Ian Nicholls, AROnline’s historian-in-residence, follows up his excellent rundown of the British Motor Holdings story with a five-part account of the British Leyland years from 1974 to 1977.
Here, in the first part, we set the scene for the company’s 1960s decline – from lofty heights – and its subsequent need for a Government bail-out in the closing days of 1974…
PART ONE : EXPORT OR DIE
AROnline contains many stories of botched decisions, cars that never were and wrong turnings. However, perhaps the real reason why the British-owned motor industry collapsed so rapidly post-1945, was the socio-political environment it had to co-exist in. The UK was a nation deeply divided by class, politics and region. It was country that believed the world owed it a living after the ordeal of WW2, and one that believed that selling was a dirty word.
This story covers in detail the period from 1974 when the British Leyland Motor Corporation went to the Government for financial aid to the end of 1977 when Michael Edwardes had taken over a basket case. There is a lot of politics involved, most of it involving conflicting views within the labour movement on the future of British Leyland.
It is well known that the Labour Government of Clement Atlee exhorted British motor manufacturers to export in order to earn their allocation of steel and this established Jaguar, MG and Triumph in the important North American market. However, this was only ever a small percentage of British car production. Another source of revenue was the British Empire territories.
Excluding the premium brands, volume manufacturers like BMC and Standard served up the public a diet of boring mechanical stodge, which was readily bought by Britons and residents of the colonies. The British motor industry was protected at home by tariffs imposed on foreign imports. National pride was still a vital factor in those years after WW2.
In hindsight, this was a complacent attitude to take, the empire was gradually declining, sometimes through violence, and many of the citizens of the newly independent nations resented their former colonial masters. These people felt no obligation to continue to enrich the very nation that only a short time before had treated them as second-class citizens in their own country.
The formation of the European Economic Community (EEC) in 1958 created a car market in which manufacturers in the member countries were able to compete on equal terms. In the long term, Europe was the place to be selling cars – except the French President, Charles De Gaulle, did not want Britain in Europe.
Setting the scene
Then, in August 1959, BMC unveiled the Mini. It may have been small, but its impact on our expectations of what the British motor industry could achieve was enormous. Since 1945 the politicians and analysts had exhorted the British motor industry to produce a volume car that would appeal to export markets in the same way as the Volkswagen Beetle. Virtually all previous attempts had failed, at the manufacturers’ expense, not the politicians, it might be added. Now, in the summer of 1959, it had arrived. However, the Mini was not the car the politicians and analysts had screamed for – it was mechanically complex and expensive to build and perhaps not as reliable as conventional rear-wheel-drive cars.
Despite this, demand for the Mini soon led to production easily outstripping the other BMC volume cars. In 1962 BMC produced 216,087 Minis, including some 100,000 for export, which was about the same number of Austin A35/A40s the company was producing in total only five years earlier. The Mini’s appeal transcended class barriers and national borders. It was fun to drive, chic, trendy, fashionable and unique.
In August 1962, BMC announced the Morris 1100. This bigger brother of the Mini soon shot to the top of the sales charts. The opening of CAB2 at Longbridge in 1963 soon resulted in the introduction of an Austin variant and production of both the Mini and ADO16 was ramped up to meet demand.
In 1964 BMC produced 244,359 Minis including 120,930 for export. It also produced 243,538 ADO16s, with 73,418 going for export. That was a grand total of 487,897.
By now well over half of BMC’s weekly car output was of these two Alec Issigonis-designed cars. Whether by accident or design, BMC had created the kind of world cars demanded by export markets. However, in doing so BMC had raised expectations of Britain maintaining a world-class motor industry on this kind of level. The reality was that BMC was punching above its weight and its sales success was more a combination of luck and the loose rein afforded to its Technical Director, Alec Issigonis.
