The British Leyland merger (1968-2005) demonstrates how a government-mandated consolidation of nearly 100 car companies into one national champion failed catastrophically because it inherited competing brands (Riley, Wolseley, MG, Triumph, Morris, Austin) that fought each other in the marketplace, combined with poor management decisions, internal politics, and a fundamental productivity gap (6-7 cars per worker versus 12 for European competitors and 60 for Toyota), ultimately destroying almost every brand it owned while costing the British taxpayer over £3 billion.
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The Dark Story of British Leyland: How One Merger Destroyed Every Car Brand It Touched追加:
10:00 on the night of the 18th of December, 1974, and the House of Commons is nearly empty.
Tony Benn rises to ask Parliament for a government guarantee of up to 50 million pounds.
Without it, before the month is out, the company runs out of money.
Not a small company.
British Leyland, 40% of the British car market, a quarter of a million workers.
The morning papers have already found their headline, and the man who built it has gone to the airport.
Lord Stokes, chairman of Britain's biggest car maker, is flying to Egypt on a sales trip, the very day the taxpayer is being asked to keep his company alive.
A reporter catches him at Heathrow.
Stokes gives him five words, "I have nothing to say."
He had quite a lot to answer for, actually.
But that comes later.
Hold that night in your mind, because the rest of this story explains how it was reached and what it cost.
Over the next 30 years, British Leyland would put almost every famous name it owned into the ground.
Riley, killed off in 1969, barely a year after the merger.
Wolseley, gone by 1975.
MG, the sports car the whole world associated with Britain, had its factory at Abingdon shut in 1980.
Triumph, finished by 1984.
Morris, the same year.
Austin, the name on the side of the Longbridge plant itself, was deleted in 1987.
And right at the end, the last of it was sold for 10 pounds to four men who walked away with tens of millions, while 6,000 workers got the legal minimum.
The The that became the national joke of the whole affair had a steering wheel that wasn't even round.
This is the story of a merger that [music] was meant to save the British car industry and instead took it apart one brand at a time through decisions made by men who never had to live in the towns where the factories closed.
To understand the £10 sale, you have to go back to a country house in Buckinghamshire in the autumn of 1967.
The government wanted a champion.
Harold Wilson's Labour administration looked at the British motor industry, saw dozens of firms tripping over one another, and decided the answer was to glue them into a single giant that could stand up to Ford, to General Motors, to the Germans and the coming Japanese.
The man pushing hardest was Tony Benn, then Minister of Technology, the same Benn who would stand in the empty Commons seven years later asking for the rescue.
In October 1967, the key players were brought to Chequers, the Prime Minister's official residence.
George Harriman ran British Motor Holdings, the side carrying Austin and Morris and Jaguar.
Donald Stokes ran the Leyland side, the profitable one, with Rover and Triumph >> [music] >> and the truck business.
Harriman did not want the merger.
But when the Prime Minister asks, you do not find it easy to say no.
Harriman admitted as much afterwards.
After Chequers, he said, he felt an extra compulsion to go ahead. On the 17th of January 1968, British Leyland was announced. On paper, it was magnificent.
40% of the home market, around 250,000 employees, the biggest car plant in the world at Longbridge in Birmingham. Nearly 100 companies folded into one.
The newspapers called it a British General Motors.
It was carrying a fault line straight through the middle, and nobody in charge ever fixed it.
The new company owned brands that competed directly with each other.
The MGB sports car fought the Triumph TR6.
The Rover saloon fought the Jaguar. The big Austin fought the big Morris, fought the Wolseley.
All of them practically the same car wearing different grills.
This was the old trick called badge engineering, and Leyland inherited it and kept doing [music] it.
It meant that no single model ever sold in the numbers needed to make real money, because the company was forever splitting its own sales between its own showrooms.
Wilson is said to have remarked of the old firm that they always had 12 men where six would do.
The merger did not cut the 12.
It just gave them more badges to argue over. Stokes became the man in charge, and he never rationalized the range.
He had been handed the keys to a workshop with too many tools, and instead of choosing the good ones, he kept all of them and let [music] them rust together.
The one cull anyone remembers from those years is putting the same front grill on two versions of the Mini, and quietly killing Wolseley.
Everything else was left to fight itself.
And while the boardroom admired its own size, the factories were about to start telling the truth about the cars.
The first to tell it was the Austin Maxi, launched in the spring of 1969.
It should have been a triumph.
