Things simply got worse for American Motors. In May 1978 the Environmental Protection Agency ordered the recall of all of AMC’s 1976 cars, a total of some three hundred thousand vehicles, to correct a fault in the pollution control system. The cost of this recall was estimated at around $3 million – more than AMC had earned the previous quarter. Strong Jeep sales enabled the firm to make a small profit in 1978–80, but new emissions directives due to come into force for four-wheel-drive vehicles in 1981, which necessitated costly engineering work on all new and existing Jeeps, prompted another nosedive in profitability. America wanted small cars, but AMC had the wrong product line and, in its ageing plant at Kenosha in Wisconsin (then the oldest continuously operating car factory in the world), an out-of-date and inefficient production line. In early 1980 the banks refused AMC further credit and, as its US market share dipped below 2 per cent (kept afloat only through healthy Jeep sales), AMC decided to throw in the towel. In 1981 the firm sold Renault a 22.5 per cent interest in the firm, in return for a $150 million cash injection and the rights to start building the Renault 5 in the US. This was effectively a Renault takeover: the new AMC president of January 1982, José Dedeurwaerder, was a Renault executive, and by 1983 Renault owned 49 per cent of the firm. New, Renault-designed, frontwheel-drive cars began to be produced at a modernized Kenosha; the first, the AMC/Renault Alliance, was merely a re-skinned Renault 9. On 14 December 1987 the last AMC-badged car, an Eagle crossover SUV, left Kenosha.
By then, even Renault had withdrawn from the fray. Many at the French car giant had been sceptical about the AMC acquisition, seeing the loss-making American firm simply as an everlasting money pit – although Renault chairman Georges Besse insisted that profitability was not far away. However, on 17 November 1986, Besse was assassinated by members of the communist terrorist group Action Directe, which cited the tens of thousands of workers Besse had sacked in France (redundancies partly made necessary by the poor performance of Renault’s loss-making AMC division) as one of the reasons for the murder. After this tragedy, Besse’s dispirited colleagues gave up and, in March 1987, sold AMC to Chrysler.
At Chrysler, Lee Iacocca was only really interested in acquiring the Jeep brand; in 1992 Chrysler finally unveiled the Jeep Grand Cherokee, the flagship SUV that AMC and Renault had been developing. Yet, once again, Chrysler made the mistake of believing that the cut-price purchase of a flagging car maker would lead to increasing sales rather than haemorrhaging profits. Despite the exciting new Jeeps, Chrysler’s market share continued to decline until, in 1998, Chrysler itself was taken over by Daimler-Benz of Germany, in what was initially billed as a ‘merger of equals’ but which, it was quickly apparent, was really a straightforward acquisition. Daimler-Benz was determined to emulate its great rival, BMW, which had recently bought the loss-making Rover Group in Britain. However, much as BMW regretted buying Rover, soon Daimler-Benz was lamenting its purchase of Chrysler. In August 2010, much to the horror of the local population and the sadness of the motoring press, Chrysler’s German management announced the closure of the historic former AMC plant at Kenosha.
Across the Atlantic, the effects of the oil crisis hit the British car industry like a tsunami. Aside from outstanding models such as the Mini, British family cars found little favour outside traditional Commonwealth markets – and even these were turning increasingly to German and Japanese rivals. British car makers were also winning a reputation for poor build quality and strike-prone factories. Industrial relations at most UK plants were abysmal, as unrealistic union demands met head-on with blinkered management. By 1975 Toyota was producing thirty-six cars per employee per year, and Honda nearly twentythree, while Ford UK was able to make only seven and BL’s factories a dismal four.
