Alex Park - Leyland's second and last chance

AUTOCAR
An exclusive interview with Edouard Seidler

For months, the men of the Ryder commission had been going through the British Leyland Motor Corporation with a fine tooth comb. The company were literally bankrupt and only government intervention could save them. Lord Ryder, heading a team of experts, had been commissioned to report on the only remaining independent large British automobile group and make a number of suggestions to the government for a plan of action. Alex Park, finance director of the company for just over a year, counted up 46 accountants and financial analysts running through his books at the same time.
Then, on 24 April 1975, at 12.30 pm, Park was summoned to the office of Lord Stokes.

"These gentlemen have analysed all of our problems," said Stokes. "One of their conclusions is that it is now up to you to take charge."

Alex Park claims he was just as surprised as the public and specialists in the automobile industry were then. To everyone, this 48-year old financier with a fine smile and a head of thick white hair was totally unknown. He has been active in a number of multi national companies (Monsanto, Cummins, Rank Xerox ), but his automotive experience was limited and he seemed to be too new at British Leyland for anyone to think that he would be picked to head a group which he had joined only 15 months earlier. The magnitude of Leyland's financial problems, Park's experience in "industrial surgery", the implicit condemnation by the Ryder commission specialists of the previous management -- all combined to make him the right man.

"You must be joking", Park answered Lord Stokes.

"Not in the least. We are asking you to become chief executive of this company as of this minute."

The same day his appointment was made public.

"I accepted this job for two reasons," he says today. "The first is that I am convinced that we can succeed with the help the government are now giving us. The second is that I have spent most of my professional life in American firms, both in Great Britain and on the continent. I have been exposed to the British malaise, and I suffered from it morally. I didn't want to miss the chance that was offered me to take part in suppressing this malaise."

Edourd Seidler: Isn't your lack of experience in the automobile industry a handicap for you?

Alex Park: "Logically, yes. Contrary to so many other executives, I was not born in the automobile industry. It doesn't have a mystical value for me. But I belive that can be an advantage in my position. For me, there is just one fundemental approach: industry must produce profits, profits investments, and investments employment. Since I am rather inquisitive, my lack of seniority in the automobile industry puts me in an ideal position to ask questions. Why? How? That is what I have been doing since I came here. I never stop comparing us with our competitors, comparing the products, the methods. I did not know our firm in 1960, or in 1970. This is finally an assett, inasmuch as I am not interested in the past.What I want to know is what we will do one, five or ten years from now."

Edouard Seidler: The past often explains the future.

Alex Park: "Of course. And I do know what some of our mistakes were in the past. We concentrated too much on satisfying needs of the British market. We were influenced by the important fleet sales basic to this market. In doing that we placed ourselves in a position of leser competitiveness on European export markets. Our first priority now is to move away from British specifications in favour of European specifications. We shall improve our present products and put most of our prototypes back on the drawing board. The essential objective is to improve our quality and reliability. That is crucial. People will buy quality, if they find it at the right price and at the right time. We have been weak in this area until now, but that will not last."

Edouard Seidler: I have heard that before.

Alex Park: "I know. That is why I do not want to speak too much on the subject. We are going to do our homework, and we shall talk later, when we have some facts to show. For the time being, an unprecedented programme was started several weeks ago. We have explained to everyone that there is no use singing 'Buy British' ! What our competitors in Europe do, we can and must do as well as they. Our future is on the other side of the channel. We must sleep, eat, work, and work like Europeans. We can't wait and pray; that leads nowhere. We have re-assessed all of our quality procedures. The quality department now has executive authority on the line. Our quality engineers were moved right into the factories of our suppliers. Quality is now the priority of priorities."

Edouard Seidler: Let's discuss the nationalisation of British Leyland. Where you picked because you are fundementally in favour of nationalisation?

Alex Park: "No. Nationalisation per se cannott be an answer to everything. It so happens that British Leyland needed fresh capital as a human being needs oxygen. The company was dying for lack of funds. The financial aid and the participation of the government were essential. Further, the government will be in a position to stimulate the entire British industry through us, thanks to our central position. We are not asking for sympathy or preferential treatment. All that we want is recognition of the fact that we cannot raise on our own the capital we will need badly in the coming years. The help we are to get will amount to £1,400 million between 1975 and 1983. We say that we are going to earn this money. If we don't make it this time, they can just crucify us."

Edouard Seidler: You say that you are going to "earn" that money. But if you really earn it, you will not need outside help. And if you need it, that will be proof that you haven't earned it !

Alex Park: "No, I disagree. We are suffering from investment starvation. We need help to recover our health. The medication we must have is money for investment. Once we have modernized our tools and procedures, we will need no one."

Edouard Seidler: The risk is that all of this government money might put the company to sleep even more.

Alex Park: "That is why I am not in favour of nationalisation per se. Now that we are being helped to move ahead again, it is up to us to make the effort, everyone from the janitor to the chief executive. I know that 95 per cent of our personnel are ready to understand this. In the great majority, our people are talented, devoted and loyal. They are fed up with hearing that they cannot succeed. I am certain that they want to see Great Britain climb out of the hole. To lead such a combat you must be a rebel. I am one by nature, and I know that Leyland can rebel as a whole. We are already making progress in our dialogue with the Trade Unions. They will co-operate. They are with us when we tell them that we must, together, improve our credibility. And the workers, who were afraid for the future of the company, now have a greater sense of security, which should leave them to co-operate as well."

Edouard Seidler: Leyland, Renault, Alfa Romeo, Volkswagen and Volvo are now totally or partially controlled by their governments. Do you still believe in the future of free enterprise in the automobile industry?