It has been commented before that probably no other company would have allowed Issigonis to develop a car like the Mini. Indeed, although he later blotted his copybook with the ADO17 1800 and the Maxi, the fact remains that in the Mini and ADO16 he created two of Britain’s most popular cars ever. BMC were easily exporting more of these two cars than their rivals at Standard-Triumph could build in a year at their Canley and Speke plants.
However, beneath the façade lurked problems. The main one was labour relations. Between 1946 and 1964 44 per cent of all strikes in the motor industry occurred within BMC’s plants, compared to 11 per cent for Ford of Britain. This is generally attributed to BMC retaining the complex piecework system of payment while Ford paid their employees through measured day work.
Piecework also existed in the factories of Standard-Triumph, Rover and Jaguar. Industrial unrest seemed to increase as the 1960s wore on. Rover was plagued with disputes as they tried to ramp up production of the best-selling P6 2000 saloon, one of the defining cars of the 1960s. Over at Jaguar there seems to have been little affection between Sir William Lyons and his workforce. In June 1965, Jaguar experienced a three-week strike when two polishers refused to do a three-minute job that was sent back as ‘below standard.’ Their 60 fellow polishers stopped work and 2500 men were soon idle.
The Union perspective
That said, before one breaks into a rant about ‘bloody minded’ unions and Communist conspiracies, one must remember that British car factories in the 1960s were noisy and dirty squalid places to work, where industrial injuries were part of a day’s work and various ailments could be contracted from inhaling polluted air. They were not the well lit, clinically clean plants of the modern British car industry. Dire working conditions only served to strengthen the trade union movement. In those days of the closed shop you had to be in a trade union to keep your job, but it afforded protection against a management that did not seem to care about your working conditions.
BMC’s brutal dismissal of some 10,000 employees in the autumn of 1966 did little for industrial relations and helped to re-enforce an atmosphere of distrust between managers and workers.
The closed shop and working-class pride also led to inter-union disputes when some employees refused to transfer their membership from one union to another. Until 1972 there were three main unions in the UK motor industry, the Amalgamated Union of Engineering Workers, the Transport and General Workers Union and the National Union of Vehicle Builders, and a host of myriad smaller organisations. The AUEW considered itself the top of the tree. This was the union for skilled workers and they took the view that their skills deserved higher remuneration than the manual workers in the TGWU and NUVB. The TGWU, which absorbed the NUVB in 1972, did its best to get its members earnings on a par with the AUEW.
Perhaps the most famous inter-union dispute occurred in August 1969 when the leaders of three unions met at Canley to discuss whose members should tighten the screws on the Triumph 2000/2500 dashboard.
Prime Minister Harold Wilson had exhorted industry to do away with restrictive practices, but turning that dream into reality was another matter. Trying to persuade the unions to dispense with piecework and accept measured day work within the newly-formed British Leyland proved problematical, as the first attempts were met with an outright rebuttal.
The 1966 Seamen’s Strike had shown the Government how the trade unions could hold the country to ransom and damage the already fragile economy. Confronted with an escalating industrial relations problem, in 1969 Harold Wilson and Barbara Castle drafted the In Place of Strife White Paper, which advocated legislation to control the power of the trade unions. This was firmly resisted by some members of his cabinet who saw it as an attack on the working class and the plan was abandoned.
Lord Stokes on the Union ‘anarchy’
The growing labour unrest was tackled by Lord Stokes, the Chairman of British Leyland, in a speech on 25 February 1970: ‘In the first four months of the company’s financial year, strikes and the squeeze have hit the company so hard we have made no profit.
‘The disruptions we are suffering are now so frequent and taking up so much time that the strain on our factory management is becoming intolerable – perhaps that is the aim of the people stirring up trouble. I cannot believe that this state of anarchy is what the majority of our workers really want.
‘We have had in our own plants, and those of our suppliers, walk-outs, go-slows, work-to-rule tactics, working without enthusiasm and other associated activities, very often led by small militant minorities. It is becoming increasingly obvious that the industrial relations system of this country must be based on a framework of law, which could well include ballots impartially administered on a mutually agreed basis.’
