entire rear floor structure, including the side storage boxes, was re-jigged to lower the rear seat. Meanwhile, the body was modified to have one-piece fixed glazing with extractor vents on the rear pillar, along with full-width, wrap-around bumpers front and rear and a one piece lift-up tailgate.

One semi-engineered prototype was built, but the project fizzled out in May 1975. Having baulked at upgrading the Mini because they believed it was an unprofitable venture, British Leyland was having to react to the new European small cars which were now appearing, instead of setting the agenda.

That same month, the ADO16 Austin De Luxe was launched in Spain by Authi. Fitted with a 998cc 55bhp A-Series engine, the grille was similar to that fitted to the Austin 1300. On 28 February, British Leyland announced it was selling its Spanish car manufacturing business Authi to General Motors for £26.7 million in cash.

Austin 1300 De Luxe

Spanish expansion plans dashed…

According to press reports, British Leyland had firm intentions of expanding its Spanish interests. It was thought that the firm was going to invest £30 to £40 million in Authi as part of its five-year investment programme.

Just before Christmas 1973, General Motors approached British Leyland with the offer. General Motors saw the Authi acquisition as a way into the Spanish market, possibly in response to the news that big rivals Ford were to invest in Spain. The deal was subject to Spanish Government approval and final sale and purchase agreements being signed between the two companies.

Net assets of the Authi business were put at £17.6 million, and the latest published results up to the end of September 1973 showed that the company was still losing money, a loss of £2.2 million was reported for the 1972-73 period. British Leyland still proclaimed it was going ahead with its five-year £500 million spending programme of which £100 million was earmarked for the current year, the £26.7 million Authi sale was a retreat from the expansion into Europe, despite all the gloss applied by the BLMC PR machine.

BL’s fortunes start to unravel

Although British Leyland had liquid assets of some £50 million at the end of 1972-73, John Barber, the corporation’s Managing Director, had admitted that liquidity had deteriorated since the year-end under the impact of the Three-Day Week. British Leyland’s plants in Britain were now working at more than 60 per cent capacity. BLMC could not make profits at this level of production. Some analysts believed the group was losing £10 million a month since the Three-Day Week had been in force.

For British Leyland, the three Authi plants at Los Corrales, Pamplona and Sampedor, represented the smallest of its European operations. In the previous year Authi produced 43,000 cars, of which 34,000 were for the home market. The year before it exported 6000 Minis to Switzerland. Because of the stringent Spanish regulations on car imports, the Authi cars comprised almost 100 per cent locally manufactured components.

With the Spanish car market booming, some observers estimated that Spain’s car makers would be producing well over one million units a year by 1980.

Selling Authi to GM: ‘mutually advantageous’

John Barber has misgivings about BLMC's size

John Barber (above), Managing Director of British Leyland, said: ‘This is a mutually advantageous deal for General Motors and ourselves. It gives GM an entree into Spain with already existing plants and enables us to continue to build up increasing support for our dealer network through the new Leyland sales company.’

The same day as the Authi sale to General Motors was announced Britain went to the polls in the General Election. It produced a hung Parliament. The incumbent Conservative Government of Edward Heath polled the most votes by a small margin, but the Tories were overtaken in terms of Commons seats by Harold Wilson’s Labour Party due to the decision by Ulster Unionist MPs not to take the Conservative whip.

It would later be claimed by her critics that future Prime Minister Margaret Thatcher divided the British nation, but the February 1974 General Election demonstrated that Britain was already a deeply divided country. Opinions were becoming strongly polarised on the left and right, with no room for compromise. Unpalatable though it was, Britain was divided by class, region and status. And the battleground for this conflict would focus in the main on British industry.

As the dust settled on the election result, Edward Heath tried to hang on to power by negotiating with Jeremy Thorpe’s Liberal Party. Meanwhile, for British Leyland it was business as usual, even if the Three-Day Week was still in force.

Political divisions cause further turmoil

Conservative Prime Minister Edward Heath resigned on 4 March shortly after the Liberals rejected his coalition terms, allowing Harold Wilson to return to power as the leader of a minority Labour Government. The defeat of the Heath Government was later seen as a victory for the Trade Union movement, which had brought about political change through industrial action. It was the triumph of people power over a regime that had sought to restrict the rights of working people and their demands for a living wage at a time of worsening inflation.

The Heath Government had contributed greatly to its own demise. An independent pay review during the election campaign concluded that the miners were underpaid, and the Three-Day Week which the Government had inflicted upon the nation caused great hardship to both workers and the business community, who just wanted things to get back to normal. The situation at British Leyland, operating at 60 per cent capacity, perfectly illustrated this.

However, the incoming Labour Government of Harold Wilson was not the same pragmatic administration of 1964-70. Its February 1974 General Election manifesto was co-written by former Technology Minister and new Trade and Industry minister, Tony Benn. He had moved to the left since 1970, citing his experience in government as the reason. He later said: ‘As a minister, I experienced the power of industrialists and bankers to get their way by use of the crudest form of economic pressure, even blackmail, against a Labour Government. Compared to this, the pressure brought to bear in industrial disputes is minuscule.’

Did he include Lord Stokes in his resume?

Labour Government promises hint at nationalisation

The Labour Party’s manifesto advocated widespread nationalisation. Benn said: ‘The British people, both as workers and consumers, must have more control over the powerful private forces that at present dominate our economic life. Wherever we give direct aid to a company out of public funds we shall in return reserve the right to take a share of the ownership of the company.’

