History : The Austin-Morris story – Part Thirteen : October 1974 to January 1975

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 thirteenth part, BLMC continues to endure its annus horribilis, plunging further into bankruptcy and its inexorable fall into Government control.


The Austin-Morris story: Over and out…

On 10 October the second of the year’s two General Elections took place. Labour Prime Minister Harold Wilson, having taken power in a hung Parliament after the February election, returned to the polls and won a tiny majority of just three. Although Harold Wilson had made his position slightly more comfortable, his policy of appeasing the Trade Unions, because they seemed to hold the trump cards, failed to gain him a convincing mandate from middle-class voters. The deep divisions in the country remained like a gaping wound.

On the eve of the London Motor Show, Lord Stokes told the media: ‘We are still a bloody good country with some bloody good Engineers. I do not understand what has become an almost hypnotic death wish in this country. Speculation, not only about our company but many others equally important to the national economy, causes unrest and demoralisation at work as well as doing untold damage by eroding confidence in British products overseas.

‘It must make our overseas competitors jump with joy. There has been too much talk of conflict between Government, industry and trades unions. I believe that we are all on the same side and the sooner everybody realises this the better. We have to face up to at least two years during which car markets will remain roughly at their present modest level. Thereafter, we believe demand will start to climb again. We are also committed next year to our biggest export programme ever.’

The next day he added to this: ‘There is a lot of unfounded speculation about British Leyland. We are a soundly-based company and all we are doing, as they say in Lancashire, is cutting our coat to suit our cloth.’

New products add life to the range

On 16 October, the rubber bumper MGB and Midget were announced at the Earls Court Motor Show. Then, on 22 October, Leyland Innocenti announced its Bertone styled 90/120 hatchback Mini. Codenamed P53, it had been instigated by Innocenti because it was tired of waiting for British Leyland to produce a replacement Mini.

Inherited by Geoffrey Robinson when BLMC bought out Innocenti in May 1972, he nurtured the project, and did his best to keep cost information out of the prying eyes of British Leyland’s bean counters.

The main problem with the P53 was that its interior packaging was inferior to the original Mini, and it was not a genuine four seater, although it was good enough to carry children in the rear. Geoffrey Robinson was of the opinion that the car needed an extra 9.0 inches, and that would cost an extra £1 million, around £10 million today, which Leyland Innocenti did not have.

When questioned why the P53 90/120 would not be sold in Britain, British Leyland responded with: ‘When a new Mini does arrive from BL it will be a completely new package, not just a shell.’

With production of the P53 having begun in September, Leyland Innocenti began to run down production of the traditionally-shaped Mini, which finally ended in January 1975. It is intriguing that, for an extra £1 million, Austin-Morris could have had a stopgap Mini replacement in the mid-1970s. The axed ADO74 (below) had a budget of £130 million, and the whole ADO88/LC8 Metro programme was estimated to have cost £275 million in 1980.

ADO74

More changes at the top

That October Alex Park, the company’s Finance Director, told the Board that British Leyland needed to find another £70 million in working capital. Later it was revealed that, over the seven-year period during which the British Leyland Motor Corporation had existed, it had made a net profit of £74 million and gave £70 million of this away in dividends to shareholders – in other words, only £4 million of the company’s profit was ploughed back into investment.

Austin-Morris investigated a comprehensive re-jig of the ADO20 Mini, giving it a full tailgate, folding rear seats and wrap around bumpers. A two-door model without the tailgate and a five-door, Clubman-fronted saloon sitting on a wheelbase ten inches longer than the Estate were also evaluated. The plans were finally killed off by the 1975 Ryder Report.

On the last day of October 1974 Frank Tilston, British Leyland’s 43-year-old Director of Manufacturing Plans, left the company after a reported clash with Bill Davis, the group’s Director of Manufacturing. There was no official announcement of his departure, but a spokesman at British Leyland’s London headquarters confirmed that Frank Tilston had resigned with immediate effect.

On to the Metro…

ADO88 proposal by Pininfarina

Having declined to produce the Innocenti 90/120, Austin-Morris continued with work on the ADO88 (above), its properly-engineered Mini replacement. On 13 November, more full-size clay models were photographed for the record.

Amid a crippling dispute at Triumph, on 27 November at the Department of Trade and Industry in London, tripartite talks were held between the Department, British Leyland and its banks. BLMC estimated it would reach the end of its overdraft facilities in December 1974.

On 2 December, Ford built its first Escort Mk2. Development of the new Escort was shared jointly between Ford’s British and German subsidiaries. The Escort Mk2 was basically a facelift of the Mk1 and, although it would sell well in Britain to the fleet buyers, in Europe it was no match for the Volkswagen Golf, which by 1975 was being produced at a rate of 10,000 a week.

Tony Benn announces British Leyland bail out

Then, on 6 December, Tony Benn, the Secretary of State for Industry announced in the House of Commons that the Government was to take an important shareholding in British Leyland, the country’s biggest exporter and biggest car manufacturer. Tony Benn said in his statement: ‘With permission, Mr. Speaker, I should like to make a statement about British Leyland.’

He continued: ‘Discussions have been taking place with the company regarding both its short-term requirements for working capital and its long-term investment programme. Because of the company’s position in the economy as a leading exporter and of its importance to employment both directly and through the many firms that are dependent on it, the Government are informing the company’s bankers that the approval of Parliament will be sought for a guarantee of the working capital required over and above existing facilities. I am satisfied that this will enable the company’s requirements to continue to be met without interruption.