Much of the blame for this decline can be assigned to inadequate management. Whereas in France, Germany, Japan and America, top-flight graduates – not just from engineering but from a wide variety of disciplines – were encouraged to enter the motor industry, in Britain there had been a long-standing prejudice against graduate talent and, accordingly, far too few of Britain’s bright young graduates chose auto manufacturing. Men like Morris, Austin and Lord, engineers who had worked their way up from repair shops or the factory floor, distrusted men from dissimilar backgrounds and despised what they viewed as peripheral functions such as product planning, marketing and financial forecasting – operations that were increasingly essential to the automotive world. The result was that mediocre British management was unable to cope with the changing circumstances, and workers’ restlessness, of the postwar years. John Barber, who had joined BMC from Ford, later recalled of British Leyland: ‘I think my worst shock was the quality of the Midlands management. The management had been so bad since 1946 that labour had got out of control; the unions had taken control and the thing was getting chaotic.’ Barber was also astonished at the insularity of BMC and British Leyland – a quality that, again, probably derived from the poor education of many of its senior managers: ‘Everyone in Ford lived cars; they couldn’t help it. You were always watching what the customer wanted and looking forward to market requirements, whereas in BMC they didn’t seem particularly interested in cars. They weren’t interested in competitors. I remember asking a BMC director who had a problem … “What do they do at Volkswagen in Wolfsburg?” He said, “I don’t know; this is what we do at Longbridge.”’
Nor were BL’s workers’ representatives much more impressive. Geoffrey Whalen, who had started out at the National Coal Board prior to joining British Leyland (and who was subsequently to lead Peugeot’s British operation as its managing director after Peugeot’s buyout of Chrysler UK), was appalled at the inadequacy of Cowley’s union bosses, particularly when compared to the professional negotiators of the National Union of Mineworkers (NUM): ‘I was surprised at the relatively poor standard of union officials; they were neither so dedicated nor so professional [as those of the NUM]. On the whole they were of poor quality though there were obvious exceptions.’
It did not help that British Leyland’s model programme was also a shambles. While German and Japanese car makers concentrated on one or two principal products, their British equivalents were selling too many models made by too many factories, and had not invested sufficiently in future planning. BL failed to spot the growing market for fleet cars, which Ford of Europe and GM’s Vauxhall quickly cornered. And while Ford was refreshing models such as the highly successful Cortina every few years, BL still resorted merely to badge engineering, reissuing the same basic model under a different marque. John Barber later asserted: ‘What was needed was a really ruthless rationalization – models, people, the lot.’
The fate of Rover’s new large model, which was supposed to compete with BMW’s growing executive range, was a sorry tale that exemplified the almost insurmountable problems that beset British Leyland. Rather than adapt the formula of the splendid Rover P6 (as BMW was to do with its 3 Series from 1975), and having been prevented by BL management from developing its exciting P8, Rover introduced a wholly new body design in the form of the SDI or P10, which was effectively an oversized hatchback. The new car’s unmistakably seventies curves and lack of a boot were by no means to everyone’s taste – particularly the fleet buyers, who generally insisted on capacious boots for their corporate clients. (The P10’s designer, David Bache, had an Issigonis moment when he refused to incorporate a rear wiper on to the ‘liftback’ rear, declaring that the car’s aerodynamics would keep it clean. He was wrong and Rover had to fit rear wipers retrospectively.) Rover also used antiquated drum brakes at the rear, while the cheap-looking interior detailing was a retrograde step back from the impressive 2000 of 1962. Crucially, as had become commonplace in the British car industry, BL’s senior managers insisted that the car be mass-produced before it had been properly tested and all its faults ironed out, while at the same time saddling the untested model with wildly over-optimistic sales forecasts. The end result was thus a car the up-to-date styling of which
belied its appalling build quality, and which was plagued by faults after its launch (initially as the Rover 3500) in 1976.
While the 3500 was, at first, received well by the press, strikes meant that BL could not fulfil the demand generated by this coverage. There were not even enough cars available to display them properly at the Geneva Motor Show of 1977. And by the time Rover was able to clear the backlog of orders, the car’s ever-lengthening menu of faults had earned it a reputation as an unreliable lemon. Autocar noted the ‘gap between windscreen and pillars, which allowed in rain and draughts’, and concluded that the ‘general fit and finish was … poor’. The 2300 and 2600 versions of 1978 were underpowered and noisy; export sales were appalling and production targets were never met. On top of all this, the fuel shock of 1979 led to hundreds of unsold, fuel-hungry SD1’s rusting away in BL parking lots. The model was finally laid to rest in 1986, its place in the line-up being taken by a rebadged Honda.