Alex Park: "Absolutely. In a way government control can lead to more efficiency. Generally, stockholders are badly or not at all informed and request explanations only when everything goes wrong. Governments make you accountable permanently."

Edouard Seidler: Maintaining employment tends to be more important to a government than keeping up the profits of their own companies. Government can exert pressure on a nationalised company to ensure full employment at any price.....

Alex Park: "Not at any price. That can also be detrimental to the nation. Everything is a matter of balance in this area."

Edouard Seidler: It could be tempting to subsidise you to keep employment up, even if that means selling your cars at a loss?

Alex Park: "You can be sure that is not the case at Leyland. We were too fat. We have undertaken a severe slimming down process in agreement with the Government and the Trade Unions. Thanks to our de-hiring programmes, our personnel have been reduced from 211,000 to 181,000 people. We have not replaced those who left us and we offer bonuses to those who depart voluntarily. We are in the process of negotiating this de-hire programme with the unions. I have already gone through similar surgical operations in the past. In one of my companies they even called me 'the butcher'. I am not ruthless. I am fair. But one must be tough at times, if the object is to save the future for the largest number of people. As for Leyland, we are in close co-operation with our governing body, Lord Ryder's National Enterprise Board. It is well understood that we must be an international commercially viable company, not an annex of the Salvation Army. This slimming down process is necessary, and it will be pursued."

Edouard Seidler: Herr Schmecker, the new president of Volkswagen stated: "To hell with volume !" Keeping production and sales volumes high doesn't seem to him to be an objective in itself.

Alex Park: "You can't idolize volume, that is true. But you can't ignore it either. I doubt that this is a lasting strategy in Herr Schmecker's mind. As for us, we have no ambition to be a giant producing some two million vehicles yearly. Our best production figures were in the area of 1,200,000 units yearly. We will be satisfied to return to that level profitably."

Edouard Seidler: Do you still believe in a noteworthy growth in the automobile industry?

Alex Park: "For the time being, we haven't bottomed out. 1976 Will be very difficult in Great Britain. With the exception of Germany, there will be no upturn in Europe before mid-1977, and sales volumes will not be strong before 1978. During the 1980's, the average growth will not exceed two to 2.5 per cent per annum. I still believe that the relative potential of Leyland is superior as a result of our past errors. We should be profitable again before 1980, and from then on we should grow faster than our competitors, when we have solved our main problem, that of the quality and reliability of our cars."

Edouard Seidler: Like Renault, you will also look for salvation in diversification.

Alex Park: "That is true. We have 20 per cent of our turnover in trucks and buses, and ten percent in our 'special products' division (refrigeration, fork-lift trucks, military vehicles, etc). We were number one in Great Britain in trucks and buses; we are now first only in the latter. As for trucks, we have some remarkable prototypes ready for production, but we have been unable to finance our investments until now. The cars were draining all of our funds. Our objective now is to accelerate product investment in this area. As for special products, which have been regrouped in an independent and major division, the objective is to move ahead as aggressively and as fast as possible. The growth potential here is definitely larger than elsewhere. Finally, we will have to re-establish profitability in our car division. This is an area where gains are necessarily limited. But we have some excellent cars coming along. Some have been delayed, also for lack of funds."

Edouard Seidler: Will you rationalise and unify your range?

Alex Park: "Yes. We have already started. Our newest car, the Princess, is neither an Austin, nor a Morris, nor a Wolseley anymore. It is a Leyland. Just as the Mini is simply the Mini with the Leyland logo."

Edouard Seidler: The drop of the pound Sterling has made you more competitive in export markets. But British inflation, now over 2 per cent, must be a bothersome problem for you?

Alex Park: "Our country is about to suffer. The anti-inflationary measures are not sufficient yet. Much stronger ones will have to be implemented, and I believe they soon will be. The Government will have to show courage, the country too. The period from now until next summer will probably be the roughest that Britain will have known since World War 2. We need strong medication; it won't be easy, but it is necessary."

Edouard Seidler: Other problems?

Alex Park: "Japanese competition, and not only on our market. The Japanese made a killing in Great Britain. When they have improved their position here, they will attack another market. I am not one to accuse them of dumping. I simply think they were the strongest, the most aggressive, and the best in marketing. They were more successful in Great Britain than their European competitors, such as Renault, VW, and Fiat for a number of reasons; they had all the necessary cars on site and no delivery delays; they chose their models very well; and they didn't fight each other, since Toyota and Datsun split the market between them; their discount policy has been good; finally, they neglected no details; and their cars were exceptionally well inspected before delivery. They were rewarded for their attention to detail. We must learn that lesson, because they are the toughest competitors not only for us but for all European manufacturers."

Edouard Seidler: You recently gave up your Spanish and Australian subsidiaries. Are you going to keep Innocenti, your Italian branch?

Alex Park: "We have had serious difficulties at Innocenti. The company was over-manned. We manufacture 30,000 cars yearly there, as against a potential of 90,000. We would have thrown the key away, had we not made a positive agreement with the Unions and the Italian Government. If this agreement is respected as we hope it will be, Innocenti will be saved. We already have some encouraging signs to that effect."

Edouard Seidler: What is the worst thing that ever happened to British Leyland?

Alex Park: "The fact that the rationalisation of the management was so long in coming. I differ from my predecessors in that I feel that time is to short to be kind with everyone. One must sometimes be tough and fast when the future of thousands of employees is at stake."

Edouard Seidler: And what is the best thing that ever happened to your company?

Alex Park: "The fact that it got a second chance with the help of our Government. We will know how to take advantage of it, because there will not be a third one."