British Leyland to Spend £200 million on Modernisation

By MAURICE CORINA

The British Leyland Motor Corporation is to spend at least £200m. over the next four years on modernizing its manufacturing operations for an upsurge in sales. This announcement comes at a time when the Government has been anxiously awaiting firm signs of increased capital investment by major industries, particularly export minded companies.

Sir Donald Stokes, chief executive of British Leyland, broke the news yesterday as the National Economic Development Council was discussing in London ways to encourage industrialists to step up their capital spending programmes to maintain the momentum of devaluation.

Speaking at the group's Leyland plant, Sir Donald said: "We are prepared to put £200m. of shareholders' money into a Backing Britain programme with hard cash. British Leyland intends to expand on the car and commercial vehicle front."

It is proposed to spend the money on replacement plant and new equipment, though details were not available yesterday. The aim is a general expansion of existing facilities to raise overall capacity in line with the target of lifting sales to at least £1,000m annually, from the present £800m in the next few years. A new model policy has been promised for the next five years. Although there have been fears about plant closures and mass redundancies, Sir Donald has consistently argued that the British Motor Corporation-Leyland merger is based on an expansionist view of development.

The Industrial Reorganization Corporation has already promised £25m. of public funds as a loan for an improvement in manufacturing operations. Discussing the proposed expenditure British Leyland's chief said: "If we are going to do this, we must have a fair run, free from disputes and other labour troubles. We can only pay ourselves more money if we first pay for our seed corn that is new equipment, new machine tools and new technology."