‘I do not believe that all our stoppages of work result from genuine grievances. They are such a regular feature of our daily life that they can only be planned and deliberate disruption for its own sake.’
Lord Stokes described the recent spread of industrial disputes, mostly unofficial, as of ‘alarming and chaotic proportions’, and referred to ‘distortion of the truth and insidious coercion’ by the troublemakers.
He also reiterated his plea that a steadily expanding home market was necessary for British car makers to be able to compete in the international markets: ‘This does not seem to have been fully accepted in all responsible circles.’
He warned that, unless there was some halt to the current round of increases and inflation, Britain faced a financial crisis through pricing itself out of overseas markets and raised the spectre of, ‘massive unemployment on a scale only remembered by the older generation in this country.’
Lord Stokes was dismissed as being alarmist, but ultimately he was proven correct. Britain was already well on the way to becoming the sick man of Europe and, within a decade and a half, the country was experiencing the massive unemployment that Stokes had predicted.
Strikes were losing British Leyland sales, draining the company of funds for re-investment and sapping morale. This was the era when the Jaguar XJ6 was rated as the best car in the world, yet the waiting list for the car grew longer and longer as dispute after dispute restricted production. Coventry was Britain’s motor town – in a decade it would be a ghost town.
Heath tried to reel in the Trade Unions
In 1970 the Labour Party was unexpectedly defeated in the General Election by the Conservatives led by Edward Heath. The Heath-led Government did push the Industrial Relations Act 1971 through Parliament ‘to control the growing power of the Trade Unions.’ The act itself was widely seen as an attack on the working class and was also widely ignored for fear of inflaming industrial unrest on the factory floor even further.
The Industrial Relations Act 1971 also seemed to inflame the deep-rooted divisions within British society. The flashpoint came with the 1972 Miners’ Strike that saw the Heath Government capitulate to the National Union of Mineworkers as the lights went out across Britain.
This again demonstrated the power of the trade union movement to hold the country to ransom.
How did British Leyland compare with its big European rivals in 1972?
|Number of employees
|Output per employee
|Sales per employee
|Fixed assets per employee
BMLC Finance Director John Barber had wanted to shed around 30,000 jobs when the merged company was formed in 1968. This news had leaked out, prompting opposition from the trade unions and resulted in a climb down by Chairman Lord Stokes. Stokes banked everything on selling more vehicles to absorb the surplus labour. Had BLMC managed to lose 30,000 workers and still produce the same number of vehicles in 1972 it would have had an output per employee figure of 7, still not good enough to match its rivals.
BLMC’s sales per employee looked good when compared with Fiat, but one must bear in mind that Fiat’s output consisted of a lot of bread and butter vehicles whereas BLMC had premium products like Jaguar, MG, Rover and Triumph. The picture looks even worse for BLMC when one considers that Fiat, Renault and Volkswagen had a whole host of new-generation, front-wheel drive cars just launched or about to be unveiled to a buying public that would lap them up.
In 1973, Britain joined the European Economic Community. British Leyland launched the Austin Allegro to replace the long running 1100/1300 series and branded it as the car for Europe. Lord Stokes was an advocate of EEC membership. He said that a market of 250 million would be opening for the British motor industry, whereas only an extra 50 million would be offered to British Leyland’s continental competitors. That was the theory…
Although the UK car market had improved somewhat since the low of 1969, in order for British Leyland to take up the slack of its surplus labour force it had to sell and expand into the European market.
In order for BLMC to match Fiat for efficiency, it would have to manufacture 1,621,800 vehicles a year, to match Volkswagen would require annual production of 2,289,600 and to match Renault it would have to produce 2,194,200 vehicles per year.
BLMC and Lord Stokes pushed the Allegro hard in May 1973. Stokes used the Allegro launch as the centre piece of British Leyland’s fifth anniversary celebrations. In a speech at the Savoy Hotel, London, on 15 May, he outlined a massive expansion plan to increase the group’s annual output of cars and trucks from 1,100,000 to 1,500,000. He threw in this comment: ‘We are already actively investigating the possibility of building a major totally integrated car production facility in the UK located separately from our traditional areas of car manufacture.’