‘In response to the company’s request for support for its investment programme, the Government also intend to introduce longer-term arrangements, including a measure of public ownership. In order to help the Government in framing a scheme for this purpose, they propose to appoint a high-level team, led by Sir Don Ryder, including members drawn from the Industrial Development Advisory Board, to advise on the company’s situation and prospects, and the team will consult the company and the trade unions in the course of its work.

‘A further statement about the arrangements for the inquiry team will be made shortly, and I shall also put before the House the proposed guarantee to the banks for their approval.’

Rover SD1 development story - Sir Don Ryder

Ryder Report announced

When questioned, he said that, until the team led by Sir Don Ryder (above), which was to inquire into the state of the company, revealed how much support was needed, the extent of public participation would not become apparent. In reply to another question, he said: ‘If the Government are required to put substantial sums of money into British Leyland in view of its importance to our national economy, it is quite right that the taxpayer in making that contribution should get with it an appropriate measure of public control and accountability.’

He added: ‘I do not see why the taxpayer should be put at any special advantage vis-a-vis any other investor, given that other investors when they put their money in automatically expect they will get an appropriate measure of control.’

Government bail out cheered on by parliament

Replying to Michael Heseltine, Opposition spokesman on industry, Tony Benn said that, on the amount of the guarantee, it would be sensible for MPs to await the study to be undertaken by the inquiry team.

In Parliament Labour backbenchers cheered Tony Benn’s rescue operation, which would provide overdrafts and a cash injection, and were extremely elated at a heaven-sent chance of massive State intervention. To them this was the failure of capitalism, the failure of a company that had failed to invest and one that had refused to listen to its workforce, in the form of the British Leyland (Motor Corporation Combined) Trade Union Committee (BLTUC).

The efforts of Lord Stokes and John Barber to keep British Leyland out of the grasp of Tony Benn had failed. On the day of the announcement Lord Stokes was on his way to Egypt on a selling trip. He told the media: ‘I have nothing to say.’

Deputy Chairman John Barber said: ‘It is true that, like most other industrial companies in the United Kingdom, we are suffering from the effects of inflation and additionally, as a motor company, we are facing lower markets in the immediate future. Inevitably, this means that money is tight. But we anticipated the position way back in January and have been taking action to conserve cash all this year. For example, by restricting hiring we have reduced manpower by 10,000 people, largely by wastage.’

Economic headwinds play against British Leyland

John Barber added that the external economic position was not improving. The economy campaign had been intensified. ‘We have no plans for large scale redundancies or plant closures unless the position deteriorates. We do not have excess stocks. In fact, we have no stock of finished vehicles other than those normally awaiting dispatch, and some cars are held up temporarily by the Triumph strike. Our distributors and dealers generally have adequate stocks of most of our models.’

He concluded: ‘Today’s announcement makes no immediate difference to the day-to-day operation of the corporation. Whatever money might become available, we shall not be relaxing pressure on costs to ensure that we are competitive in world markets.’

The next day John Barber failed to persuade the Spanish Government to authorise the sale of the Authi plant to General Motors for £26.7 million. The Government wanted it to be bought by a European consortium, at a lower price, and talks were to continue in Madrid.

On 21 December, General Franco’s Government finally approved the sale of Authi to General Motors. A high official of the Ministry of Industry reportedly said: ‘There was agreement at the cabinet meeting on Friday about the conditions in which General Motors may take over Authi.’

The official, Senor Emilio Mirande, Director General of Steel and Shipbuilding, was quoted by the staid and respectable monarchist daily ABC. However, in 1975 the deal fell through and the Authi plant was sold to SEAT.

1974: A grim year for British Leyland

The car sales dead-end into which British Leyland had driven was spotlighted by grim figures. The firm’s sales nose dived to 27,212 in November 1974 compared with 41,800 in November 1973. Home sales of all British cars crashed from 83,100 to 59,300. And British Leyland could not be bailed out by parent companies in America or Europe.

It was in the interregnum between BLMC going to the Government for help and the release of the Ryder Report that the company announced the ADO71 as the Austin-Morris 18-22 Series on 26 March 1975. On paper, the simple expedient of rebodying the unloved BMC 1800/2200 Landcrab with a new startling wedge shaped design by Harris Mann should have been relatively straightforward. At launch time, Austin-Morris emphasised the improvements over the outgoing Issigonis car and a waiting list soon built up. The response to the new 18-22 Series suggested that all British Leyland actually needed was a Government loan to offset their cash flow problems.

However, the quality of the 18-22 Series cars emerging from Cowley soon destroyed such notions. John Barber had envisaged the ADO71 moving the Austin-Morris range upmarket, but the by now obligatory cost cutting resulted in owners experiencing collapsing suspension, driveshaft failures and multiple engine changes. The one time Chief Political Editor of the Daily Mirror newspaper told this writer that the Princess (below), as the 18-22 Series was rebranded later in 1975, was the worst car he had ever owned.

Because much of the mechanicals had been carried over from the Issigonis ADO17, this was unforgivable. This was the time bomb of designing cars to a price referred to earlier. The new generation of British Leyland cars may have been subject to intense market research and testing, unlike the Issigonis designs, but they were subject to strict cost controls in the design process, used the cheapest engineering solutions and any redesigns to remedy faults needed the sanction of the bean counters, and often their financial targets held sway.

It was the customer who paid the price for the cost cutting and this combined with the constant news of industrial disputes led to BL Cars’ share of the UK car market collapsing to 15 per cent by January 1980. This was the ongoing legacy of the Stokes-era management.

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

Forward to: History : The Austin-Morris story – Part Fourteen : Conclusion

Ian Nicholls

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