£400m expansion by British Leyland

By Clifford Webb

A £400m investment over the next five years in new and expanded manufacturing facilities was foreshadowed yesterday by Lord Stokes, chairman of British Leyland. It could well include a large new and totally integrated car plant. The intention is to increase the group's annual output of cars and trucks from 1,100,000 to 1,500,000. That, Lord Stokes said, 'would have a dramatic impact on our international standing and competitiveness and of course provide additional employment.'

Lord Stokes, speaking at the fifth birthday celebrations of British Leyland. refused to be drawn on the location of the projected new car plant beyond saying that it would 'be located separately from our traditional areas of manufacture'.

Sources close to the company said last night that five sites were being investigated. In a detailed survey of what the next five years would hold for British Leyland, Lord Stokes said that to date most of the group's investment had gone to Austin Morris to modernize production facilities and introduce new models. In the second five years Austin Morris would continue to expand and develop but there would be a relatively major swing in investment towards the highly profitable Jaguar, Rover, Triumph and truck and bus operations. He also disclosed that although he would continue for the time being as chairman and chief executive, Mr John Barber, at present a joint deputy managing director, had been appointed executive deputy chairman and deputy chief executive.

Mr George Turnbull, also a deputy managing director, becomes managing director responsible to Mr Barber. Lord Stokes continued:  'With the consent of the board, I hope it will become possible for me gradually to relinquish the responsibilities of chief executive and assume the full time role of chairman.'

The question of Lord Stokes's successor as head of Britain's only large scale motor manufacturer is therefore still to be settled but yesterday's announcement points to Mr Barber. Certainly he seems to have emerged in a stronger position than Mr Turnbull; his most widely canvassed contender. They will be respectively chairman and deputy chairman of each of the operating divisions, with the managing directors of Jaguar, Rover Triumph and British Leyland reporting direct to Mr Barber on day-to-day matters. Mr Turnbull will also report to Mr Barber for the Austin Morris, truck and bus and special products divisions, which he at present heads. Lord Stokes also disclosed that the corporation would soon be moving to a new headquarters building, the 14-storey Burmah Castrol House in Marylebone Road, London.

It will be renamed the Leyland Building and corporate staff will begin leaving the present cramped office block in Berkeley Square in the autumn. During the next five years, he said, British Leyland would be spending money on the biggest expansion programme in its history. It would modernize some of the older facilities. create new plants and expand production capacity to consolidate its position in the world big league of automobile manufacturers. He declined to give detailed investments: 'This would be unwise in view of the competitive nature of our, industry'.

But he threw out several gems, including the news that plans were being laid for 'what may be the biggest overseas manufacturing project of them all in Spain, where we are considering a major volume expansion with fully integrated facilities, including power-train manufacture'.

Spain is the fastest growing car market in Europe, and there has been increasing speculation recently about plans to expand British Leyland Authi, the group's existing Spanish plant. Summing up, Lord Stokes said: 'We believe that these steps over the next five years will serve to improve our penetration of the United Kingdom market, the EEC and other major overseas markets, as well as our profitability. We are also quite confident that for two years at least we shall be able to generate the cash we need from our own ,resources. This is the beginning of a very exciting era for British Leyland and I think that our designers, engineers, production men, planners and marketeers are going to provide you with a British motor industry of which you will be very proud.'