Wednesday, 27 October 2010

Back From the Brink?

A good friend of mine often sings the praises of the decade taste forgot; the 70’s. He reckons the music was brilliant and the parties memorable (if he could remember them).

My impressions are of a dismal decade; constant industrial strife, terrorism, 1973’s oil crisis, 3 day weeks, the threat of nuclear Armageddon and lousy fashions. Most of the music was dire too.

I happened to read a book that brought all back, Michael Edwardes’ 1983 story of how he turned around the failing British car (and truck, tank, tractor, air-conditioning plants etc etc) giant that was British Leyland. Its called, rather ironically, ‘Back from the Brink’.

When Edwardes was appointed Chairman and Chief Executive by Callaghan’s Labour government in 1977, the company had experienced 300 strikes in the 6 months beforehand. He phoned up his opposite number at Ford; they’d also had 300 strikes in 6 months. Leyland lost 250,000 working days in all, a potential revenue of millions.

It was known throughout Europe as ‘The English Disease’. Leyland’s research showed that every time the words ‘Leyland’ and ‘strike’ appeared in the media, more would-be buyers turned away.

The mechanisms of the workforce agitation were interesting. Leyland’s workers were represented by a large number of different unions, all jealously guarding their members jobs and individually negotiated wages and conditions. The resulting demarcation meant it might take 4 different workers to change a simple component on a machine. Most of the strikes were unofficial; they were initiated without the agreement of the union leaders. All it took was the local union officials; conveners or shop stewards, to find some cause for offence and they led their member out. And if those workers were responsible for a key process, it would quickly lead to the shut-down of the plant, or to wider disruption.

Disputes weren’t only related to pay. In fact any attempt by plant management to make changes was met with resistance. In one case the Rover factory was shut down because the management tried to change the workers overalls, in another when a 5 minute discretionary rest break was stopped.

Edwardes was clear where the blame lay for allowing this culture of constant industrial action to reach the stage he faced: for years Leyland’s management had backed down in the face of union threats and industrial action. And the unions knew this, their whole strategy centred on this experience – that eventually the management would back down.

Until the ex-Chloride executive arrived, local factory managers trying to resist absurd union demands would be routinely overruled by senior Leyland directors.

It was no surprise that the result was industrial anarchy; it became accepted practise for workers on night shifts to sleep, agreements negotiated locally meant security staff couldn’t challenge or search workers, so expensive tools and components were taken out through the gates under their noses, workers who sabotaged parts couldn’t be punished, unions controlled the recruitment processes in many plants, and workers would leave shifts hours early having completed negotiated production quotas,

From 1977 on, the Leyland board determined to wrest control of the plants back from militant unions. But turning around a culture that had existed for decades proved to me a hardslog. Even in 1980, on the eve of the make or break launch of the Metro, there were a series of disputes as unions assumed that the management would roll-over to protect the launch schedule from disruption. Edwardes and his board didn’t back down, but they were forced to risk the whole critical product launch to make the point that those days were over.

On a more sinister note, some union officials were left-wing activists, dedicated to bringing about Leyland’s demise. Their thinking was that the business’s collapse, and the resultant unemployment of hundreds of thousands of workers, would ‘prove’ that capitalism had failed and this would be enough to bring about a socialist revolution. On the eve of the secret ballot of all employees on Edwardes’ key 1979-80 rescue plan a meeting was held at Longbridge between union leaders and the committee of the Communist Party of Great Britain, at which they planned their resistance. But the conspirator’s hubris helped bring them down; the misrepresentation of the results (overwhelmingly in favour)by some of the officials finally allowed Leyland to dismiss Derek Robinson, a key militant figure.

The sums of public money Leyland needed for survival were fantastic, even by today’s standards. Their 1980 rescue plan meant going to the government, cap in hand, and demanding for £990 million, at a time when the Mrs Thatcher salary as Prime Minister was £36,000 a year. And Edwardes wasn’t even sure that would be enough.

His strategy for saving Leyland wasn’t only about regaining control of the factories and increasing productivity. He also recognised that earlier product planning decisions were disastrous – models such as the Marina continued to be produced long after they became uncompetitive. He also know that quality of most of Leyland’s product was dismal, and that layers of centralised management structures were preventing effective decisions. In fact before a worker was laid off (in those days the process was called ‘de-manning’), 300 corporate managers lost their jobs.

The fantastic reception the Metro received, and the planned launch of the key mid-market Maestro/Montego in 1983 appeared to give Leyland a future in the automotive industry. Had the Conservative government been less dogmatic about to supporting strategic industries like Leyland in public ownership, like for example the French and Renault, we may have seen a large scale British motor manufacturer survive and flourish into the 21st Century.

As it was, the seeds of disaster were planted by weak, ineffective managers in the 60’s and 70’s and the sorry tale finally ended with the dismal sight in 2005 of suppliers stopping production of MG Rover’s 75, as their invoices hadn’t been paid.

The ‘cool’ 70’s? If you think that you were either not born, or on drugs.

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