Downing Street Years - Margaret Thatcher [70]
Our consideration of the BL Corporate Plan was delayed by two other events. First, as a result of our (unconnected) decision to remove Rolls-Royce from the purview of the NEB, Sir Leslie Murphy and his colleagues resigned and a new Board had to be appointed under Sir Arthur Knight. Second, the Amalgamated Union of Engineering Workers (AUEW) now threatened the very survival of BL by calling a strike following the dismissal on 19 November of Derek Robinson, a notorious agitator, convenor of the shop stewards at Longbridge and chairman of the so-called ‘Leyland Combine Trade Union Committee’. Robinson and others had continued to campaign against the BL plan even after its approval. The management had been right to sack him, pending the outcome of an inquiry by the AUEW.
On Monday 10 December ministers, under my chairmanship, considered the Corporate Plan. The first thing I noticed was that BL’s performance had deteriorated even since it had been drawn up. So I asked for up-to-date forecasts of profits and cash flow. I wanted from Michael Edwardes a proper definition of the circumstances under which the BL Board would abandon the plan. There had to be clear bench marks against which to measure future performance. I also wanted to know whether Michael Edwardes himself intended to remain as Chairman: officially, his contract had only another year to run.
We were now, though, put under pressure to approve the plan before the Christmas recess — without waiting for completion of BL’s wage negotiations — in order to enable the company to sign a collaborative deal with Honda for a new middle-range car. I was not prepared to be bounced into a commitment. In any case, past experience suggested to me that the plan would not in fact be fulfilled. BL’s annual plans always forecast major improvements: but every year things seemed to get worse. Its share of the UK market for cars had slumped from 33 per cent in 1974 to 20 per cent in 1979, and had fallen further, down to only 16 per cent, over the last two months. BL’s productivity was only two-thirds that of its European competitors, and lower still compared with the Japanese: for the company to become competitive again productivity needed to improve by something like 50 per cent. It remained to be seen whether the Plan could transform that. The proposed new models could help. But the first of these was not due until the end of the following year, and by then all its competitors would have new models too. Meanwhile, BL was already running out of cash and would need an advance on money allocated for the next financial year.
I, therefore, asked John Nott, who brought to the problem the expertise and scepticism of a banker, to go over BL’s accounts with the company’s Finance Director. Keith Joseph, John Biffen and others also went over the plan in detail with Michael Edwardes. Their conclusion was that there was only a small chance of BL surviving and that it was probable that the plan would fail, followed by a run-down or liquidation of the company. About a third of BL was thought to be saleable. But the final judgement had to be based on wider considerations. We reluctantly decided that people would simply not understand liquidation of the company at the very moment when its management was standing up to the unions and talking the language of hard commercial common sense. And so, after much discussion, we agreed to endorse the Plan and to provide the necessary financial support. Keith announced our decision to the House of Commons on 20 December.
Agreeing to provide more public money was not, though, the end of the problem: it rarely is. BL’s ballot on their pay offer went badly wrong, partly because the question put to the workforce — ‘do you support your Negotiating Committee’s rejection of the Company’s wage and conditions offer?’ — was confusing. Fifty-nine per cent of those taking part voted against