Triumph fared little better under BL’s aegis. The car being developing to replace the Dolomite range, a four-door vehicle tagged the SD2, which looked a bit like the idiosyncratic Citroën BX, was axed in 1976 because BL’s management feared it would steal sales from the dismal Marina and its planned successor, the Maestro. To its eternal shame, BL also squandered the legacy of Triumph’s globally successful sports cars of the 1960s. The new Triumph TR7 of 1974 featured an ungainly wedge shape, a heavy tail, a pointed snout and an inexplicable ‘go-faster’ crease along the side. Performance was poor and build quality – as was typical of BL in the 1970s – was appalling. Road testers complained of ‘unbearable’ road noise at a miserly 78 mph. Most importantly, the TR7 was built as a fifties-style twoseater just when Datsun’s groundbreaking 240Z had introduced a ‘two-plus-two’ layout which allowed children or midgets to ride in the rear. American customers, whose parents had bought Triumph sports cars in droves in the 1960s, complained, with some justification, that they were being used as guinea pigs for a car that was launched before thorough testing had been undertaken. In 1982 the brand-new Solihull plant that made the SD1 and the TR7 was closed; production of the former went to Cowley, and of the TR7 to Speke. In the same year the old Vitesse brand name, which Triumph had once prized, was applied to an upmarket version of the ailing SDI.
Even Jaguar’s sure touch seemed to disappear. When British Leyland was created, Jaguar found itself chained to a patient on life-support. Submerged in a flailing combine principally geared to high-volume small-car production, both development and standards plunged. The classic E-Type was in 1975 replaced with the ungainly XJS, whose notorious unreliability earned it a wholly different reputation. Jaguar dealers found they were making more money on repairs than on sales. Even more disappointingly, heavy investment in the E-Type’s replacement meant that Jaguar could not afford to retire the model until 1996.
By 1974 British Leyland was broke. With the company headed for a £24 million loss, and its market share down to 32 per cent (from 41 per cent in 1971), the banks refused to extend its overdraft. Fearful of the mass unemployment that would result, the British government felt that it could not allow British Leyland to go under; Harold Wilson’s new Labour administration bought 90 per cent of the company and commissioned a report on the debacle from Lord Ryder, Wilson’s favourite businessman.
In 1974 Sydney Thomas Franklin Ryder, head of the Reed International paper and printing combine and known to his friends as ‘Don’, saw himself as Wilson’s industrial right-hand man. In November 1974, a month after winning the second election of the year, the premier had proposed Ryder as chairman of the new National Enterprise Board (NEB),1 a post he accepted the following year. At first, Tony Benn, the industry minister, welcomed the appointment, finding Ryder ‘very energetic and … sympathetic’; but soon Benn was labelling him ‘very managerial, rather conceited, and thinks he is the cat’s whiskers’.
Ryder’s background was in printing and he knew nothing of the motor industry. None of this would have mattered if his report had been realistic and had sought to match BL’s future planning to its resources. But instead it was naively optimistic, presenting Wilson with what he wanted to hear, rather than the stark facts. The increasingly self-important Ryder believed that he could turn the company round in just a few years. He proposed that there should be no redundancies, that none of BL’s fifty-five factories should be closed, and that the government should inject £1 billion into the firm in return for a two thirds stake in it – in effect, a nationalization.