Britain's first five-door hatchback with a five-speed gearbox, the last design from Alec Issigonis, the genius who had given the world the Mini.
Instead, it arrived with the doors carried over from an older, bigger car because that was cheaper, an underpowered engine, and a gear change operated by a cable that felt like nothing anyone wanted in their hands.
A journalist from the time said driving it was like stirring treacle with a long, thin cane.
Austin had predicted it would take 4% of the market.
By the end of that first year, it had managed less than half of that.
They fixed the gear change eventually with a proper metal linkage.
But by then, the damage was done.
And the next car was already in trouble.
In 1970, came the Triumph Stag.
And the Stag is where the story turns from disappointing into genuinely tragic because it did not have to happen.
It was a beautiful thing, a sleek convertible styled in Italy aimed at the Mercedes drivers of the world at half the Mercedes price.
Triumph fitted it with their own new V8 engine.
That engine cooked itself to death.
The cylinder heads warped, the timing chains wore out. The water pump sat so high that the smallest leak left it pumping nothing but air.
Owners watched their dream cars boil over on the hard shoulder.
Here is the part that should make you angry.
The same parent company owned a brilliant, [music] proven V8 engine over at Rover.
Triumph refused to use it. Internal politics, pride, the usual boardroom reasons that mean nothing to a man broken down in the rain.
So, owners ended up doing it themselves, ripping out the Triumph engine and dropping in the Rover one the company had refused to give them in the first place.
Then, in May 1973, came the car that put a face to all of it, the Austin Allegro. [music] 21 million pounds was spent developing it.
It was meant to be Britain's sophisticated new car for Europe.
The designers' original drawings were sleek, then the cost-cutters got to work, forcing in bulky old engines and oversized heaters so the parts could be shared with other models, and the sleek car got fat.
And then someone, somewhere in the building, decided the steering wheel should be square, not round, square with the corners filed off so you could supposedly see the dials better.
They called it Quartic.
The public called it ridiculous, and the legend grew that if you jacked the car up wrong, the rear window popped clean out.
Lord Stokes went on the BBC and told the nation he was absolutely convinced they had a car that was outstanding in its standard standing in its class.
The Allegro became known the length and breadth of Britain as the All Aggro.
The car the company sold as proof of its sophistication became proof of the opposite.
And while the Allegro was earning its nickname, the money was running out.
Which brings us back to that empty Commons, that 50 million pound guarantee, and the chairman at the airport.
By late 1974, British Leyland could not pay its own bills.
The banks had got nervous about how much cash the company was burning just to keep the doors open, and they pushed Stokes towards the government.
The 50 million pounds was only a ceiling, a maximum, and within months, even that was not enough.
So, the government commissioned a report.
So, Don Ryder was sent in to decide whether Britain should keep British Leyland alive at all.
His team worked for about 14 weeks, and in March 1975, they delivered their verdict.
Letting the company fall, they argued, could put around a million people out of work once you counted everyone in the supply chain.
That figure was attacked at the time as wildly inflated, and it probably was.
But, it did its job.
The report said very large sums would be needed, and that only the government could provide them.
The government agreed.
In June 1975, British Leyland was effectively nationalized, the state taking a 95% stake.
The shares were valued at 10 p each, a valuation Stokes argued about personally.
Across the aisle, the leader of the opposition, Margaret Thatcher, gave her view of pouring public money into a failing car maker.
Her solution, she said, was not to go on putting massive subsidies into failure.
Remember that line.
She would be in [music] power within 4 years, and the bills would still be arriving.
The taxpayer now owned a car company.
The car company kept building cars that fell apart.
The proof arrived in 1976 in the worst possible package, because this time the car was actually good.
The Rover SD1 was a stunning fastback saloon with that proper Rover V8, and it won European Car of the Year, the last all-British car ever to do so.
For a moment, it looked like redemption.
Then, the bodies started coming back.
The paint flaked [music] off.
The trim fell away.
The electrics worked when they felt like it.
One road test reported you could see daylight through the gaps around the doors.
Police forces who had bought fleets of them canceled their contracts and sent the cars back early.
A Leyland planner summed up what the company had managed to build.
They had taken a Rover body, he said, and ended up with a Rover-bodied Cortina.
The Cortina, of course, being the Ford that was quietly eating them alive.
In March 1976, Ford overtook British Leyland to become Britain's biggest-selling car maker.
The crown had gone, and it was never coming back.