For such a plant to be viable the media concluded that it would have to be capable of producing a minimum of 250,000 cars a year.
Lord Stokes concluded with: ‘We are also quite confident that for two years at least we shall be able to generate the cash we need from our own resources. This is the beginning of a very exciting era for British Leyland and I think that our Designers, Engineers, Production men, Planners and Marketeers are going to provide you with a British motor industry of which you will be very proud.’
The reality was that the big European manufacturers had caught and passed British Leyland’s front-wheel drive technology and the Austin Allegro simply was not up to the job. Moreover, by now British Leyland was rapidly gaining a reputation for dire build quality and appalling reliability.
Again, the reality that British Leyland was trying to punch above its weight was masked by outside events, in this case the ‘Barber Boom’, named after the Chancellor of the Exchequer of the time. The Heath Government pumped money into the economy and the UK car market expanded to record levels. BLMC’s production and profits peaked, but it was not enough. The stop-gap Morris Marina fleet car briefly attained its intended production rate of 5000 cars per week, which British Leyland had boasted it would achieve on launch in 1971.
Austin Morris Sales Director Filmer Paradise had made the ludicrous claim that he could sell 300,000 Marinas per year, including a sizable chunk for export, shortly after the cars launch, when records show that peak production was 201,724 in 1971/72. Was he really being serious? Did he really believe that? Even he must have known that the Morris Marina was a rush released parts bin special and it could not compare with the more properly engineered Ford Cortina Mk3 and comparable European rivals.
The ‘Barber Boom’ in fact caught the Austin Morris division of British Leyland out. BLMC had three best sellers, the Mini, ADO16 1100/1300 and the Morris Marina. In 1971 ADO16 production was ended at Cowley to make way for the Marina and, while the Marina benefited from the ‘Barber Boom’, Longbridge could not produce enough Minis and 1100/1300s to satisfy demand, the production shortfall of the ADO16 was some 74,000 cars – hence the need for a separate factory to produce the required number of cars.
Despite the extra money floating around the economy, there were precious few takers for the new Austin Allegro, whose production peaked at 2500 per week and the planned move to a second track and 4000 cars per week output never materialised. There was not enough demand from the UK market, let alone a big surge in sales to Europe that British Leyland had hoped for.
British Leyland had thrown everything into the launch of the Allegro and blown it. The expected seamless transition from the ADO16 to the Allegro never happened. BLMC had replaced a much-loved family favourite with a dud with dire consequences. At launch, Austin Morris had boasted of producing 4000 Allegros per week and attaining an eight to ten per cent UK market share, which corresponded in 1972’s car market as 131,022-163,777 sales per year, both matching and exceeding the performance of the ADO16.
The rush to the showrooms never happened…
The plain truth for British Leyland in 1973 was that the Mini was ageing and sales were declining as more modern rivals came on the market. The company claimed that it could sell an extra 150,000 cars per year, but the Morris Marina’s appeal was strictly limited to the British fleet market – for which it was designed – and the firm’s great white hope for expansion into the bigger European market, the Allegro, stumbled. When the time came to replace their ADO16, buyers had no choice but to buy a completely different car and many opted to change brands as well. A Ford Escort, a Volkswagen Golf or maybe something Japanese?
BLMC’s days come to an end in 1974
The Japanese had been selling cars in Europe since 1966 but it was in the early 1970s that they began to make real headway.
No one single event appears to have triggered off the Japanese invasion, but it seems that they succeeded by word of mouth. Japanese cars lacked the style, panache and heritage of the average British car. What they did have was superb build quality and reliability, and that is what counted.