He added: ‘We shall also take shipbuilding, ship repairing and marine engineering, ports, the manufacture of airframes and aero-engines into public ownership and control. We shall also take over profitable sections or individual firms in those industries where a public holding is essential to enable the Government to control prices, stimulate investment, encourage exports, create employment, protect workers and consumers from the activities of irresponsible multi-national companies, and to plan the national economy in the national interest. We shall therefore include in this operation, sections of pharmaceuticals, road haulage, construction, machine tools, in addition to our proposals for North Sea and Celtic Sea oil and gas.’

Many within British Leyland felt that nationalisation was on the cards for them. The manifesto also advocated the creation of a National Enterprise Board to oversee these state-owned companies. On the subject of industrial relations, the manifesto said that the new Labour Government would: ‘Repeal the Industrial Relations Act as a matter of extreme urgency and then bring in an Employment Protection Act and an Industrial Democracy Act, as agreed in our discussions with the TUC, to increase the control of industry by the people.’

Tony Benn on the future for Britain

Industrial democracy was a 1970s phrase for allowing employees more of a say in the running of their companies. The manifesto seemed to define ‘people’ as Trade Union members in a country where the ‘closed shop’ functioned widely.

In Tony Benn’s world view, bankers, industrialists, property speculators, corporate raiders and other ‘powerful private forces’ were working against the interests of the British people who were in turn represented by the Trade Union movement. Tony Benn was seen by many as the most dangerous man in Britain for his new found left wing zeal, and this manifesto saddled the Labour Party with an anti-business image that it took a generation to shake off.

The Industrial Reorganisation Committee of the late 1960s, where private companies had been persuaded to merge to create world-class enterprises, had been superseded by a proposed programme of nationalisation to give the state a direct input into industrial policy, cutting out avaricious private shareholders. The detailed examination of a political manifesto may seem rather excessive, but it was to have far-reaching consequences for British Leyland, especially the phrase: ‘Wherever we give direct aid to a company out of public funds we shall in return reserve the right to take a share of the ownership of the company.’

With capitalism seemingly in crisis, it looked as if Tony Benn’s time had come.

The winds of change were coming

For many activists the February 1974 General Election was a minor revolution, a blow against industrial oppression in a Britain where asset strippers such as Slater Walker, founded by a Tory cabinet minister and a British Leyland Director, were seen as villains who lined their own pockets at the expense of ordinary people.

With a new Government in place, the Miners’ Strike was rapidly settled on 6 March by Harold Wilson’s new protege, Energy Minister Eric Varley, an NUM-sponsored MP. The new Chancellor of the Exchequer, Denis Healey, was due to deliver a budget after only three weeks in the job.

John Barber, the Managing Director of British Leyland, gave a warning on 13 March that a tough budget could reduce the United Kingdom car market in 1974 to below one million units. Speaking from the British Leyland stand at the Geneva Motor Show, he said that a policy of cutting home consumption by, for instance, an increase in Value Added Tax or Car Tax, would be short-sighted and do nothing to help the balance of payments.

The industry needed a sound home base to maintain its exports. The fuel situation and petrol price rises had already cut demand for cars and, even if the budget did not bring in further restrictions, domestic sales were likely to be only 1.1 million compared with 1.7 million in 1973. As events turned out, the UK car market for 1974 was 1.26 million, which although down on 1972 and 1973, the ‘Barber Boom’ years, was only slightly down on that of 1971 and well above 1965, which had been BMC’s best year.

Barber predicts a brighter future

John Barber predicted that, with a return to a five-day week, British Leyland would continue to hold nearly 40 per cent of the British market and he did not see imports rising much above 22 per cent. On exports prospects he said: ‘The whole European car market is down significantly on last year and things are going to be tougher for everybody. But I still think we shall sell all the cars we can make.’

British Leyland still intended to go ahead with its £500 million expansion programme and John Barber did not foresee a switch to smaller cars. ‘But we have got to make our cars more economic. In the next five to ten years there will be quite dramatic improvements in fuel consumption on cars like the Marina and the Allegro, even if performance has to be sacrificed.’

The Austin Allegro, launched by British Leyland as a car for Europe, began its attack on continental markets in this week. It went on sale first in Switzerland, Belgium and Holland with all the main European countries selling it by the autumn of 1974. This was the first mention of the Austin Allegro in the news media for months. Quite clearly the British Leyland publicity machine had little to crow about.

Do you think the Austin Allegro is the greatest BLMC car of them all? If so, vote for it as your favourite, below…

Tax rises predicted to dent sales

As it turned out Chancellor Denis Healey raised Income Tax by 3 per cent taking the basic rate to 33 per cent. A new tax band at 38 per cent was introduced and the top rate was increased from 75 to 83 per cent, causing an exodus of the wealthy. Corporation Tax was increased by 12 to 52 per cent. VAT of 10 per cent was to be charged on petrol.

Six months after he quit British Leyland, George Turnbull was in the news again. South Korea had decided to create from scratch a domestic motor industry and to assist them they had recruited George Turnbull, the former Managing Director of Austin-Morris and British Leyland.

During the coming two weeks, full-page advertisements would appear in local newspapers serving motor manufacturing centres in Britain. Senior Motor Industry Engineers were being offered tax-free salaries up to three times their present earnings, Chief Engineers specialising in body, chassis, plant lay-out, development and tooling would be tempted by free cars, free western-style housing, cheap household help, free travel back to Britain for four weeks’ annual holiday and undisclosed but ‘substantial’ fringe benefits.

