Last Chance for Leyland

Workers greet a new boss by voting for reform

Britain's biggest automaker is still deep in trouble, but a new boss and a turn toward moderation by its fractious workers are strengthening its chances to stay in business. When the Labor government reluctantly agreed to take over nearly bankrupt British Leyland Motor Corp. in 1975, it publicly warned the maker of Jaguar, Morris, Triumph and Rover cars that it would not throw good money after bad. The price of government cash for new-car development and badly overdue plant modernization was to be an end to the constant bickering that has pitted unions against management and against each other. For two years, the warning was mostly ignored, and Leyland continued on the road to collapse.

Last week its prospects for survival suddenly improved. Rejecting the advice of militant shop stewards, Leyland's 100,000 car workers voted 2 to 1 for a package of bargaining reforms that holds at least some hope of ending labor anarchy. The results of the vote came on the first day in office of Michael Edwardes, who was named chairman by the government, getting his term off to an auspicious start.

In other respects, Edwardes would seem to be taking over at the worst possible time. Leyland's share of the British auto market has dropped to just over 20% currently, from 27.5% in 1976. Though Leyland's truck and bus operations are still profitable, auto losses pared companywide pretax profits to less than $23 million in the first half of 1977 (on sales of $2.4 billion), from almost $97 million a year earlier on slightly smaller sales. And those figures mask a serious cash shortage; in July, Leyland had to borrow 5180 million from the government's National Enterprise Board to keep going.

Leyland was originally formed by a jerry-built amalgam of smaller companies, and that is now one reason for its troubles. Its crazy-quilt wage bargaining structure forces management to deal with 58 different bargaining units at its 34 plants; executives are involved in some kind of labor negotiation for nearly nine months of every year. Strikes, many prompted by wage differentials from plant to plant, break out frequently, with or without union authorization. In the first six months of this year, Leyland lost 9.3 million man-hours and production of about 120,000 cars because of strikes, v. losses of 2.3 million man-hours and 50,000 unbuilt autos in the 1976 period.

Leyland's car workers voted to replace this chaotic state of affairs with a single companywide labor pact, to be negotiated by November 1979. The centralized agreement is to provide that all Leyland plants pay the same wage for comparable jobs. Negotiating the contract will not be easy: the unskilled production-line workers who belong to the Transport and General Workers Union argue that they ought to be paid as much as the skilled craftsmen represented by the Amalgamated Union of Engineering Workers, while the A.U.E.W. is determined to maintain the pay differentials. But the vote at least staved off the worst. The government, which now owns 95% of Leyland's stock, had passed the word that it would advance no more cash to Leyland if centralized bargaining were rejected--a move that would have meant the company's demise. The workers apparently believed that London really meant it.

New Chairman Edwardes, consequently, will have time to try to make sense out of Leyland's disorganized management structure. He succeeds Sir Richard Dobson, who hastened his own departure by making injudicious remarks about Leyland "bribing Wogs"--a reference to allegations of overseas payoffs by Leyland. Dobson spoke at a private dinner party, but a guest tape-recorded his comments, and they were later published.

Edwardes, 47, is a 5-ft. 2-in. dynamo who has proved himself as a manager: as chief of the 20,000 employee battery-making Chloride Group, he almost quintupled profits in five years to $47.5 million. He won the Guardian Young Businessman of the Year award in 1975. Though he will have to negotiate a companywide pact, Edwardes is a fervent believer in decentralized management who pledges to use "ruthless logic" in organizing executive teams to run Leyland as a group of "profit centers." He had better hurry.

His appointment is for three years--at an annual salary equal to his Chloride $93,000--and government officials make it clear that they regard those three years as giving Edwardes a "last chance" to save the company.

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