British Leyland chief given the unenviable task of turning round the UK car industry in the late 1960s
Lord Stokes, who has died aged 94, had what the Financial Times described as “the toughest job held by any boss in Britain” when, as Sir Donald Stokes, he was given a key role in trying to turn round the British-owned car industry in 1968. The engineer/salesman who symbolised the go-ahead, vibrant, new business elite, had just become chief executive of British Leyland Motor Corporation (BLMC), the flagship company created from Leyland Motors and British Motor Holdings (BMH).
Technology minister Tony Benn had tried, in 1966, to persuade the two to come together to save the British Rootes Group from the clutches of the US firm Chrysler, revealing in his diaries that, in October 1967, Stokes and his opposite number Sir George Harriman had been harangued by prime minister Harold Wilson at Chequers. The two industrialists had resisted: “Donald Stokes was a buccaneer and Harriman was a statesman,” wrote Benn. But there was more to it than that. Stokes was the chairman of the Leyland truck and bus company, a successful, small manufacturer which had moved into cars with the acquisition of Standard-Triumph, concentrating on the low-volume upper end of the market, including the famous Rover brand.
Harriman’s company, BMH, had its main business in the mass market, where it competed directly with Ford and Vauxhall. It was a sprawling mess in almost every conceivable way, largely as a result of the mishandled Austin/Morris merger in the early 1950s. No sooner had he sealed the 1968 “merger” (it was effectively a takeover of the larger company) than Stokes wished he had not. And despite his previous successes, he was indeed not up to the task.
Maybe no one would have been equal to the challenges of tackling decades of under-investment, layers of incompetent management, and an immensely powerful trade union structure. It would have needed one of Margaret Thatcher’s 1980s favourites, with the vision and ruthlessness to create a revolution, and the skill to bring the company through it in one, effective, piece. Stokes had the vision but not the ruthlessness. His finance director, John Barber, said: “In many ways he was too kind a man to have taken over BMH.”
Born in Plymouth, Stokes was the only son of the city’s traffic manager. After Blundell’s school, Tiverton, Devon, in 1930 he took the unlikely path to Lancashire and an engineering apprenticeship at Leyland Motors, including engineering studies at the Harris Institute of Technology in Preston.
He married his wife Laura on the eve of the second world war, and they had a son, Michael. After leaving the Royal Electrical and Mechanical Engineers at the end of the war with the rank of lieutenant-colonel, in 1946 he persuaded his chairman that Leyland needed an export drive, and that he was the man to direct it. This was his most successful period in business. He became a media figure in the 1950s, especially for selling London buses to Cuba, and his optimistic, outgoing nature, combined with high energy, were ideally suited to the brash salesman’s role.
His successes brought him into general management: he became managing director of Leyland in 1963. Stokes enjoyed the power of the top position and the platform it gave him for promoting the modernisation and internationalisation that were a key element of the Labour project under Wilson, but he was never as successful as he had been selling buses. For a while he was a Wilson favourite. He was put in charge of arms sales in 1965 and knighted for services to exports in the same year. But it was not to last. The omens looked good, however. The government had set up the Industrial Reorganisation Corporation to shake up British industry (Stokes himself was on its board and briefly deputy chairman). And Arnold Weinstock was showing, with his controversial takeover of the electrical giant AEI, how to make takeovers work, even if that meant politically unpalatable closures and redundancies.
Stokes had already proved himself through integrating Standard-Triumph into Leyland. But BMH was a different matter. The biggest problem was a lack of management, especially in finance and marketing, to challenge the dominance of the engineers who ran the place. (It was said that the first time the sales people saw new models was when they rolled off the production line; a total absence of costing meant that the Mini failed to make any money.)
The new group had more than 40% of the UK car market, but this was before the arrival of Japanese and other Asian manufacturers, and before Britain’s membership of the Common Market made continental models more competitive. On a European scale, it was small, though BMH brought with it factories in Belgium, Italy and Spain, and was a successful exporter. BLMC also had some fine brands, ranging from the Mini, through the hugely popular MG 1100 and 1300, to the Morris Oxford, Rovers and Jaguar at the top end. But there were also the good old Morris Minor, the Triumph Herald, the Austin Cambridge, Land Rover – and so on. In fact there were 18 models in total, spread around 70 factories, compared with the handful produced by Ford and Vauxhall in just a couple of plants. Productivity was half the level at Ford, though that was partly because equipment was often 40 years old.