Biggest of these were tax-free concessions on earnings for approved foreigners working in South Korea. A spokesman for George Turnbull said on 15 March: ‘This is only the first phase of the recruiting campaign. After Chief Engineers we shall be looking for all the other key people necessary to start a motor industry from scratch.’

Interestingly, there seemed to be no job vacancies for Cost Controllers… George Turnbull would leave for South Korea in April 1974.

George Turnbull - 1972

British Leyland’s lost production and profits

On 21 March Daniel Richmond, the former BMC consultant and boss of Downton Engineering died. The true cost of the Three-Day Week was revealed four days later.

British Leyland had lost production worth £100 million during the 12 weeks for which the Three-Day Week had continued. This sent the group into the red in the first half of its trading year, and put a question mark on profits for the whole 12 months. During the go-slow, which also hammered many of British Leyland’s suppliers, vehicle production was down by 100,000.

Lord Stokes told shareholders that the group had been operating at around 60 per cent capacity during the Miners’ Strike. No engineering company the size of British Leyland could expect to operate profitably at that level of output, he said. British Leyland made £51 million in 1972/73, but the chance of making any money at all in 1973/74 was now in doubt

Barber’s last stand

‘If we get a fair run in the second half of the current year we should make good some of the earlier losses, but it is not going to be easy. I believe it will take some time to get us fully back on course,’ said Lord Stokes. He would not say how big the first half losses were, but his deputy, John Barber said later: ‘When you talk of heavy losses you do not mean £1 million.’

He also said: ‘If we have uninterrupted production we could well be able to pull back into profit overall at the year’s end.’ Now British Leyland was threatened by the possibility of industrial action by engineering workers.

‘It could have disastrous results which are bound to have repercussions throughout the motor industry,’ said Lord Stokes. He also reported that the Energy Crisis cutback had left the way wide open for overseas competitors in export markets.

The end is nigh…

The Three-Day week had knocked a £30 million dent in British Leyland’s profits and valuable export customers had been lost, some of them for good. ‘They haven’t been prepared to sit and wait for our cars and will now tend to stay with their new suppliers,’ said John Barber. He conceded that British Leyland’s bank balances had drained away during the prolonged crisis.

Heavy borrowings were believed to have taken their place. The Budget by new Chancellor of the Exchequer Denis Healey, far from providing relief, had piled on further problems. The increase in National Insurance contributions alone would cost British Leyland nearly £4 million a year.

The 30 per cent increase in electricity charges and 15 per cent rise in rail freight rates would add significantly to the group’s costs. And sales were bound to be affected by VAT on petrol and a 25 per cent increase in steel prices. The latter would add at least £50 to the cost of a £1000 car and it was little more than a month since prices had increased by about 10 per cent.

Workers appear to be less militant

Lord Stokes pointed out proudly that the number of man-hours lost through internal disputes fell 41 per cent the previous year. But the group was losing millions of man-hours a year through external disputes. Even in 1974’s depressed conditions, the company claimed it could not produce enough vehicles to meet demand in the home market and overseas.

‘We can sell all the vehicles we can make. The first thing is to restock our dealers and refill the export pipelines,’ claimed John Barber.

The production difficulties – largely attributable to strikes – helped explain why British Leyland had slipped down the world league since it was formed. In 1968 it was the second-biggest motor manufacturer outside the United States. Now there were four companies – Volkswagen, Fiat, Toyota and Datsun, which produced twice as many cars as British Leyland. This was a disappointment to those who hoped that bringing together Austin, Morris, Triumph, Rover and Jaguar would ensure that Britain stayed in the first division.

Meanwhile, Barber still talks about expansion

However, John Barber insisted that the group, ‘has never been in the super-high volume business. We don’t have any aspirations to be big for the sake of being big. We think we have our own special niche in the market with good quality, reasonable volume cars. We plan to expand output by about 40 per cent over the next few years and with this modest expansion we will remain viable and profitable,’ he said.

Lord Stokes had not been able to invest as much as he would have liked because of the group’s poor profitability prior to 1972/73. The upshot was that each British Leyland worker was still backed by less than half the capital that backed each man at Fiat, Volkswagen and Ford of Britain. This, in turn, made it difficult to bring productivity up to the level of other companies. The value added by each employee was 75 per cent lower in Britain than in Germany, and profits were held back. That meant there was less money to invest in plant and equipment and the company stayed stuck in the slow lane.

British Leyland’s expansion programme to spend £100 million a year was quite modest by world standards. Ford of Britain, which was far smaller and did not suffer years of neglect, was now spending £65 million a year.

Future model programmes put back

ADO74 project

However, British Leyland had already admitted that the body-blow to profits would force it to spread the programme over seven years instead of five, which was equivalent to trimming the annual rate by 30 per cent. And the idea of selecting a ‘green-fields’ site for a completely new assembly plant by the end of the decade had now been quietly dropped, if indeed it was ever really on.

The company claimed that cars like the Austin Allegro were perceived as being highly competitive at the time thanks to the downward float of the pound. But the company had been unable to take advantage of this to penetrate European markets because of supply difficulties. John Barber conceded that British Leyland’s progress had ‘slipped a couple of years’ because of the cash outflow during the Miners’ Strike, the fuel situation and the economic downturn in Europe.

But he added firmly: ‘We’re convinced that the motor industry is still a growth industry though our forecasts suggest that growth is about three years in arrears.’

Lord Stokes maintained that ‘given even a reasonable industrial and economic background to operate in, British Leyland could prove very profitable and rewarding business. We know the profit potential is £100 million.’ However, one Motor Industry Analyst commented: ‘But the company is still very vulnerable to outside strikes and, even if the market holds up, the group will never get a chance to produce that kind of profit on a consistent basis.’

