Leyland stops investment to meet daily running costs

By Clifford Webb

Mr Derek Whittaker, managing director of Leyland Cars, shocked 650 management and union representatives at a meeting yesterday by announcing that the company's financial position was so serious that he has practically stopped all capital expenditure. This means that within six months of its formation, the largest company in the state controlled British Leyland concern is being forced to break its commitment to the Government not to use money earmarked for capital investment to meet day- to-day running costs.

Mr Whittaker said he had no alternative. If he had not halted capital spending he would have been forced to go to the National Enterprise Board for more money before the end of March. The next tranche of government cash is due in May.

He admitted that management was partly to blame for the crisis, because it had under-estimated market demand in the closing months of 1975 and had reduced production accordingly. But Mr Whittaker made it plain to shop stewards from his 35 factories that shopfloor disputes had been the biggest set back. More than 40,000 cars had been lost in the past six months through strikes and this had left Leyland extremely short. He outlined an emergency package of proposals to the unions, which he hoped would provide the 10 per cent increase in production necessary to close the gap between supply and demand.

It called for management and unions to co-operate to make the new participation committees work as soon as possible and a commitment from the unions to ensure that strikes did not occur until established disputes procedures had been exhausted, until national officials had given their approval and until statutory strike notices had been observed. Mr Whittaker also pressed the unions to avoid inter-union disputes, which have been a feature of recent strikes, particularly at Cowley. One of his most controversial proposals was that the unions should agree to overtime working in certain sectors while voluntary redundancy continues.

At a press conference later, Mr Whittaker said there was no question of a further part of the £200m provided by the Government in September being channelled from BL's other companies to Leyland Cars. It is believed that the car company received about £150m of this first allocation. Mr Whittaker said: "I do not want to be feather bedded and we are clearly not going to be feather bedded. We have been allocated a certain amount of money to last a certain time and we must stand or fall on that ".

Lord Ryder, chairman of the National Enterprise Board, addressed the management and union meeting, held in private in Digbeth Civic Hall, Birmingham, for 45 minutes. He told a press conference afterwards that he had not gone to whip workers for the poor productivity of recent months. He had been heard in attentive silence and was applauded at the end. Lord Ryder admitted that low productivity continued to be a major problem, but he clearly wished to avoid giving any impression of conflict with the unions on this issue. He revealed, however, that he had given the unions details of higher productivity levels achieved in " identical" European car companies.

"I said quite frankly that if the level of disputes was not reduced, I could not see how they would get the level of productivity. necessary for the next tranche of government money."