I wrote this post on December 9, 2008, when the auto bailout plan surfaced as national news. I was reminded of the similarities between the federal government’s approach and that of the British in the 1970s, when HM Government tried its hand at running the British auto industry. Watching the hostile takeover of GM by Hope ‘n Change and after reviewing the administration’s ’viability plan’ (which cancels profitable truck and SUV lines), I think the experience of British Leyland is even more relevant for today. I lived in Britain in the late 1970s and experienced first-hand the ‘Winter of Discontent’ in 1978-79. I think that Hope ‘n Change’s meddling with GM is the government dictating our tastes, desires and preferences and is doomed to fail. But you be the judge.
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Watching the Detroit Big Three grovel for their handouts is only marginally more entertaining than the politicians who’re dictating the terms of their surrender. If you’re curious about the kind of cars Detroit will produce when the companies are nationalized, look no further.
There’s British Leyland.
BL was the government-owned conglomerate that staggered along, producing miserable cars until the Thatcher government finally sold off the lot in the 1980s. To be fair, BL did produce some decent cars like Rover and Jaguar, but the bulk of them were worthless, even by the standards of the day. Leyland products made American cars look like models of fine engineering.
But from a socialistic perspective, BL’s formation was interesting: under the prodding of the British ‘Industrial Reorganization Committee’ (chaired by radical Tony Benn), Leyland Motor Company (a successful private corporation) was forced to merge with British Motor Holdings, which was failing. From Wikipedia:
While BMH was the UK’s largest car manufacturer (producing over twice as many cars as LMC), it offered a range of dated vehicles, including the Morris Minor which was introduced in 1948 and the Austin Cambridge and Morris Oxford, which dated back to 1959. After the merger, Lord Stokes was horrified to find that BMH had no plans to replace these elderly designs. Also, BMH’s design efforts immediately prior to the merger had focussed on unfortunate niche market models such as the Austin Maxi (which was underdeveloped and with an appearance hampered by using the doors from the larger Austin 1800) and the Austin 3 litre, which was a car with no discernible place in the market.
BMH had produced several successful cars, such as the Mini and the Austin/Morris 1100/1300 range (which at the time was the UK’s biggest selling car). While these cars had been advanced at the time of their introduction, the Mini was not highly profitable and the 1100/1300 was facing more modern competition.
The lack of attention to development of new mass market models meant that BMH had nothing in the way of new models in the pipeline to effectively compete with popular rivals such as Ford’s Escort and Ford Cortina.
Immediately, Lord Stokes instigated plans to design and introduce new models quickly. The first result of this crash program was the Morris Marina in early 1971. It used parts from various BL models with new bodywork to produce BL’s mass market competitor. It was one of the strongest selling cars in Britain during the 1970s, although by the end of production in 1980 it was widely regarded as a dismal product which had damaged the company’s reputation. The Austin Allegro (replacement for the 1100/1300 ranges), launched in 1973, earned a similarly unwanted reputation over its 10-year production life.
The company became an infamous monument to the industrial turmoil that plagued Britain in the 1970s. At its peak, BLMC owned nearly 40 different manufacturing plants across the country. Even before the merger BMH had included theoretically competing marques which were in fact selling substantially similar “badge engineered” cars. To this was added the competition from yet more, previously LMC marques. Rover competed with Jaguar at the expensive end of the market, and Triumph with its family cars and sports cars against Austin, Morris and MG. The result was a product range which was incoherent and full of duplication. . . . This, combined with serious industrial relations problems (principally, the company’s relations with trade unions; the 1973 oil crisis; the three-day week; high inflation; and ineffectual management meant that BL became an unmanageable and financially crippled behemoth whose bankruptcy in 1975 was assured.
Sir Don Ryder was asked to undertake an enquiry into the position of the company, and his report, The Ryder Report, was presented to the government in April 1975. Following the report’s recommendations, the organisation was drastically restructured and the Labour Government (1974–1979) took control by creating a new holding company British Leyland Limited (BL) of which the government was the major shareholder.
On the theory that a picture is worth a thousand words, here are two videos. The first is a requiem piece on Leyland done by the gents at Top Gear, a popular BBC auto show. The second is an actual Leyland advertisement from 1977.
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