British Leyland looks to borrow money

In late March 1974 the latest published figures suggested that British Leyland could borrow about £150 million without getting overstretched. But borrowings were expensive and there was a limit to the amount the banks would be prepared to lend to a company making little or no profit on sales at £1.5 billion.

It would hardly be possible to ask shareholders to put up more cash because it was only two years since the company raised over £50 million through a rights issue at 45p. The share price was now down to 14p and the whole company had a market value of only £80 million. That compared with £320 million soon after the merger.

‘If you worried too much about the short-term share price I think you’d have a nervous breakdown. We can still see that our cash needs are covered for the next two to three years,’ said John Barber. Despite the bravado, behind the scenes a process of retrenchment had begun.

Projects killed, off-shoots for sale

Authi in Spain was up for sale and some time during March 1974 the ADO74 supermini project finally bit the dust. The deciding factor was undoubtedly the cost. In early 1974 it was estimated that it would cost £130 million to put the ADO74 and its all-new K-Series engine into production – that is circa. £1.38 billion in today’s money.

This was money British Leyland did not have, could not generate and could not borrow. No doubt other uses could have been found for the K-Series engine to mitigate the investment, but it was beyond British Leyland’s resources. Thus, by axing the ADO74 British Leyland saved £130 million, but the company had lost 21 months’ development work, 21 vital months while Fiat and Renault hoovered up small car sales all over Europe.

The ADO74 could have reached the showrooms in 1977, the same time as the ‘Bobcat’ project which became the Ford Fiesta. The Issigonis Mini would just have to soldier on for the time being.

British Leyland under attack from new superminis

Mini Clubman

For all British Leyland’s bluster about not being able to produce enough Minis, annual production in 1973 was 7.3 per cent lower than in the peak year of 1971, and that was before the impact of Three-Day Week working. And it seems that Leyland Innocenti, Authi and Seneffe production was relatively static. The Mini was clearly being hurt by the new generation of superminis, whatever BLMC management might have stated in public about lost sales due to lack of production.

The ADO74 symbolised British Leyland’s lofty ambitions when it was conceived in the early stages of the ‘Barber Boom’ and after the record year for Mini production – a second-generation, front-wheel-drive small car with an all-new powertrain that technically, if not stylistically, would have put it in front of the European competition.

A car that could be produced at Longbridge, Seneffe, Innocenti and Authi to feed a growing market for supermini’s. Instead, that very sophistication was its downfall due to the vast expense of putting the whole package into production. The Fiat 127, Renault 5 and the later Ford Fiesta all used existing engine designs – if Austin-Morris was to enter the supermini business, the company would have to have to use what was in the parts bin, and that meant using the A-Series engine again.

Supermini programme changes direction

This early sketch, dating from 1974, clearly shows that ADO88 started out as a Mini replacement. While looking more adventurous than ADO74, the principle of “maximum interior room – minimum external size” was eloquently demonstrated in the car’s boxy lines
This early sketch, dating from 1974, clearly shows that ADO88 started out as a Mini replacement. While looking more adventurous than ADO74, the principle of ‘maximum interior room – minimum external size’ was eloquently demonstrated in the car’s boxy lines

And so ADO74 disappeared from Austin-Morris’s future range. Whether there was any attempt to adapt the design for the A-Series engine is not known but, by July 1974, Austin-Morris was working on an all-new project christened ADO88, employing the A-Series engine. But crucially, the aborted work on the ADO74 had cost Austin-Morris 21 vital months that the company would never get back.

On the production front the real weakness of British Leyland was the output achieved per man. It was the lowest of the industry and this was not solely the consequence of under-investment over the years. The low productivity caused by the switch from piece-work to a flat day rate had caused problems.

David Buckle, the TGWU’s District Secretary for the Cowley body plant, said: ‘Workers will not give piecework effort for day wages. If the employers cannot win on industrial engineering, we will get some form of bonus within two or three years. Then we will have achieved one of the union’s primary objectives, getting a high basic rate with high security and incentive payments.’

However, Pat Lowry, BLMC’s Industrial Relations Director was adamant: ‘We have got to make the new systems work. We have got to make supervisory skills adequate to achieve our targets. Measured Day Work has had three years of operation at most and it would cause demoralisation among managers if we changed again,’ he said.

The trouble with piecework

Three further problems had emerged with Measured Day Work: the demand for parity between plants, rivalries between grades, and the desire for meaningful income security. Under piecework, no one knew what they would earn from week to week, let alone year by year. But with flat-rate wages, comparison was easy.

Comparison between workers  – the old differential problem – had also been highlighted by Measured Day Work. Craftsmen often used to tolerate the high earnings of semi-skilled piece-workers, because of the insecurity of jobs on the line. Now they saw themselves getting little more or the same as people without their skills or expertise.

Productivity at Cowley had fallen 25 per cent with the removal of the piecework carrot in 1971. The British Leyland management had been so determined to launch the Morris Marina on Measured Day Work, that it chained itself to a mutuality agreement demanded by the TGWU.

Marina issues

Recruitment at Cowley to man the two Marina production lines had been heavy, but stopped in the winter of 1973, with the Energy Crisis. It is indeed possible that no further recruiting took place at the instigation of John Barber, as a way of cutting BLMC’s head count. Marina line speeds were cut from 35 to 25 cars per hour after three-day working and, when management tried to restore them to 30 on 26 March, the assembly plant struck.

