Leyland will spend £70m on expanding Cowley works

By GILES SMITH

British Leyland, Britain's biggest car group, will spend a total of £70m. in a major expansion of its Cowley, Oxford, car-making complex over the next few years, George Turnbull, managing director of the group's Austin-Morris Division, announced yesterday.

The expansion, Leyland's biggest single spending item in a current total capital investment programme of £200m., will make the Cowley complex the most up to date car production plant in Europe and push car output from the Austin-Morris division to over 1m. vehicles a year, said Mr Turnbull, who was speaking at Silverstone.

A Leyland spokesman in London confirmed last night that the announcement represented an extra "major" capital expenditure programme of £25m. In May the group, the only wholly British-owned of Britain's "big four " car makers, announced that it would spend £45m. expanding the Cowley complex. This includes the Morris Motors production lines and the plant of Pressed Steel Fisher, Europe's biggest car body maker.

Leyland's expansion announcement comes at a time when there are fears that the money squeeze will hold back future capital investment by British industry. It also comes towards the end of a year when home registrations of cars are certain to drop below 1m. for the first time for six years, something which industry chiefs warn will put at stake the future of the industry. The Cowley expansion indicates that Leyland sees the complex, which does not have the group's best strike record, as a major long-term production centre.

Production is to be stepped up from 5,000 cars a week to 10,000, and company chiefs say they are confident that annual output from Cowley and Longbridge combined will rise from the present 900,000 to "well over 1m.". Mr Turnbull said part of the money would be spent on tooling up for new models, and the rest on modernizing factories and building up production. Lord Stokes and other Leyland executives have chosen Cowley as the first area for major capital expenditure since the group was created with the merger of Leyland and British Motor Corporation 18 months ago.

Mr Turnbull admitted to some dissatisfaction over the progress of the group's Maxi model announced in the spring. Last week in Business News it was revealed that the model, production of which is being cut back, had claimed only 2.5 per cent of the total British market. He said that 22,000 had been produced, sales had been held up initially by industrial disputes but production was now running at 1,600 a week. Some 20,000 Maxis a year were expected to be sold in Europe.

Mr Turnbull also said that Leyland was determined to push its share of the British market up to 35 per cent. At a time when the total market had dropped by 17.5 per cent, the Leyland share had increased by 1 per cent to 30 per cent, but this was not good enough.