For the next two years Ryder took a far closer interest in British Leyland than he did in any of the NEB’s other basket cases. Yet his constant interference proved futile. Stokes (kicked upstairs, as a result of Ryder’s reforms, to the non-executive role of president) later said that he thought Ryder’s team ‘were an incompetent lot’: ‘They published a report which was bland and innocuous itself and then mysteriously added that there were certain pages which were not for publication – and they were equally bland and innocuous’. Management was demoralized, strikes continued, and the Ryder plan, which had put all its eggs in the quixotic basket of a new Mini project, got nowhere. No new car at all appeared from any of BL’s plants for four years after the launch of the SD1 in 1976. There were some positive signs: union officials such as Bill Roche and Derek Robinson were invited to discussions between BL and the NEB – the first time the British car industry had ever dared experiment with German-style worker participation. But in 1976 Harold Wilson resigned as prime minister, and this proved a fatal blow to Ryder’s ambitions. Ryder resigned from the NEB, and from his involvement in British Leyland, a few months later, when only halfway through a five-year contract. His mission had visibly failed: BL’s market share in the UK had fallen from 32 per cent four years earlier to a dismal 23 per cent.
Harold Wilson’s successor as prime minister, James ‘Sunny Jim’ Callaghan, held no torch for political animals such as Ryder and happily waved him goodbye. Instead, in 1977 he appointed a far tougher industrialist, Michael Edwardes, a confrontational South African, as the new chief of British Leyland, throwing in a knighthood for good measure.
The combative Edwardes was not a motor man either. He had read law at Grahamstown University and had risen through the ranks of the Chloride Corporation, the battery manufacturer, to become chairman by 1974. Chloride was only a fraction of the size of mighty British Leyland, but he seemed to know the answers – decisive action rather than the bland, Panglossian palliatives prescribed by Ryder. Edwardes was single-minded in pursuing his ends – and he was convinced that his way was the right way. His attitude was remarkably similar to that of Margaret Thatcher, who replaced Callaghan after her party’s comprehensive victory in the 1979 general election, and his combative style won him many enemies in government as well as in the motor industry. Derek Robinson’s tart description of Edwardes as ‘ruthless and cynical’ was something with which most of Edwardes’s colleagues and acquaintances would have agreed. Admirers called him ‘the Mighty Mini’; critics within BL – of which there were far more – christened him ‘the poison dwarf’. And, like many aggressive managers, Edwardes was curiously sensitive to criticism. Accordingly, when his five-year contract expired in 1982, he abruptly left British Leyland for IT manufacturer ICL.
Michael Edwardes began by insisting his role be that of an executive chairman (‘I couldn’t accept less than the combined role of chairman and chief executive’, he later declared), dismissing the Ryder report as a ‘charade’, earning more subsidies from the Callaghan government, and making brutal job cuts of the kind from which the more politicized Ryder had recoiled. On his very first day, Edwardes dismissed all but three BL directors. The point was made. Two thirds of BL’s senior staff were culled and twelve thousand shop-floor staff lost via natural wastage. (A month after he joined, the NEB claimed back its promised bail-out because BL’s accountants had ‘misplaced’ their claim.) By 1982 Sir Michael Edwardes had sold off nineteen of the fifty-five British Leyland businesses he had inhe
rited five years earlier, and almost halved the workforce – cutting it from 196,000 to 104,000. One of the closures was the strikeplagued Speke No. 2 factory, where the Triumph TR7 was built between stoppages and which was only nine years old. Edwardes also scrapped the Stag’s planned replacement sports car, the impressive Triumph Lynx, and shut the old Abingdon MG works (which had enjoyed the best labour relations of any BL factory) in 1980. In effect, BL had already signed MG’s death warrant by designating the TR7 as BL’s only sports car. A year after Abingdon, the TR7 was itself axed.
In retrospect, Edwardes’s euthanasia of MG and Abingdon, while it may have made economic sense at the time, was a serious error. Edwardes also made another key mistake: having originally separated BL’s monolithic and unhelpful cars division into two parts, Jaguar-Rover-Triumph and Austin-Morris, after only two years he separated Jaguar completely and threw Rover and Triumph back in with the mass-market marques. While the decision was a good result for Jaguar, which began to recover under the new management of John Egan, it was disastrous for Rover and Triumph. Over the next few years, these two famous, resonant brand names were applied inappropriately downmarket cars (Rover) or simply as a badge for Japanese imports (Triumph).
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