British Leyland 1980 Corporate Plan

Part of the debate – in the House of Commons at 12:38 pm on 16th May 1980.

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Photo of Mr Terry Davis Mr Terry Davis , Birmingham Stechford 12:38 pm, 16th May 1980

I simply hope that the Minister will apologise for the failure of his Department and the Secretary of State to provide the information to us. I shall respect him much more for that than if he tries to wriggle, as the Minister of State did.

Then we have a peculiar insistence on comparing performance in 1979 or part of 1979 with performance in previous years. I am not sure why the Secretary of State has decided to use only two previous years, 1977 and 1978, unless it is intended to compare the performance of British Leyland under Sir Michael Edwardes with its performance during the year before he was appointed. Leaving that on one side, surely the best way to judge the performance of management is to compare what it has achieved against what it undertook to achieve.

Nowhere in the document can I find any comparison of actual performance with budget or target except where we are told that United Kingdom car sales were slightly above budget for the first half year but probably below budget for the year as a whole. We are not given any clear information about the extent of the difference, nor told the extent to which sales exceeded budget for the first half of 1979 thanks to the market being higher than forecast as distinct from sales effort.

I should also like to point out that there is an apparent inconsistency between the information in paragraph 15 and the statement in paragraph 11 that sales revenue suffered from lower than planned sales volume, unless paragraph 11 is intended to refer to the combined sales targets and actual sales volumes for BL Cars and Leyland Vehicles, in which case the sales performance of Leyland Vehicles must have been significantly worse than the performance of BL cars.

I come to my next point about this inadequate document. In some places, we are given separate figures for BL Cars and Leyland Vehicles. In other places, we are given aggregate figures for BL Cars and Leyland Vehicles together and presumably also including information for BL Components and SP Industries. I am forced to the conclusion that the information has been presented to Parliament in a way that is designed to prevent hon. Members from forming a considered judgment about the performance of the company and its management.

I take one specific example of what I mean. We are told in the document that the average productivity for cars during the first nine months of 1979 was 5.2 cars per man year compared with 5·8 during the first six months of 1979 and 5.7 in 1978.

Incidentally, the hon. Member for Oxford said that productivity had improved during the last 12 months. I do not know where he got the figure from. It is not contained in the document before the House.

Everyone knows that, in any case, these figures are affected by the mix between Austin-Morris and Jaguar-Rover-Triumph vehicles. In 1978, Austin-Morris produced nearly twice as many vehicles per man as Jaguar-Rover-Triumph. That is no criticism of Jaguar-Rover-Triumph; it takes more labour to produce the more expensive and specialised vehicles. At the same time, it is obvious that if BL Cars made proportionately more JRT vehicles than Austin-Morris vehicles in 1979 than in 1978, productivity will appear to have declined when, in fact, it has not declined. We do not know because the information is not given. It has not been presented to us in the document before the House. If Sir Michael Edwardes did not give this sort of detailed information to the Secretary of State, the right hon. Gentleman should have asked for it.

This lack of information is even more striking when we look at the BL 1980 corporate plan. I understand the need for some figures in the 1980 plan to be regarded as confidential, although I suspect that BL's competitors have much more information than we have been given about what BL is trying to do.

Productivity is nearly always regarded as the key indicator. Why cannot the Secretary of State tell us BL's productivity target for 1980? No such figure appears to be contained in the document before us. We know what the target was in 1979. Again, that is not in the document. It should be in it, but it is not. The productivity target for 1979 was 6.0 cars per man year. For 1978 the target was 6.4 cars per man year. In that year the performance was about 10 per cent. lower than the target, so Sir Michael Edwardes set a lower target for 1979. He missed that by about 10 per cent. as well. And I am not surprised because, in my view, the approach of Sir Michael Edwardes and that of the BL board is wrong.

