At least a million families in Britain depend on the giant British Leyland Motor Corporation. Nearly 200,000 collect pay packets from its factories. The rest make accessories or work on distribution. A question mark now hangs over all those jobs. For British Leyland Is facing trouble.
Production schedules have been wrecked by strikes. The company’s share of the British car market has dwindled to a lowest-ever one-third. Profits — £40,000,000 last year — crashed to £1,000,000 in the first half of this financial year. On the Stock Exchange the shares have crumbled from last year’s 18s. to 6s., wiping £300,000,000 off the company’s value.
British Leyland have been forced to produce’ skeleton’ cars without many components to keep their production lines moving.
In this question-and answer session, Lord Stokes, who started as an apprentice on the factory floor and now heads the seventh largest company in Britain talks about the present and the future.
What went wrong?
Lord Stokes – ‘We were happy running Leyland—a well organized outfit — but one has to look to the future. The idea of a merger with the British Motor Corporation was put into our minds. With pressure and promises from the Government, we eventually agreed to a merger. We felt it was vital for this country to have a viable British owned motor industry.
I will admit two failures. We thought BMC was in a better condition than in fact it was. And we thought we would have a better response from people at all levels whose jobs we were trying to save. We were trying to save an industry. But some people cannot see beyond the short term — of getting as much out of it as they can.
The BMC cupboard was bare when we opened it. There were no new models. There had been a bad lack of capital investment .’
What are you doing to put things right?
Lord Stokes – ‘We have reorganized Austin – Morris and Pressed Steel into one unit. We have torn down an inadequate motor car factory at Cowley and built a brand new one. We have invested £30,000,000 in producing a new family car — a
Morris. It will be out in January.
We inherited the Maxl. We have now got it right—it is now a very good car. I believe we have now got B.M.C. into the shape it should have been in.’
Why are labour relations so bad?
Lord Stokes – ‘ We are in the middle of a social revolution. People are becoming better educated. They are thinking. They discuss and query. But there is no constructive thinking. It is easy to criticise, but few people are putting up satisfactory alternatives .
The day when management imposed its will on the workers is gone.
In future we will have management by consent—with participation and co-operation from everyone. But people will have to accept discipline too—they will have to abideby the decisions in which they participated. This applies to workers, trade unions and management.’
And if they refuse?
Lord Stokes – ‘We would have anarchy. We can never go back to the old system except by some form of dictatorship —
terrible .The motor industry is a conveyor belt—break one link in the chain and the whole thing grinds to a halt. British Leyland is the most vulnerable. Our competitors have dual sources—factories on the Continent as well as here. We are completely dependent on this country.
On the good side we have made very significant improvements in our labour relations. There has been a great deal of responsibility and co-operation. New wage structures have been introduced.’
You employ 190,000 people. Is that more than you need?
Lord Stokes – ‘I am not going to answer that.’
Strikes in components factories have forced you to buy a lot of parts abroad this year. Will you buy more abroad in future?
Lord Stokes – ‘ We are looking everywhere in the world. But we are a British company and we’d prefer to buy in Britain , where things are near at hand and we know the suppliers.
But where we used to buy all our glass from Pilkingtons , we had to go to Italy, France and South Africa during their strike. We are now buying quite a percentage of glass abroad and it is coming in cheaper than British glass. We are also bringing tyres in from abroad—it’s crazy’!
Foreign cars now account for one in every seven sold in Britain — while your share of the market has gone down to 33 per cent. Can you beat the imports back?
Lord Stokes – ‘ The drop to 33 per cent was caused by lack of supplies. I believe that the range of cars provided by British manufacturers is more than competitive. This is proved by the fact that we sell 50 per cent overseas. You must be competitive to do that .’
Do you make profit selling overseas?
Lord Stokes – ‘ On some cars we make money overseas. On others it’s very marginal. Any manufacturer makes more money on the domestic market. There is very little profit in selling- a car anywhere. In a good year the profit on a car like the Mini is only £4 to £5. You have to sell a million to make £4,000,000 or £5,000,000 profit.
I do not think that imports would have gone up from 10 per cent to 15 per cent, if British cars had been available. But once they get into the market it is difficult to get them out.
It is not a bad thing to have imported cars —after all we expect to sell British cars in other countries.’
Do you still own 30,000 British Leyland shares as shown in the last annual report?
Lord Stokes – ‘I’ve bought some more since then. I now have 36,000. I am a business manager, not a business owner.
But if ever I started in business again I think It would be in a one-man business .’