The men argued that 800 workers had left Cowley and manning was now inadequate. But they also objected to the presence of Industrial Engineers, who were there to study ways of reducing manning scales and raising line speeds.

The dispute was not resolved until 8 April and after John Symonds, the Cowley Plant Director, sent out letters to each of the strikers, with the warning that they faced dismissal. He said: ‘The company is not bluffing. We would be irresponsible to let a minority put the whole future of Cowley at risk.’

More strikes affect Cowley

Having solved one dispute Cowley ran into more trouble the next day. Some 150 forklift truck drivers walked out in protest against the suspension of lay-off pay during the recent dispute on the Morris Marina assembly lines. Their action halted output of Morris Marinas and Austin Maxis. Under an agreement made with the unions, lay-off pay guarantees were suspended when a stoppage resulted from a dispute within the plant.

Simultaneous to this, production at Longbridge was halted because of a dispute at the SU carburettor factory at Erdington in Birmingham. The total production losses at Cowley over the previous three weeks amounted to around £15 million.

On 12 April the management at Cowley decided to refuse to continue to recognise the Chairman of the Cowley Joint Shop Stewards’ Committee, Alan Thornett, and to instruct him to return to his normal job as a transport driver. In a statement the Cowley management accused Alan Thornett of ‘blatantly demonstrating his unwillingness to use his best endeavours to keep men at work while disputes are discussed’ and of not complying with the company’s agreed disputes procedures.

Industrial unrest spreads

Alan Thornett, later nicknamed the ‘mole’ and a member of the Workers Revolutionary Party, was the chief spokesman for the Transport Department and the Deputy Convener for the Transport & General Workers’ Union at the plant.

The 1974 Easter holiday intervened, but the striking 150 transport drivers decided to continue their unofficial strike over lay-off arrangements at the plant. All car production remained at a standstill. Now British Leyland was hit by an overtime ban in the engineering industry, called by the unions in support of pay demands for two million workers in about 5000 companies.

Austin-Morris’s main problems centred initially on maintenance and service activities which were normally carried out on an overtime basis outside normal shifts. This was the position at Longbridge where equipment in the foundries, the heat treatment plants and the paint sections of the factory had not been made ready in time for the start of the production shifts. As a result of the delays, about five hours of production on the first day of the dispute were lost.

Rumblings about British Leyland’s future…

Meanwhile, the strike by 150 forklift truck drivers at the Cowley assembly plant, where 12,500 workers had to be laid off, continued. By a clear majority at their meeting on 19 April, men in the Transport Department voted to stay out and to continue their protest against British Leyland’s refusal to recognise Alan Thornett as a Shop Steward.

On 21 April, after a weekend of growing speculation on its future, British Leyland issued a strongly worded statement denying reports that suggested it was seeking financial help from the Government. The statement said: ‘We have no information concerning the source of these rumours. The corporation has made no approaches to the Government for assistance and has no intention of doing so in the future. Our strong cash position at the end of the last financial year enabled us to cope with the problems created by the recent industrial crisis and the resources available to us meet all our foreseeable requirements. We have very substantial facilities with the banks.’

It was said the speculation was probably caused by unofficial statements by union hardliners that Tony Benn, Secretary of State for Industry and one of the strongest advocates of increased state ownership of big public companies, had instructed his staff to prepare contingency proposals in the event of British Leyland seeking financial assistance.

Tony Benn states nationalisation ambition

These reports suggested Tony Benn would use any such request as an excuse to inject sufficient Government capital to obtain a majority shareholding. A Department of Industry spokesman said that the Government had drawn up no plans for public participation in British Leyland.

He said: ‘We have held talks with British Leyland, as with other companies. But that is a normal procedure concerned with development proposals under the Industry Act, which provides for incentives on which industry can act. We have discussed this with British Leyland, but that is all.’

Lord Stokes himself denied reports that the Government might take a controlling stake in his company — for up to £70,000,000. He said: ‘We have not asked the Government for money. We have no plan to do so.’

Moreover, the news emanating from Cowley did not help matters either. Next came the event that put Cowley on the front page of the tabloid newspapers.

Back to History : The Austin-Morris story – Part Ten : 1973

Forward to: History: The Austin-Morris story – Part Twelve : April to October 1974

27 Comments

  1. I am surprised they did not look at bringing the ADO74 to market with the A Series rather than start again with the ADO88, because as I understand it the ADO74 was quite conventional with steel springs etc, it was the cost of tooling up a whole new engine plant for the K Series that killed it.

    If there was a need to further save money, could they have done what Chrysler / Simca did with the Horizon for the European market, (take the skin and graft it over existing mechanicals rather than tool up for a new platform), using Allegro underpinnings.

    Also note no thought was given to use the Innocenti reskinned Mini as a stop gap, i.e. using it to replace the then 5 year old Clubman, to refresh the Mini in the face of growing competition.

    I guess behind this was the “Ford” culture of designing new tightly costed cars rather than reskinning existing platforms, which is what Fiat and Renault did with their superminis.

    • My admittingly very limited understanding on ADO74 is that while the 1970s H/K-Series engine was lighter than (and AFAIK not related to) the A-Series, it was said to have been tall to necessitate the engine having to be slanted at an angle.

      It does not help matters the A-OHC also appears to have been earmarked for ADO74 at one point, however it is not clear if that was at the beginning or near the end of the ADO74 project (to the beginning of ADO88) nor if A-OHC ran parallel to the H/K-Series as lower-cost alternative.

