BL needs merger to survive, report says

By Donald Macintyre Labour Reporter

British Leyland has little chance' of survival in its present form - without a merger or wide-ranging partnership deal with one or more foreign manufacturers, according to an independent consultants report disclosed yesterday, The report was prepared by the Paris-based firm Eurofinance for the Transport and General Workers' Union. It says that even after rebuilding its product range and meeting production targets "The odds are heavily against BL (on its own) in the longer term ".

The report whose main conclusions were rejected by British Leyland last night, states: "As a result of damage suffered in the 1970s BL is now the smallest and weakest full range motor vehicle manufacturer in the world. It has no overseas production (as opposed to assembly) bases, an ageing and uncompetitive product range and is pitifully short of skilled technical and engineering resources. Its market share is shrinking and dealers are defecting."

Eurofinance suggests that even Leyland Vehicles, despite introduction this year of the new T45 truck, may be vulnerable because of
"its small size and weak European presence" ,The report concentrates on British Leyland's market position and hardly touches industrial relations. It sees a major threat to BL as a volume car manufacturer, describing the company's problems as acute with
" things likely to get worse in the next 12 to 24 months".

Eurofinance says that BL's link with Honda, with which will be jointly launching the new Bounty model in the latter half of next year, is not yet a real partnership . Partnership would involve joint manufacture of components and component sharing and that would mean BL modifying its ideas about "producing all-British cars in all-British factories".

The report argues strongly that BL with an annual output target of 750,000 to 800,000 cars, is ill-placed to reap economies of scale afforded to the much higher producing multinational -companies. It points out that BL's target compares with the 750,00 units produced by VW manufactures in the Golf range alone. British Leyland said yesterday: "There is no question of BL merging with anyone else. We firmly believe that given our new model programme, our capital investment programme, and the support of the workforce we have, BL is quite able to make a success of itself."