Chris Cowin looks back at May 1973, the moment when Lord Stokes and the British Leyland management celebrated and reflected upon five years of the merger.
In May 1973, when British Leyland celebrated its fifth birthday with a glittering party at London’s Savoy Hotel, there were plenty of reasons to be optimistic about the future of the Corporation. It had a troubled start, but the future appeared bright – and a dazzling array of new products was adding to the excitement…
Let’s deal with those first: The Morris Marina (launched in 1971) was seen in 1973 as a roaring success – at least as a business venture. For 1973, it was second only to the Ford Cortina in the UK Top Ten sales chart, thus British Leyland’s best-seller. Work on a much improved successor for 1975 was well underway.
The Austin Allegro was on the cusp of being launched when that party at the Savoy was held, and great things were expected of it – as a successor to the BMC 1100/1300, it was forecast to conquer 10% of the domestic market while expanding British Leyland’s sales on the continent beyond the base built by the Mini – replicating that car’s pan-European success in the segment above.
The new models: looking good
Work through the numbers, in the context of booming demand, and that results in a huge number of Allegros and huge boost to British Leyland’s output.
Away from the ‘volume cars’, there was plenty to talk about also. The MGB GT V8 was a newcomer that summer and, with fuel prices still cheap, looked a winner.
At Rover the new 2200 models freshened the admired 2000 saloon with more power and better trim, while a huge new factory was under construction at Solihull for the forthcoming SD1 range which was intended to lift Rover output onto a whole new plane.
At Triumph June 1973 would see the launch of the exciting Triumph Dolomite Sprint while 1974 would see the dedicated TR7 plant at Speke (No.2) start building the new corporate sports car, which was expected to attain new heights in terms of production volumes for a British sporting model.
Meanwhile, at Jaguar the substantially revised Series 2 range was being readied for an autumn launch and would be displayed (including the very beautiful XJC) at the Frankfurt Motor Show in September.
Expansion plans: looking good
Agreement had (at last) been reached with the British Government to allow expansion of Jaguar’s Browns Lane plant at a cost of £60m and, with waiting lists for Jaguars stretching to years, there was little doubt such a bigger factory could be filled.
Not only that, but in the southern hemisphere Leyland Australia was launching the big new Leyland P76 sedan, at the same time as Allegro was being launched in the UK – illustrating the multinational reach of the Corporation.
Again, optimistic volume forecasts saw Leyland P76 lifting Leyland Australia out of the doldrums – it was essentially hoping to ‘build itself out of trouble’. The P76 was also expected to appear in South Africa, another important overseas manufacturing base.
A song for Europe
Spain was also a significant overseas manufacturing base and, in that busy month of May 1973, British Leyland had established (at considerable cost) full control of what became Leyland AUTHI, a move mirroring what happened in Italy a year before to create Leyland Innocenti. This gave British Leyland three wholly-owned car factories in continental Europe (the third being Seneffe in Belgium) with capacity to build 300,000 cars annually.
Moreover, those cars did not need to be clones of the UK range, for while the Spanish were already building the Austin Victoria (an ADO16-based saloon also seen in South Africa as the Austin Apache) – the Italians were gearing up for the introduction of the Innocenti 90/120 in 1974 – neither of the above would ever feature in the UK range…
Against this backdrop of a product-led renewal, Donald Stokes made some headline-grabbing announcements in his speech at that fifth birthday party.
Investment plans: revealed at the Savoy
A capital investment programme of £500 million would see large-scale renewal of the UK manufacturing infrastructure – to include a brand new Austin-Morris factory with capacity for 250,000 cars annually to be built in a development area (Teeside and South Wales were tipped as candidates).
In effect, Triumph would soon be building a new high-volume car in a (newish) plant, Rover would be soon building a new model in a brand new plant, Jaguar was in line for a new car factory and new models, and so was Austin-Morris with that proposed investment. In addition, a new £15 million engine plant was planned for Longbridge to build a new family of aluminium engines.
The Corporation expected to sell 500,000 cars in continental Europe in 1975, doubling the 250,000 of 1971 – with the new Austin Allegro clearly central to meeting that forecast. At considerable expense, British Leyland had bought out and/or rationalised the patchwork of independent distributors it inherited in many export markets, seen as key to unlocking greater sales on the continent of Europe.
The struggles are behind BLMC…
The struggle to introduce Measured Day Working had been won at both Cowley and Longbridge, eliminating in those plants the Piece Work system which was at the root of so many grievances. It was hoped this would usher in a new era of industrial harmony and reduce the incidence of strikes which had prevented British Leyland from meeting demand during 1972. Most disastrously, Jaguar – which had the potential to generate a lot of profit – had been on strike for ten consecutive weeks in 1972, resulting in Jaguar building fewer cars than the previous year despite red-hot demand.