Stokes saw the need for rationalisation. He also needed to sort out an antiquated piecework payment system which fuelled union disputes, delayed the introduction of new models and methods, and left production well below theoretical capacity. But the worst problem he inherited from BMH was a complete lack of new models. Six years after Ford’s launch of the Cortina, there was no Austin or Morris model to compete with it.
The new boss of Britain’s flagship carmaker therefore found himself in a bind which he was unable to get out of. He needed to introduce new models quickly: the Maxi, Morris Marina and Austin Allegro were the result. But he also needed to completely overhaul the group’s plants and systems, which would inevitably hit production in the short term. BLMC needed to spend £100m a year, but its profits never hit more than £50m. Stokes’s solution was to sweep in with a demonstration of great energy and urgency, but with an underlying philosophy of gradualism. “We are not going in as axemen,” he declared on his first day, when in fact that was probably the only time he could have got away with doing so.
Immediately, he disappeared on a trip round the group’s African and Australian operations, giving another misleading signal to his 200,000 employees, and hinting at his zest for high-profile action rather than management change. A flurry of activity began at home, but it was committee activity, and mostly concerned with pinning labels on organisation charts rather than actually shaking anything up. It was two years before a new structure was introduced, and – astonishingly, given the importance of labour relations – before an industrial relations director was appointed.
Wilson made Stokes a life peer in 1969, but by then it was becoming clear that the enthusiasm demonstrated by the new Lord Stokes of Leyland was not enough. He was forced to deny that the group needed more cash, and that he was looking for another job.
In 1970 the new group, far from reaching his million cars a year target, made fewer vehicles than its constituent companies had before the merger, and Labour lost the general election. At the start of the following year, Stokes had to confess that the company could not pay its dividend to shareholders.
The short-lived economic boom under the Tory chancellor Tony Barber provided some breathing space. But even this brought problems, because BLMC simply could not produce enough cars to meet demand.
In 1973 Stokes made a limited show of relaxing his grip on the group. He appointed John Barber as managing director, although since he retained the title of chief executive this was largely cosmetic, Stokes’s salesmanship still driving strategy. His targets in 1973 demanded a 50% expansion in production: Rover’s Solihull plant was to get a £50m investment, Jaguar’s 25,000 capacity was to be doubled, Triumph was to build a new sports car, and production in Spain was to be tripled.
With these typically ebullient plans, Stokes drove headlong into the oil crisis, the subsequent industrial chaos and roaring inflation. His eternal optimism produced only financial disaster.
With Benn back in office as secretary of state for industry on Labour’s return to power in 1974, Stokes was forced to go cap in hand saying he just needed a bit of money for investment. But by the autumn the group was on the verge of collapse. The government organised an injection of £100m, but signalled the end of Stokes’s reign by setting up an inquiry under another industrialist, Lord Ryder. Ryder duly reported in spring 1975. His most damning indictment was that ever since its formation, BLMC had been making “wholly inadequate” profits, but that matters had been made worse by paying out virtually all this profit in dividends.
The Ryder plan proved no more successful than Stokes’s efforts, but the super-salesman was sidelined as the company was nationalised. After toying with walking out, he accepted being kicked upstairs as president, but his involvement was largely symbolic. Stokes finally left the board in 1979, when Thatcher, then the new Tory prime minister, brought in Michael Edwardes. By then BL’s market share was down to 20%. During the 1980s and 90s Stokes took a number of board seats, some involving cars in subsidiaries of the Lonrho group, others in local radio. But he maintained a low public profile.
His first wife died in 1995, and in 2000, at the age of 86 and as the remnants of BL were being sold by BMW, he married Patricia Pascall, a 70-year old widow. His comment on the car industry was: “I think it is sad that it is going into a terminal state of decline.” But the fact is that the decline began even before he helped create BLMC.
He once said that he had been like a man walking quickly in front of a steamroller. Eventually the steamroller caught up.
He is survived by Patricia and Michael.
Donald Gresham Stokes, Lord Stokes of Leyland, industrialist, born March 22 1914; died July 21 2008