T HE FACT that it has taken the politicians so long
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to realise what was implied by the talks between Leyland and General Motors does not detract from the importance of what has been discussed in the last few months (see Commercial Moior, August 24, 1985). Should GM succeed ill buying Land Rover-Leyland (minus its bus interests) the British commercial vehicle manufacturing business will be forced into its biggest reorganisation since Leyland took over AFC.
Nobody can deny that British (and European) truck production needs rationalisation. Too many factories chasing too few sales is bad tbr everybody: even the attraction of being able to buy cheap trucks has to be put against the possibility that the dealer will make so little money doing so that he won't he around to service that cheap truck in a year's tune. Bedford and Leyland are both ripe for tile exercise because both are too small in world terms to survive independently.
Leyland, from being a world power in trucks, is now confined to all intents and purposes to Britain, a small part of mainland Europe 311(1 a couple of ex-colonial export markets. Bedford has fared little better in its marketing scope. (In that respect, Leyland must he a less-than-attractive buy for GM because it does not bring with it the most important assets of all — a widespread customer and dealer base in international markets.)
What a Leyland takeover does offer GM is the chance to get some economies of scale in production — and that would mean worthwhile cost savings which could be passed on to the customer. Bedford and Leyland both have large, hugely under-utilised truck assembly plants; both sides have medium van plants which could easily handle double their present volumes. Assuming that the politicians do not insist On the politically and socially attractive, hut commercially impossible, retention of two companies worth of jobs, a buyout could lead to a near-halving of the total number of production plants.
For all sorts of geographical. political and economic reasons, the logical candidates for closure would be Bedford's Dunstable truck! plant and Freight Rover's vans plant in Birmingham. That would leave a trucks plai at Leyland and a van plant at Luton as the major commercial vehicle plants of the combined group.
It remains to be seen, however, if such moves would genuinely do anything for eith the economics of manufacture or the well being of the customer. Bigger volumes of single models should mean a cheaper produc but at the expense of customer choice. Fewei manufacturers means that fewer dealer and service outlets can be justified, again reducini the convenience to the customer. (Dealers displaced from the Leyland or Bedford networks would, in many cases, be snapped up by the importers, a factor which might further depress the market share of British products.) Other factors raised so 1:ir in the debate cai be dismissed as red herrings in many cases: defence sales is an obvious one. The Ministr) of Defence has been quite happily buying tht bulk of its trucks from GM for decades, so ti prospect of buying its light 4x4s from the same source can hardly fill it with horror.
Of course, it would he wonderful to see a strong, independent, British-owned Leyland, competing strongly on the international market without the need for a foreign parent But the time for that passed two decades ago — in a world of international link-ups a stain alone business building just commercial vehicles to sell in just one major market is a non-starter.
So the proposed GM deal must be seen as the best available in the circumstances, and a good deal better for Britain than had, for instance, GM decided to go and buy another manufacturer which already had a strong international dealer network and presence — like MAN or even Dal or Enasa.
Certainly, if Ford and Iveco achieve their proposed tie-up, the GM/Leyland link will b the only possible lifeline for the two companies.