Britain's billion-dollar "last chance" plan to rescue its ailing nationalized auto industry has been imperiled by the increasing reluctance of Britons to buy British-made cars and the refusal of auto-workers to agree to pay raises that fall far below the rate of inflation here.
Last night, British Leyland, the giant, government-owned automaking conglomerate revealed it would lay off up to half of its 90,000 workers for several weeks or longer because it had built up an expensive backlog of unsold cars.
BL sales fell to a record low of just 15 percent of the otherwise booming British new car market in January before an aggressive "Buy British" promotional campaign brought BL back up to 20 percent of the market so far this month.
"Layoffs are the only way to adjust our working capital to market demands," Ray Horrocks, managing director of BL cars, told union leaders. He said the outlook for the rest of this year was for "much lower" BL sales than last year.
Today, in a count of mail balloting conducted before the layoffs were revealed, BL autoworkers rejected, by 59 percent to 41 percent of those voting, what management considered the best pay offer that could be offered within the strictures of BL's recovery plan.
BL had offered its workers depending on their jobs, pay raises of between five and ten percent (compared to a current inflation rate of 17 percent), provided they cooperated with changes in work rules to greatly increase BL's productivity. Late last year, in a similar mail vote, BL workers overwhelmingly approved a rescue plan that would streamline the firm by permanently closing all or part of 13 factories and eliminating 25,000 jobs.
But this time, a majority of those voting backed their negotiators' demands for a more attractive package of pay raises and work rule changes. Union leaders said they were not now considering a strike, however, and would return to negotiations with management at the end of this week.
Both BL's management and Prime Minister Margaret Thatcher were pleased that a strike did not take industrial action," said Thatcher, whose government is currently trying to weather a national steel strike.
But BL's management warned, in a statement, however, "as BL made clear before the unions decided to go for a ballot, the company does not have the cash to improve its offer."
"If working practices are not changed, we will not become competitive and our plan will not be met," Horrock added. "You know the implications of that," he said, girmly hinting that BL could collapse if the rescue plan fails.
The billion dollars in new government subsidies committed to the BL rescue plan during the next four years is earmarked for developing more competitive models, including an updated version of the legendary Mini and a new medium-sized model to be jointly developed by BL and the Japanese automaker Honda.
Except for the Mini and BL sports cars like the Triumph, BL's current models are losing out to more up-to-date foreign-made competitors, including the market leader, Ford UK, which now makes elsewhere in Europe more than half the cars it sells here.
BL has suffered from a combination of past management mistakes and labor unrest that made quantity and quality of production undependable.Its dealers complain that they never have the better-selling models when their customers want them and are overstocked with the rest.
BL is only one of several giant government-owned industries facing collapse, or drastic restructuring with large losses of jobs. Their markets are disappearing, as in the case of British steel and British shipbuilding, or they are failing to compete in cost and quality with the competition as BL has.
Thatcher and her controversial industry secretary, Keith Joseph, have insisted that the government can only spend a limited amount of taxpayers' money trying to rescue those industries so their workers' pay raises must be largely financed by productivity increases or job cuts.