Austin-Morris 'in serious situation'

By Giles Smith

Sixty-five thousand workers in British Leyland's Austin-Morris and Manufacturing group, Britain's largest car producing unit, which is understood to be making losses, were warned last night that the group's finances were in a "serious position".

In a strongly worded statement, Mr. George Turnbull, group managing director, told the workers that this year the group had suffered a £21m. increase in costs, made up of a £12m. increase in material costs, and £9m. in higher wages.

It was understood last night that when Lord Stokes, chairman, announces B.L.M.C.s financial results in January, separate figures for the Austin-Morris group, which makes seven out of every 20 cars sold in Britain. will show losses made by this group within British Leyland. The group's production is understood to be"very well down"on last year-around £35m. worth of cars have been lost already this year because of strikes and it is known that the group has been losing money for some time.

Mr. Turnbull said in his statement: "We consider it vital in view of the serious financial position of the group to let all management, and all grades of supervision, know what action is being taken to improve the company's efficiency. This information will be supplied regularly in good times as well as bad. The figures advised to the management through the new communications network are that in the past financial year Austin-Morris has been faced with an additional £12m. in material costs and a further £9m. for wage increases."

It is understood that Mr. Turnbull's statement was issued after close consultation with Lord Stokes, who gave warning in August that B.L.M.C.'s profits, instead of rising, had continued at"an extremely low level". In the first half of this year, Leyland's total profits after tax were only £100,000, compared with £9.5m. in the first half of the previous year.

The A-M group, which takes some 34 per cent of domestic car registrations out of Leyland's total of some 45 per cent, became part of Leyland when, as BMC, it was taken over two and a half years ago. With its reliance on heavy volume production, the group is certainly the most vulnerable within B.L.M.C. to strike problems.

One London executive of British Leyland said last night: "Austin-Morris is certainly the sick child of the corporation at the moment."