Outside events again conspired to distort the true picture of the state of the British-owned motor industry, namely the 1973 Energy Crisis sparked off by the October Arab-Israeli Yom Kippur War. In Britain, this resulted in car sales dropping by 30 per cent as Lord Stokes was wont to point out but, in reality, this meant a return to the more normal level seen before the ‘Barber Boom’. Indeed, UK car sales in the 1970s, even in what seemed the darkest moments, were all well above the kind of levels seen during the 1960s.
However, with a decline in the appeal of its model range, BLMC found that its market share began an inexorable downturn and the 40 per cent market share it had attained in 1971 was now pie in the sky. The colourful chrome-endowed, badge-engineered BMC models of the 1960s had given way to bland Leyland-ised cars available in a new range of dull colours including the infamous British Leyland beige.
The winter of 1973/74 saw Edward Heath’s Conservative Government have another run-in with the National Union of Mineworkers and, in order to reduce electricity consumption, the Government instigated a Three-Day Week from the beginning of 1974. British Leyland found itself operating at only 60 per cent of its capacity and there was no way it could remain profitable in such circumstances.
The Three-Day Week drained the company’s finances and bear in mind such an event did not affect its continental rivals. In a previous article, I have described how various Governments affected the British motor industry, yet omitted the most destructive, which was the Heath Government and its imposition of the Three-Day Week on British industry, which caused enormous financial damage.
Edward Heath called a snap General Election for the end of February 1974 over who really ruled Britain, the Government or the Trade Unions.
Heath may have claimed he had no issues with the Trade Unions, but they had plenty of issues with him, the main one being the contentious Industrial Relations Act 1971, which was intended to curb Trade Union power. The election campaign exposed the deep-rooted class divisions within Britain. The Conservatives won more of the popular vote, but the Labour Party won more seats. Many voters probably just wanted an end to the three day week and a return to some kind of normality. It was later said that Margaret Thatcher divided Britain. That is palpable nonsense. It was already deeply divided and the evidence is contained within the February 1974 General Election results.
The February 1974 General Election returned the Labour Party under Harold Wilson to power. However, it was not the pragmatic administration of the 1964-70 years, which contained ministers from a broad political spectrum and backgrounds. During its period of opposition the party had moved to the left and was now committed to further nationalisation and employee protection, led by Tony Benn, one of the prime movers behind the formation of British Leyland.
A move to Government ownership
Benn later cited his experiences in Government during the 1960s as part of his move to the left. He said: ‘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.’
Benn played a part in drafting Labour’s February 1974 election manifesto which stated: ‘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. However, more will be needed if we are to create a new spirit in industry. The British people, both as workers and consumers, must have more control over the powerful private forces that at present dominate our economic life.
‘To this end we shall sustain and expand industrial development and exports and bring about the re-equipment necessary for this purpose through the powers we shall take in a new Industry Act and through the Planning Agreement system which will allow Government to plan with industry more effectively. 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. In addition to our plans set out for taking into common ownership land required for development, we shall substantially extend Public Enterprise by taking mineral rights.
‘We shall also take shipbuilding, ship repairing and marine engineering, ports, the manufacture of airframes and aero-engines into public ownership and control. But we shall not confine the extension of the public sector to the loss-making and subsidised industries.
‘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. Our decision in the field of banking, insurance and building societies is still under consideration. We shall return to public ownership assets and licences hived-off by the present Government, and we shall create a powerful National Enterprise Board with the structure and functions set out in Labour’s Programme 1973.
‘We intend to socialise existing nationalised industries. In consultation with the unions, we shall take steps to make the management of existing nationalised industries more responsible to the workers in the industry and more responsive to their consumers’ needs.’
Far from co-operating with and encouraging the private sector, which employed most Britons, as it had prior to 1970, the Labour Party now seemed openly hostile to it and, indeed, the February 1974 election manifesto saddled the party with an anti-business agenda that it took two decades to shed. The business community were now the bad guys. Everything was now seen in black and white.
The Labour Party managed to achieve a small working majority in a second October 1974 General Election and, in December, British Leyland went to the Government to act as a guarantor for further bank loans.