  2. This is a quite masterly synopsis of events that I remember well.

    It was unfortunate that the costs of the three day week were directly landed on businesses and their employees. That contrasts tellingly with the COVID 19 furlough scheme of the past year and a bit. Ted Heath’s government would have done well to come up with such a scheme. Tony Benn and company would then probably never have had a look-in.

    However, there were indeed too many other underlying issues. The cheap labour available in South Korea (and elsewhere) underlay much of the retrenchment of labour intensive industries in Britain and indeed the US. BL’s self-inflicted wounds of unappealing new cars (Marina, Allegro, Princess, Maestro and Montego) followed straight on from the earlier trend that BMC had already set with the 1800, Maxi and 3 Litre. There was plenty of blame to go around.

    • Fortunately we live in very different times economically then now.

      Had at the time the UK unilaterally decided to fund the three day week with printed money, as we have done with Covid (but on a global scale, the “only matters to be the healthiest horse in the (global) glue factory” issue of market perception), then there would have been a collapse in the value of Sterling which would have driven up already high inflation and exacerbated the energy crisis and food because of our inability to buy food and oil on the world market with our devalued currency.

      Remember that just a few years later in 1976 the UK was to need a bailout from the IMF after the value of Sterling collapsed and for a time Sterling was no longer a traded currency. This collapse was caused by the markets losing faith in the ability of the UK Government to contain public expenditure within affordable limits.

    • The Allegro was too complicated at the time but also the marina was in the line up, seemingly the unions deliberately scuppered the chances of the company during the period.The later cars just showed what could be achieved as has been said the company set out to be small/medium company and had far less budget than larger firms resulting in dealers and customers fixing the problems and also business espionage with the maestro gearboxes austin didn’t have the budget to develop these items to the degree ford or GM would. I seem to remember FWD gearboxes of GM were pretty recalcitrant its a shame it took till Rover time for the Montego to be sorted into a decent car just showing that given a chance this could be achieved. If they were given more time I’m sure they could have produced a better car form the off same with saab on their later models. Telling that montego and maestro continued so long as I thought they acheived what some people want a practical vehicle maestro and montego coming good in the end I thought they looked modern but could have been improved a better design from the start.

  3. As hinted at here – and presumably something to be expanded on in the next chapter covering late 1974 – some more militant elements within the BLMC workforce began to see the effective “bankruptcy” of the company as an objective to be pursued during 1974.
    Because it was clear the Labour government elected in early 1974 (and re-elected in October 1974) would step in under such circumstances (Benn described the new National Enterprise Board (NEB) as “an ambulance”) and effect a rescue which would bring a majority government shareholding and an extension of worker control and industrial democracy.
    That in a nutshell is what happened in late 1974/1975. Without a financial collapse it would have been much harder for the government to establish control.
    Donald Stokes was quite clear that it was such politically-motivated industrial action that pushed the company into the arms of the government.
    Especially damaging – and the “last straw” was the month long strike at Triumph in November/December 1974 during which nothing was built in either the Coventry or Liverpool plants. This cost £1 million a day in lost production and sabotaged the vital US launch of the Triumph TR7. To outsiders it seemed suicidal.
    Even some Union officials were highly critical of this strike – a war of attrition which the AUEW’s Bob Wright described as “totally unnecessary and counter-productive”. It was ostensibly over lay-off pay.
    Huge damage was done to Triumph and British Leyland generally but for some, the end justified the means.
    It created the conditions under which the government could (relatively) easily implement a plank of their manifesto regarding extending public control of industry which (Triumph shop steward & convenor) Eddie McGarry described as “in line with our policy and with Labour policy for saving and creating jobs”. The left of the Union movement promoted a vision of a “National Motor Company” (the eventual absorption of the American multinationals’ UK operations was also envisaged) protected by import barriers and run on worker control principles. Meriden made big.
    But in practice state control of British Leyland from 1975 could not insulate the company, or Triumph, from the realities of the marketplace, or easily repair the damage done during those years of conflict.
    All very sad.
    The 1974-79 Labour government was in fact far less radical in extending public ownership of industry than Tony Benn (who was swiftly replaced as Industry Secretary by Eric Varley) or the left-wing of the Trade Union movement had hoped. The appointment of Michael Edwardes in late 1977 (with the government’s blessing) signalled an end to some of the wilder dreams that had motivated militants within British Leyland during 1974.

    • Yes it does seem that the threat/aspiration of nationalisation from Benn was the perfect scenario for left wing union leaders, as they could bring the company to its knees, knowing the government would step in and nationalise, which is what they wanted

      It’s easy to forget what a mess the country was in during the 1970s, and that even without the self inflicted own goals in its product range, it would have been an incredibly tough time to run British Leyland.

    • After the formation of BL itself (and discounting the preceding baggage of its constituent companies, actions of the Macmillan government onwards on building factories, etc), would it be correct to say the actions the left-wing union leaders at this time in plotting its bankruptcy in anticipation of the Labour government intervening by nationalising the company was what ultimately sealed its doom?

      Had the non-subversive elements among the unions kept their left-wing malcontents in check during the early/mid-1970s, would it have been enough to save BL from financial collapse despite the circumstances at the time or would it have simply delayed the inevitable by a few years?

      • Like a lot of your questions Nate, that’s a very big question : ) If one wanted to be controversial one could argue that the pursuit of state ownership as an objective by elements of the unions – despite a lot of collateral damage getting there – opened up enormous opportunities for British Leyland because suddenly, in 1975, they were free of the strait-jacket of having to answer to shareholders and the stock-market and given access to (what briefly appeared) generous funding. Many people argue that should have happened before, making reference to Renault.
        And there was a lot of optimism in some quarters that a new approach to running the business (where profit was only one of several objectives – like Renault) would transform prospects for British Leyland especially if combined with the harmonious industrial relations which were supposed to flow from the Ryder plan and the new mechanisms of worker participation in decision making that it imposed.

