Those BL Blues

A tempest over a tea break

The names still strike a nostalgic chord in the hearts of automotive enthusiasts: the MG and Triumph sports cars, the four-wheel drive Land Rover and the sleek Jaguar. But these days BL Ltd. (formerly British Leyland), Britain's one remaining large-scale auto producer, is only a pale shadow of its former self. MG production ceased a year ago, and the last Triumph was built in October. And now, the very existence of BL is in doubt.

Since it took over BL in 1975, the British government has invested $4.4 billion, much of it to modernize the company's production facilities. Yet the problems persist. Workers, already far less productive than their foreign competitors, are prone to going out on strike at the drop of a wrench. BL's management has often been slow to prune outmoded, unprofitable car lines or to react to changes in the auto market. The company, for example, stopped exporting Land Rovers to the U.S. in 1976, mainly because of a shortage of capacity, and thus missed a boom in sales of off-the-road vehicles like the Jeep Cherokee and Ford Bronco. As a result of labor troubles and market mistakes, the company lost $1.2 billion in 1980, and it may match that figure this year.

BL owes its survival up to now to recent steps taken by BL Chairman Sir Michael Edwardes, 51. The South African-born boss has attempted to turn this ward of the state into a well-run and profitable company by closing plants and slashing the work force by at least 25,000 workers. But the attempts of Edwardes to reform BL may have run into an impasse.

In October, workers demanded an 11.5% annual pay increase, and Edwardes countered with an offer of only 3.8%. When the unions' militant shop stewards recommended that the workers strike, the chairman coldly threatened to fire them and shut down entire sections of the company. These tactics finally forced the workers to accept the lower wages and won Edwardes the sobriquet Supermike.

Yet BL's future is now being threatened by new strikes over an eleven-minute reduction in that most sacrosanct of British workers' institutions: the tea break. The unions had earlier agreed to reduce daily tea and rest breaks from 51 minutes to 40 minutes in exchange for a cutback in the work week from 40 hours to 39 hours. But 2,200 workers, angry over their defeat on wages, decided to walk out. The strike halted production of 1,200 cars a day.

The labor trouble comes at a time when BL's prospects are turning brighter. While world car sales plummeted this year, BL actually sold 15,000 more vehicles than in 1980. September was the firm's best sales month since January 1979. Among its popular models is the Metro L, which gets up to 44 m.p.g.

The company's outlook is also better because of attractive new joint ventures with Honda. In September, BL introduced the Triumph Acclaim, a Honda-designed car that seats five people and sells for as much as $10,500. In addition, BL has signed a joint agreement with Honda to create and build a compact luxury car, code-named the XX, which will be sold both in Britain and abroad.

The failure of BL would devastate the already weakened British economy. For every BL job lost, three or four other employees would be thrown out of work, and the cost to the government in lost tax revenues and social security would reach several billion dollars. But Edwardes believes that without some major changes in work rules, BL cannot survive. qed

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