The UK market was still booming, something that had seen a surge in imports as UK manufacturers struggled to meet demand, but many saw the sudden popularity of cars like Datsun as a temporary phenomenon, which would fade away once British Leyland got its act together and new products (Allegro notably) answered the challenge.
Despite losing market share in the UK since 1971 (something that could be blamed on supply constraints) British Leyland was selling everything it could build in early 1973, and selling more cars in the UK than ever before, thanks to the growth of the market.
So even though imported cars had taken 23.5% of 1972 registrations (comparable to West Germany where imports already accounted for 23% of sales in 1969) – this was less of a concern than it would later become.
The downhill slide begins here…
Why? Well, in a nutshell, things started to go wrong almost from the moment Donald Stokes sat down after making his speech at the Savoy that balmy May evening.
The new Allegro on which they had “bet the farm” received a luke-warm welcome when unveiled in late May, which would have set alarm bells ringing, and in June a strike halted production at Longbridge for three weeks.
Reports of design flaws and a safety scare (rear hub bearings) would follow. In Europe’s largest car market of West Germany, the importer refused to take them until quality improved. Production of the Innocenti Regent version in Italy was halted after 18 months, and Seneffe in Belgium found itself building far fewer than once planned, as did Longbridge. The customers weren’t there.
In May 1973 the British Government finally accepted the UK economy was ‘overheating’ with the sucking-in of imports (especially car imports) being a symptom of that, as was the starving of important export markets of product – a sin British Leyland was certainly guilty of.
Chancellor Anthony Barber (forever famous as architect of that Barber boom) began to raise interest rates which had reached 11.5% by July 1973. The property market weakened and new car sales began to flag – although 1973 as a whole with 1,661,000 units retailed was still marginally ahead of 1972.
But boom definitely turned to bust in the autumn following the sudden jump in oil prices sparked by the war in the Middle East. A raft of grim economic statistics lie behind the rapid shift at British Leyland from expansion to crisis management – with 1974 being essentially a year where the Corporation battled (unsuccessfully) to avoid becoming a ‘ward of the state’.
From bad to worse the following year
UK car sales slumped dramatically (30%) to 1,268,000 units for 1974. But importers, far from fading away as the German bubble cars had in the early 1960s, held on to their share of a shrunken market. British Leyland’s continental sales failed to expand with the 1975 figure for BLMC being just 150,000, – mostly Minis still.
Optimistic forecasts had been defeated by a European recession and a lack of appealing products.
(The shortfall between the 500,000 forecast, and that outcome, would have been enough to fill Longbridge for the best part of a year – though the plan was to build many of those additional cars in the continental plants).
Expensive petrol saw a slump in sales of bigger, more profitable cars especially and a reversion to the low margin Mini. With European export markets also in recession, it would have been hard for the Allegro (even if better conceived) to make many inroads against the established players in Europe, which were discounting heavily, and Allegro output would always disappoint.
Energy shortages provoked by the Miners’ dispute led to the Three-Day Week in early 1974 and British Leyland found itself generating huge quantities of red ink. Inflation soared (towards a peak of 27% in mid-1975) causing huge problems for British Leyland which traditionally only adjusted car prices twice yearly, but was faced with suppliers raising prices much more frequently.
Against that inflationary backdrop, pay-bargaining became even more of an energy-sapping and dispute-ridden nightmare.
From a first half profit of £22.8 million a year before, the first half of the 1973/74 financial year saw a loss of £16.6 million. British Leyland’s car production in the UK slumped from 916,000 in 1972 to 738,000 in 1974, despite adding the new Allegro at the heart of the range. And 1975 was even worse with just 605,000 cars built.
Most of the plans announced with great fanfare in early 1973 would be pruned back or cancelled, as would others behind the scenes such as the Triumph SD2 intended to replace the Triumph Dolomite, and the ADO74 supermini. Plans for a new Austin-Morris plant, new engine plant and the expansion of Browns Lane were also all shelved.
There was a ‘fire sale’ of overseas assets with hasty retreats from manufacturing in Australia and Spain, and the sale of Innocenti in Italy.
In many ways, the company had become a victim of circumstances beyond its control.
Much more detail on the troubled times of British Leyland in Chris’s three books available on Amazon: British Leyland: Chronicle of a car crash, British Leyland: Betting on a Miracle and Export Drive: BMC & British Leyland Cars in Europe and the World.