        But it didn’t work out quite like that, as despite having achieved the supposed nirvana of state ownership, industrial relations (after a brief honeymoon) were just as bad after 1975 (never more so than with the 1977 Toolmakers’ dispute) …
        But it’s a big, big topic. I don’t think one can talk of poor industrial relations “sealing the doom” of British Leyland (though they did of the private sector BLMC) because of course the company lived on through various incarnations right through to 2005 (or after, if one views JLR and Mini as “descendants”) by which time the strike-torn ’70s were a distant memory.

        But to answer your question differently. If a way could have been found to address all the “grievances” which caused so much trouble, and to settle pay negotiations etc. without recourse to the strike weapon in the early 70s, then BLMC would have undoubtedly been in a much better position to weather the storm prompted by the fuel crisis of late 1973 and subsequent recession. One only has to look at the production (and profit) foregone during the boom year of 1972. To take an example, it’s frankly tragic (and a symbol of how self-defeating the prevailing industrial warfare had become) that Jaguar who had a red-hot car on their hands with XJ6 and XJ12 – with waiting lists stretching to years – were on strike for 10 weeks over the summer of 1972 and built far fewer cars than the year before. At least 10,000 Series 1 XJ saloons that should have been built never got built. As Jaguar generated a lot of profit that dispute alone was enough to depress British Leyland’s profitability below the level needed to fund investment for the long-term (including at Jaguar) …. Between April 1971 and March 1972 5 million man hours were lost at British Leyland overall due to strikes, though of course at that time, driving the company into the arms of the state was not the objective.
        If such damaging disputes could have been avoided it would also (like a lot of “what if” questions) have had associated consequences – notably less of the UK market lost to importers (who profited from a shortage of British built cars during 1972/73) and more success in building up exports (supplies of cars to export markets were constricted in 1972/73 just when BL needed to be building those markets – again due to shortages). And one can argue (quite convincingly) that a lack of disputes would have resulted in better quality and a better reputation for British Leyland products. So when ones puts all those things together its quite plausible to see a fictional strike-free BLMC weather the storm and prosper in the late 1970s.

        • Meant the unions actions ultimately “sealing its doom” in reference to BL’s post-bankruptcy decline over the next few decades after its financial collapse, puncturing the newly formed company’s pretensions of being a kind of British General Motors despite many false dawns between then up to 2005 (sans the spun-off descendants).

          That is not to say there weren’t other factors that did not also play a role prior to BL’s collapse or even prior to the formation of BL, it is just that for all the blame and recrimination various sides have ascribed to each other amongst those involved (including successive governments) over the decades. What the subversives amongst the unions did in this particular instance towards their goal of nationalisation (and a receptive government that included Tony Benn) appears to be the straw that broke the camel’s back.

          The ill-conceived gambit by the unions in theory could have just about been pulled off had a smaller and less chaotic company other than BL been nationalised instead (with no existing large portfolio of overlapping marques and models or perfect storm of competing upcoming overlapping models and engines planned for the next decade). With a UK that was actually flush with cash to begin with, had a pre-existing background of properly investing in its industries (without being motivated by nationalising or building factories in faraway areas with bad logistics yet with a plan for increasing factory automation akin to VW, etc) and not had to deal with paying off post-war loans (there was potential for the loan to have been a gift instead or even payed off early under LBJ – albeit at price only Hugh Gaitskell would have been receptive to were he alive as PM at the time in place of Harold Wilson).

          From a potential production and profitability POV with respect to the Jaguar XJ6/XJ12 (and other examples) in the early-1970s during a strike-free timeline (or TL for short), can definitely see the possibility of BL just able being able to weather the storm and thrive in the late-1970s yet that inevitably leads to more questions amongst which include whether it could have maintained such an extensive range of models and marques without going on another internal culling spree to something more manageable.

          • Of course we’ll never know for sure. But one thing to bear in mind is that even if British Leyland in the early 70s had (rather miraculously) operated under a company-wide “no strike” agreement with the Unions (also applicable to wildcat strikes) that actually wouldn’t have helped all that much. As a great deal of the stoppages and lay-offs that plagued the company were due to external disputes at component suppliers, delivery companies (BRS) etc.
            It would have taken an over-arching “reset” of British industrial relations to free British Leyland of the millstone which disputes external and internal represented.
            That’s not an implausible concept – as one can argue the Labour government of the late ’60s was attempting to bring about just that with their proposed “In place of strife” legislation which was abandoned (in part due to union opposition) ahead of the 1970 election (which they lost anyway).
            And by the mid 80s British industry, including Rover Group, had for the most part become strike-free. In Rover’s case it was the same factories and in many cases the same people that had been involved in so many disputes a decade or so earlier.
            The other point to bear in mind is that Labour were elected again (rather unexpectedly) on a manifesto (part written by Tony Benn) which included the establishment of public ownership of major firms in key sectors – only in Feb 1974. And they were very constrained by the lack of a majority until after the second election of October 1974. So it’s only really realistic to portray militancy in the car plants as something intended to trigger collapse and thus nationalisation (or “quasi-nationalisation” which is what it was) – as something that was going on during 1974, not before.