The men who owned 95% of this company now needed someone to run it who would actually make the hard choices.
In November 1977, they found him.
Michael Edward was a small, blunt South African brought in to either save British Leyland or shut it.
He understood his brief perfectly, and he put it in plain words.
Make Leyland work or close it.
He started closing things.
He sold off the bits that didn't fit, and he went looking for a fight with the man the newspapers had turned into [music] the face of everything wrong with the British worker.
Derek Robinson was the senior union convener at Longbridge, a communist, a committed man, and the press christened him Red Robbo.
Management blamed him for 523 disputes [music] over 30 months, and for the loss of 62,000 cars worth, 200 million pounds.
You should know that figure came from management itself, and that historians and Robinson's own colleagues have always disputed it, pointing out that one man could not physically have organized that many strikes, and that he often worked to stop the unofficial ones.
Whatever the true number, the strikes were [music] real and they were constant. In November 1979, Edwards sacked him.
Robinson had put his name to a pamphlet attacking the recovery plan and refused to take it back.
The unions balloted for a strike in his support. They lost it, 14,000 votes to 600.
Edwards was honest about why it had to happen.
From a strategic point of view, he admitted they could not have both the new small car and him.
The workers, when asked directly, backed the plan to save the company by more than 87%.
The man the press had blamed for everything was gone.
And it changed almost nothing.
Because the deepest problem was never really the men on the line.
The deepest problem was this.
By the late 1970s, British Leyland built roughly six or seven cars per worker per year.
The good European firms managed about 12.
And Toyota in Japan was approaching 60.
You cannot strike your way out of a gap like that and you cannot manage your way out of it either, not in time.
The factories were already being chosen to die.
Speak in Liverpool, the most strike-hit plant in the whole company, building the wedge-shaped Triumph TR7, lost a 14-week strike and was shut down with production hauled south and the best part of a model year simply thrown away.
And then came the one closure Edwards himself would call his single regret.
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Stories like this one only get told properly if people stay for the whole thing.
On a day the workers remembered as Black Monday, September 1979, it was announced that MG at Abingdon in Oxfordshire would close.
Abingdon had built more than half a million MGB sports cars.
It had a record of nearly 25 years without a strike.
It was by the standard of every other plant in the company, exactly the kind of factory you would want to keep.
They shut it anyway in the autumn of 1980 because the small numbers it built could not be made to pay inside a company this size.
The country did not take it quietly.
There was a march through London to save the MG.
A petition was carried to head office by Jean Cook, the daughter of Cecil Kimber, the man who had founded MG in the first place.
There was a debate in the Commons.
American dealers begged.
Every appeal was turned down.
The works were knocked down in 1997, and there are houses on the site now where the sports cars used to roll out.
So, by the early 1980s, the brand killing was well underway.
But two names did survive this story, and the way they survived tells you everything about what was wrong with the rest.
They survived by escaping.
Take Jaguar.
By 1981, Jaguar was losing 50 million pounds a year, and its reputation for quality was in tatters, partly because its bodies were painted in a plant that, by one account, could only properly manage three colors.
Then the company put a man called John Egan in charge.
On his first morning, he was met by a picket line at the gates of the Coventry factory.
Egan went to war on the faults.
He cut the hours it took to build each car from around 700 down to roughly 300.
He sold Jaguars cheap to police forces just to put hard miles on them quickly and find out what was breaking.
On the big American customer survey, Jaguar had been the worst car sold in the country.
Five years later, it sat in fifth place just behind Mercedes.
And the moment Jaguar was healthy, it left.
In August 1984, it was floated on the stock market. The sale eight times oversubscribed.
The thing was so badly run before Egan that someone had even let the Jaguar trademark itself lapse.
And it turned out to be owned by a sports equipment company in Pakistan.
Within a few years, Jaguar belonged to Ford, sold for around 1 and 1/2 billion pounds.
It got well and then it got out.
Land Rover survived the same way by being kept at arm's length from the rest.
It was set up as its own separate company at the end of the 1970s [music] and its independence was guaranteed.
Think of the Range Rover, launched in 1970 for just under 2,000 pounds.
So admired as a piece of design that in 1971, it was put on display in the Louvre in Paris as a work of industrial art.
While it sat in that gallery being admired by the French, its parent company back home was sliding towards bankruptcy.
The product was good enough to survive almost anything including the people who owned it.
That is the bitter lesson sitting underneath this whole story.
