Britain has lauched a billion-dollar "last-chance" attempt during the early 1980s to save its ailing nationalized auto industry from succumbing to international competition and internal decay.
The rescue effort is built around a drastic plan to reorganize, refinance, retool and reform the image of British Leyland, the giant government-owned car maker that not calls itself BL Ltd., and to tackle the critical problem of declining productivity in British industry.
The problem facing Britain in its effort to keep BL, among the world's 15 largest auto manufacturers, in business, is similar in many ways to that facing the United States in its efforts to keep Chrysler from bankruptcy.
In both situations, government financial assistance, labor union concessions and relatively new corporate leadership are expected to play key roles.
Last month, BL's 150,000 employes approved the plan to streamline the firm by eliminating 25,000 jobs closing all or part of 13 factories, phasing out several models including the venerable MG sports car, and selling off some subsidiaries.
On Dec. 20 the British government agreed to commit to BL up to a billion dollars more in taxpayers' money over the next four years to help finance the development of competitive new cars and commercial vehicles. This nearly doubles the government subsidy to BL.
Last Friday, BL chairman Sir Michael Edwardes signed an agreement with Honda in Tokyo for BL to build and sell exclusively here and in Europe a new medium-sized car designed by Honda, which the Japanese auto maker will market in the rest of the world.
Next, BL must win agreement from its unions on a 1980 labor contract holding down wage increases and making sweeping changes in traditional restrictive work rules that will modernize and increase the productivity of BL plants.
BL plans later in 1980 to introduce its most important internally developed new model, the Mini Metro, a redesigned version of its highly successful small economy car. BL also will mount a major "buy British" promotional campaign.
Edwardes, a cocky, energetic 48-year-old business executive who became BL's chairman two years ago and has directed the daring last-ditch recovery effort, believes he is gaining employe acceptance for his strategy and now must "win the support of the British public."
He said the promotional campaign will emphasize the "enlightened self-interest" the British have in buying British-made cars. A BL spokesman said the British will be told, in effect, "If you don't support your own industry, nobody else will."
BL, the only remaining British-owned car company, is a conglomeration of older firms that made Austin, Morris, Jaguar, Rover, Triumph and MG cars and Leyland trucks and commerical vehicles. Its production ranges from luxury Daimler limousines to tiny Minis.
But BL's production and sales have been steadily falling and that is also true of the foreign-owned segments of the British auto industry. It is one of a number of threatened British manufacturing industries, including steel, shipbuilding, home appliances and textiles, which are suffering from shrinking world markets, more efficient foreign competitors, ineffective foreign competitors, ineffective British management and the steady decline in the productivity of British workers.
BL has been particularly hard-hit by past management confusion, inefficient production methods and frequent labor disputes. BL produces only half as many cars per employe as its European or Japanese competitors.
Although Britons bought a record 1.7 million cars this year, less than half of them were made in Britain. BL's share of the British market fell below 20 percent (from more than 30 percent only four years ago), yet it built more cars here than Britain's three foreign-owned auto makers -- Ford, Vauxhall (a subsidiay of General Motors) and Chrysler (now owned by Peugeot-Citroen and being renamed Talbot).
Half the cars Ford sells here are now imported from Ford factories Elsewhere in Europe. Vauxhall has been put under the control of the West German management of General Motors' Opel to try to improve its performance. Peugeot-Citroen threatened early this year to start shutting Chrysler-Talbot plants during a damaging labor dispute.
Edwardes decided to tackle BL's problems at the roots by trying to make each model and plant pay for itself. Unproductive plants were to be closed and unprofitable models replaced. "From now on," he said earlier this year, "we will only back success."
When BL's union shop stewards refused to accept the plant closings and job cuts in his plan, Edwardes and the BL board put the question to a vote of all BL employes. About 80 percent participated in the mail ballot and more than 87 percent of those voting backed Edwardes' plan.
Edwardes helped build the majority by telling the employes that BL could not survive without the cutbacks and that employes who lost their jobs could be compensated by $10,000 or more each in severance pay. The vote, he said, showed that union shop stewards "have not always represented the wished of those they represent."
When some of the shop stewards tried to organize worker resistance to the recovery plan despite the vote, Edwardes took the unprecedented step of firing ringleader Derek Robinson, a veteran militant union leader at BL. When workers began walking off their jobs in support of Robinson, Edwardes told national union leaders that a strike would kill BL. They argeed instead to submit the case to a board of inquiry.
Impressed by Edwardes' initial success, Prime Minister Margaret Thatcher's Conservative government decided to increase BL's government subsidy to help finance the recovery plan, although Thatcher's industry Secretary, Keith Joseph, warned, "Success cannot by any means be guaranteed."
Edwardes now must convince BL's unions to agree to a 1980 contract under which wage increases may be limited to 5 percent -- less than a third of Britain's inflation rate and of the average of other pay settlements in British industry -- and to agree to drastic work rule changes. What BL calls can "employes' charter" would break down long-standing job and union demarcation lines and allow workers to perform any task in increasingly automated factories.
Appealing to the work force to accept this contract and make the coming year strike free, Edwards emphasized in receiving the additional government subsidy that this was "the last chance" for BL.
"We cannot live on government money forever," he said. "We are still on a knife-edge."