  4. That sketch of the Mini ADO88 from 1974 looks quite appealing all these years down the line. It’s a pity other BL cars like Marina’s and Allegro’s didn’t look as good in their time. The Rover SD1 & Triumph 2000 Innsbruck series were probably the best lookers of the range.

  5. Do any images of the semi-engineered prototype for the revised ADO20 Mini Clubman first initiated in February 1974 exist (was it also connected the later Blackheath / South African Clubman hatchback proposal that also featured wrap around bumpers)?

    And was the idea for the project essentially a low-cost way to create an expedient Mini “hatchback” out of the Clubman estate, vaguely reminiscent somewhat to the odd Clubman Estate single lift-up tailgate conversions?

  6. The winter of 1973/74 was probably the bleakest period in Britain’s post war history until the current COVID era, and its after effects were felt for the rest of the decade as the country struggled to control inflation and rising unemployment. Energy shortages, a three day week, strikes, soaring inflation and even most pubs being closed to save energy made it a grim time. Also the useless Ted Heath was replaced an even more useless minority Labour government that was bitterly divided between people like Harold Wison and Tony Benn.

  7. Rings true Glenn. The problems then were on a similar scale to what they are now. I am of an age that I recall vividly what life & indeed working life was like in 1973 /74. Despite advances in many areas, we still can’t get it right can we?

    • @ Hilton D, the 1974 crisis had problems like inflation, rising unemployment and a recession that long outlived the three day week and a similar energy related crisis would reappear five years later, along with another wave of strikes. Hard times, but at least there were no lockdowns for months on end, even if many pubs closed during the three day week to save energy.

      • The one main difference these days is that we seem to have got rid of the problem of industrial disputes. It’s rare these days to hear of a significant strike anywhere. I can remember the news in the late 60s and 70s, and even to me as a teenager it was depressing and incomprehensible to hear about endless strikes.

        • When my sister was studying for her law degree she was covering industrial relations.

          At the time Gate Gourmet was in the news a lot, which was probably the biggest industrial dispute, and for a few years either side there wasn’t any other big strike I can remember.

          My Dad remarked that 30 years earlier there were normally about 8 of them happening at any one time!

      • Ironically during those dark days in the 1970s, my area of work was still busy and no fear of lay-offs or strikes (must have been lucky). Indeed that decade was happier for me than the 90s and noughties.

  8. It’s a bit ironic that BL seemed to be digging itself out of a bit hole during the almost as grim period between 1979 & 1982.

    • @ Richard16378, by the early eighties, British Leyland was becoming more confident. Most of the union problems had been beaten, productivity was increasing, Jaguar was being prepared for privatisation, and the Metro and Triumph Acclaim were big successes. Also tens of thousands of job losses and plant closures probably made the workforce more wary of taking industrial action and most workers no longer wanted to be dragged on strike by union militants. The company did seem to be turning the corner and British Leyland jokes no longer raised a laugh.

  9. The real problem by the 1990’s was that most of the good designs were Honda based (thanks to Sir Michael Edwardes’ partnership deal with Honda back in 1979).

    That was abruptly undone when then owner British Aerospace sold out to BMW in 1994.

    Honda went their own way after that in the UK (and that has now come to an end). BMW meanwhile struggled with Rover, and ended up just keeping MINI.

    Too many changes of ownership meant that the long term strategy kept changing.

    It is ironic that BMW itself was bust in the 1950’s, rescued by at least one British bank (Warburgs – later to advise Leyland in the merger with BMC) amongst others.

    And it was the British Army (specifically Major Ivan Hirst) which put VW back on its feet after the War, after all British and American car firms had given the Beetle the thumbs down.

    Maybe we should take solace in the fact that BMW have poured money into MINI, and VW into Bentley. Not to mention Tata with Jaguar Land Rover. Tata’s roots go back to 1864, under the British Raj in India. But that is another story…

  10. I was 18 years of age at the period of the 3-day week, Ted Heath called a General Election and two days later I recall the Financial Times / Times revealing a bombshell article. The article revealed the Civil Service had been supplying incorrect figures for Miners wages, had the supplied figures been correct then the Miners pay rise would have been granted, the Miners would have gone back to work, the 3-day week was a consequence of a major error by the Govt and Civil Service

    • Correction, the incorrect pay figures given to the Pay Board were from the NCB and not the Civil Service,, the Union was in dispute with an employer lacking a grip upon a simple statistic of the wages paid to key workers

  11. It was a chaotic time, with the Pay Board only recently reinstated by Ted Heath in his famous U-turn, after he had previously abolished the Prices and Incomes Board just a little earlier.

    Inflation was running at over 20% per annum, and keeping pace with wage changes across what was still a huge and sprawling mining industry was no doubt difficult. Not that that is necessarily an excuse, but the Unions were never happy with the old Prices and Incomes Board, even under Harold Wilson’s Labour government. They were certainly not inclined to support the Pay Board under Ted Heath’s Conservative government. The fact that they were then able to bring down Ted Heath’s government further empowered them. However, it ultimately led to their undoing under Arthur Scargill when he was unwise enough to take on Mrs Thatcher a decade later.

  12. Miners weren’t particularly well paid for what was an unpleasant job where many miners developed health problems and were always at risk of injury or death. Also miners wages had fallen behind other workers due to the decline in their industry in the sixties, but those pits that remained were vital for generating electricity, so the miners could cut off electricity by striking. The two strikes in 1972 and 1974 saw wages go up by 27% and 30% respectively, as governments bought off the NUM to end energy shortages, and a further 30% pay rise in 1975 saw miners become some of the highest paid workers in the country..

Add to the debate: leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.