There are two ways of improving productivity. The first is the one that has been chosen by BL—namely, to keep the same level of production and to reduce the number of employees. The second is to keep the number of employees the same and to increase production. That means, that it is necessary to sell more vehicles. That is BL's real problem. It is not a production problem. The company has a sales problem. When this has been raised in the House, we have been told by the Secretary of State that there are waiting lists for some vehicles. That is true as far as it goes, but the waiting lists are usually for specialist vehicles, and what matters in this context is the volume car business. For this purpose I am including the Rover saloon in the phrase " volume car ".

My most serious criticism of the plan is that it is a plan for contraction whereas we need a plan for expansion. We have already been told that the plan has been accepted by those who work at BL. The hon. Members for Bromsgrove and Red-ditch (Mr. Miller) and Oxford told us that the work force has accepted the plan against the advice of trade union leaders. If the English language means anything, those statements were rubbish.

The engineering union, ASTMS and other unions accepted the corporate plan. It was not accepted by some other individual unions, but it was endorsed by the Confederation of Shipbuilding and Engineering Unions, which recommended to those who work for BL that they would vote for the plan. It is true that some individual unions continue to oppose it, but if words such as " trade union leaders " mean anything it was the trade union leaders who urged employees to vote for the plan.

I am not surprised that employees voted for it or that trade union leaders suggested that they should do so. They had no alternative. They were given two options. They were described by the Minister today—namely, " Vote for the plan or collapse." In effect, there was no choice. It was a matter of accepting death or hoping for survival. That was the " choice" presented to the work force, and it was not an attractive one.

There are problems in arguing that BL should set out to increase its sales. There are problems with the model range. The, company needs to introduce new models. That will take time. In the meantime, BL salesmen are trying to sell the company's vehicles against a difficult background. That does not mean that we should sit back and accept that nothing can be done. We must not allow British Leyland salesmen to use the model range as an excuse for poor performance. To be fair to them, it is not their fault only. They are selling in an increasingly difficult market.

The best part of the corporate plan is the introduction, particularly paragraph 3, which sets out the reasons for the crisis that hit British Leyland last year. It is clear that the crisis had nothing to do with strikes. It is clear that it had nothing to do with trade unions or with the quality of the cars.

Three factors are listed in the introduction to explain the crisis at British Leyland last year. The first is the substantially lower forecast of world-wide demand for vehicles following the 1979 oil crisis. The second is the strengthening of sterling affecting both overseas revenue and British Leyland's competitiveness against imports. The third is a drop in BL's United Kingdom market share for both cars and trucks due largely to the increased competitiveness of imports.

Those are the real reasons for the crisis which hit British Leyland last year. It is obvious that the Government cannot do anything about the first factor—the size of the world market—but they can do something about the value of the pound and the level of imports.

The tendency is for Conservative Members and Ministers to suggest that they have done everything necessary by agreeing to finance the British Leyland investment programme. Their theme is " We have given them the money and it is now up to management and the work force to make British Leyland succeed." That view came across clearly in an intervention by the hon. Member for Knutsford (Mr. Bruce-Gardyne), who referred to the amount of support given by other Governments to their national motor industries. He sought to suggest to my hon. Friend the Member for Nuneaton that the amount of financial support given by those other Governments was less than the support given by the previous Labour Government and by this Government.

That intervention was significant because it is clear that some Conservative Members, and the Government, think in terms of financial support only. They believe that they have done everything that needs to be done by making the money available for the investment programme. Foreign Governments do not see support simply as a matter of money. They support their own motor industries in other ways.

It takes time as well as money to introduce new models. Without time, it can be a waste of money to finance the investment programme because by the time that programme bears fruit the market, unless we are careful, may have disappeared.

The Government can take action to help in the retention of British Leyland's market. We have heard about interest rates. The hon. Member for Bromsgrove and Redditch said that the Government were tackling the problem of high interest rates with resolution. I hope that we never see the Government being flabby. Everybody deplores the fact that the exchange rate is so high and the Minister referred to the petro-pound. It is within the power of the Government to take action to stabilise the exchange rate or, if necessary, reduce it to ensure that our exports remain competitive and that imports do not remain as cheap as they are now.