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Leyland Report is indictment of private enterprise

2 May 1975


THE RYDER Report on British Leyland published last week delivers a stunning blow at the incompetence of the company's management. Possibly the most startling fact to come out of the report is the evidence on what British Leyland did with its profits. Over a period of seven years, BLMC made a net profit of £74 million and gave £70 million of this away in dividends to shareholders. In other words, only £4 million of the company's profit was ploughed back into investment.

The Ryder Report comments:"Despite this low level of profits, BL has, over the period, distributed nearly all of them as dividends. In our view, this policy was clearly wrong."

It was this under-investment, says the report, which was the main cause of the company's collapse. "BL is still using an unacceptably high proportion of old plant but also, since this old plant was fully written off some years ago, that the provision made for replacement over the period since 1968 has been lower than it should have been."

It continues: "In BL more than half the machines and equipment are over 15 years old. . . This record of under-investment is the main reason for the low productivity of BL's workforce compared with, say Fiat or Volkswagen."

When it comes to looking at the company's working operations, there is even more criticism. Much of it is centred around the inefficient use of plants in assembly operations. "There is still . . . unnecessary movement, particularly in the car divisions, which transport unpainted body shells to another location for paint, trim and final assembly." And: "There have been occasions when facilities for a new product have been 'tacked on' to the plant producing the existing product."

Although the, media have in, the past talked a great deal about British Leyland's poor record on industrial relations, the members of the Ryder Committed , do not lay any blame for BLMC's economic difficulties , with the unions. "We do not subscribe to the view that all the ills of BL can be laid at the door of a strike prone and work-shy labour force. While BL has suffered seriously from interruptions to production, , these have often been the result of factors outside the control of BL's workforce , breakdowns in plant and equipment, faulty scheduling, shortages of materials and components, and external industrial disputes."

They talk of the responsible role adopted by trade unionists at BL in recent months and the new attitude and willingness to make BL a viable project. "The most crucial factor in improving industrial relations," says the report "and in creating the conditions in which productivity can be increased is that there should be some significant progress towards industrial democracy. Means must be found to take advantage of the ideas , enthusiasm and energy of BL's workers in planning the future of the business which their livelihood depend. The objective should be to remove frustrations caused by management decisions imposed routinely from above. Workers' representatives need to be given more information about the company so that they better appreciate management problems and co-operate more constructively in solving problems."

From the shop floor, focus of the report moves to the executive suite and take a detailed look at how company's top management was structured. The main point of criticism concerns the fact that there were 14 operation managers reporting to the managing director. As any first-year student in business management knows there should never be more than seven managers responsible to the managing director . The load is not only impossible to bear but far too much one man to deal with adequately.

In his proposed restructuring of the company, Sir Don Ryder recommends two possibilities and, in each , no more than seven men are reporting to the managing director. They consider " the present organised structure has serious defects and has significantly had effects both on the efficiency of BL's operations and on future development."

The report finally recommends that the company undergo a complete re-structuring with the provision of £1 billion capital over the eight years for a re-investment programme to bring BLMC line with its interned competitors. The Government has agreed to the financing the company but as a condition has decided to take a major shareholding.

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