The only two brands that lived were the two that got furthest from the center.
>> [music] >> Everything held tight in the company's grip was slowly crushed.
The rest of the 1980s and the '90s was one long sale.
There was one more genuine success, and it was the small car Edwards had said he couldn't have alongside Red Robbo.
The Metro arrived in October 1980.
Launched with the line, a British car to beat the world.
Unveiled on a cruise ship called the Vista Fjord at a time when the company was shutting factories.
It sold well.
It kept the company breathing through the worst of it.
But it still couldn't fix the old problem.
It never sold in the European numbers the Ford and Volkswagen rivals managed.
So, it never delivered the savings that come with real scale.
It was a patch, not a cure.
And the marquees [music] kept dying.
Triumph, the name behind the Spitfire and the Stag, ended its days in 1984 building a rebadged [music] Honda under license, and then it was gone.
Austin, the name on the Longbridge gates, was quietly dropped in 1987.
The company that had owned almost every British car brand was running out of brands to own.
Then the disposals went wholesale.
The remaining car business, by now called the Rover Group, was sold to British Aerospace in 1988 for 150 million pounds.
The state had put billions in.
It got that back.
Six years later, in January 1994, British Aerospace sold the lot to BMW for 800 million pounds.
The way it was sold left a wound.
Honda had been Rover's partner for years, the firm that had quietly kept it producing decent cars.
Honda was given no real say and felt utterly betrayed.
Its president said the decision wrecked the long effort to build a future for Rover as a British company.
The Germans, meanwhile, started losing money fast, hundreds of millions of pounds a year.
And by 2000, [music] they broke the whole thing up.
Land Rover went to Ford. BMW kept the new Mini for itself, the one genuinely good thing it took away.
And the rest, the volume car business, the heart of the old empire, was handed to a group of four British businessmen for 10 pounds.
They were called the Phoenix Four.
John Towers and three others bought MG Rover for that single 10-pound note in the spring of 2000 with BMW throwing in a dowry of around 500 million pounds to help them on their way.
For 5 years they ran it.
Then, on the 8th of April 2005, MG Rover collapsed into administration.
Production at Longbridge had stopped [music] the day before.
Around 6,000 people lost their jobs against debts of nearly 1 and a third billion pounds.
It was the biggest single site closure Britain had seen in over two decades.
The workers received the legal minimum redundancy, around 3,400 [music] pounds each.
A study that followed them afterwards found that most who found new work took a pay cut, on average several thousand pounds a year worse off in real terms.
The four men at the top did rather better.
A government-commissioned report, running to over 800 pages, found that they and one other executive had taken pay and pensions worth around 42 million pounds, rewards the inspectors called unreasonably large, out of all proportion to anything these men had earned before.
One of them had bought a piece of software called evidence eliminator ahead of the inquiry.
No one was ever charged with a crime.
They were banned from being company directors, and that was the end of it.
So, let us do the final accounting the way that empty [music] Commons chamber once tried to.
The British taxpayer put more than 3 billion pounds into British Leyland in cash over the years.
Measured in today's money, one analysis puts the true cost at around 11 billion pounds.
In return, a company that in 1968 held 40% of the British market >> [music] >> and employed a quarter of a million people ended in 2005 with Longbridge silent and the workers queuing for their statutory checks.
And here is the roll call.
Riley, dead in 1969.
Wolseley, 1975.
MG at Abingdon, 1980.
Triumph and Morris, both 1984.
Austin, 1987.
Names that had been on British roads for the best part of a century.
Each one switched off by the company that was supposed to protect them.
The survivors all live abroad now.
Jaguar and Land Rover are owned in India.
The Mini is German.
There is still a small MG presence at Longbridge, but the company that builds those cars is Chinese.
Go back to that night in December 1974.
The near-empty chamber, Tony Benn asking for the money, and Lord Stokes at Heathrow flying away from it all, giving the reporters his four words, "I have nothing to say."
He was right in the end. There was nothing to say because the cars had already said it.
The square steering wheel, the engine that cooked itself, the body you could see daylight through, the factory at Abingdon with its 25 years of peace, shut anyway.
None of it was destroyed by a war or a disaster or a foreign rival who simply built better.
It was taken apart brand by brand and factory by factory by reasonable men in boardrooms making reasonable decisions who never once had to stand at the gates the morning the work stopped.
That is what one merger did.
And the people who paid for it were never the people who decided it.
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