U.K. Bailout Of British Leyland Analyzed Government bailouts of automotive giants aren't a new development — the British did it with British Leyland in 1974. Garrel Rhys, director of the Center for Automotive Industry Research at Cardiff Business School in Wales, talks about the history of that company.
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U.K. Bailout Of British Leyland Analyzed

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U.K. Bailout Of British Leyland Analyzed

U.K. Bailout Of British Leyland Analyzed

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ROBERT SIEGEL, host:

The Wall Street Journal wrote that the distressed company was not just the country's largest automaker, but a source of national prestige. The government's coming to its aid stemmed more out of necessity than political philosophy. It wasn't General Motors this week. It was British Leyland in 1974.

(Soundbite of British Leyland ad)

Unidentified Man #1: When British Leyland set out to create a beautiful car, you get 10 cars called the Morris Marina; beauty with brains behind...

SIEGEL: Forgive me a case of the flashbacks. When I lived in Britain in the early 1980s, the country was struggling with the consequences of the effective nationalization of British Leyland a few years earlier. British Leyland, later BL, brought together several of Britain's most famous brands under one roof, some of them with the roof off.

(Soundbite of British Leyland ad)

Unidentified Man #2: Have fun in the sun in a topless MG or Triumph. They're waiting for you now at your British Leyland sports car dealer.

SIEGEL: But as one wit memorably remarked, only the British could call that car a Triumph.

What was BL, what became of it and why are questions for Garel Rhys, director of the Center for Automotive Industry Research at Cardiff Business School in Wales.

And Professor Rhys, first, what was British Leyland?

Professor GAREL RHYS (Director, Center for Automotive Industry Research at Cardiff Business School): British Leyland was the major British-owned car company. It was going to be a world champion. Every company was getting bigger, so Britain needed a big company, and the government brought two companies together: the Leyland Motors Corporation and what was called British Motor Holdings, which was a merger in itself of the British Motor Corporation and Jaguar. Then you had Morris and Austin, MG, and that was just in the cars. And then there were various other names in the commercial vehicle area.

SIEGEL: And instead of becoming a national champion, it end up being a nationalized champion.

Prof. RHYS: Yes, it did, that by 1974, it was clear the company was in trouble. Its product range was not selling well, strikes were endemic, the company had what were called bargaining units. They had 364 and they all bargained at different times. So literally, the company was continually in a labor bargain, which meant that if things went wrong you could have strikes every day of the week. And of course, the management wasn't of the best, either.

And when you'd created a company of a truly Orwellian scale and a complexity, which really added up towards organized chaos, it is very, very difficult to run the thing at all. So at the end of '74, they were starting to make advances to the British government for loans. But in '75, then those loans clearly were not going to be sufficient and a device was created for the state to buy the company. It was never really nationalizing the legal sense, but it was state-owned.

SIEGEL: When you look back on what was spent on trying to save the British auto industry, what it cost and how many jobs eventually were saved, what's the score card?

Prof. RHYS: Oh, the score card is really very, very poor, indeed. You would have done it that way. There are 30,000 jobs still in the British economy employed in companies that came out of British Leyland before it finally collapsed. But if you had realized that's all that you would have saved, the taxpayer would not have been asked to put in the money of the day, 3.2 billion pounds, which in today's money is over 11 billion pounds; a substantial sum even in the days of confetti money being thrown at the banking system in the world.

(Soundbite of laughter)

SIEGEL: Now, one interesting point to me, back in the early '80s, was that in the U.K., the transplant car company that played the role that we in America might associate with Honda or Toyota cleaning the clocks of the U.S. automakers was in fact the well-managed U.S. car company, Ford.

Prof. RHYS: Indeed. And the Ford Motor Company was the only truly efficient operation in the U.K. People didn't think of them as American. They didn't perhaps think of them as British, either. But they'd been in Britain so long, the products were so acceptable and so widespread, from trucks, buses, agricultural tractors, and of course, cars and vans, that Ford was really almost as British as roast beef. Perhaps, roast beef with a little bit of cranberry sauce on it.

(Soundbite of laughter)

SIEGEL: Well, Professor Rhys, thank you very much for talking with us.

Prof. RHYS: My pleasure.

SIEGEL: That's Garel Rhys, who is the director of the Center for Automotive Industry Research at Cardiff Business School in Wales.

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