Following on from the above and the reasons Sir William Lyons gave for Jaguar becoming part of BMC.
Jaguar was a profitable company but Lyons was in his mid-'60s, and he was still very hands-on in managing Jaguar and its associate companies. His main concern was the supply of body shells for the saloon cars, which mostly came from Pressed Steel, owned by BMC. E-type bodies were made in-house by Jaguar at Browns Lane. Typically Jaguar was buying about 20,000 body shells annually, but because it was a relatively small quantity in comparison to BMC’s totals Jaguar was often kept waiting for supplies. Reasons, industrial relations and disputes, poor quality, and rectifications that Jaguar had to do. Lyons thought that by being part of BMC he would be guaranteed his numbers of body shells. Also George Harriman who was Chairman of BMC guaranteed Lyons autonomy to run Jaguar in the manner he always had done. However, when BMC’s (or BMH as it had become) annual financial results were published after the first year that Jaguar was part of the group, Lyons was horrified at BMC’s losses (Jaguar was still profitable) and realised he perhaps had made a mistake.
In 1968 Prime Minister Harold Wilson hosted a dinner at Chequers for George Harriman of BMC and Donald Stokes of Leyland as a prequel to the merger of both companies. As negotiations progressed and the full extent of BMC’s finances became apparent Leyland wanted to withdraw and things got very acrimonious indeed. Eventually, from being a merger, Leyland mounted a hostile takeover bid, forced on it by the Labour Government, and Lyons had to act as something as a middle man to negotiate the deal through. The stress of it all made Harriman seriously ill and he had to retire. The rest is history.
One factor often mentioned in reviews of the British motor industry of the 1950s and '60s is the lack of investment. One reason for low investment which becomes apparent in this book is the high levels of corporation tax in this period, 55 to 60% on profitable companies, which took a big chunk of money out of businesses.
Just another mention of Stokes and his management ethos. He would not countenance any subsidiary, no matter how successful, having autonomy. It had to be a group approach. Jaguar had long been an exporting success story, in some years up to 70% of its output being exported, with USA being its biggest market. It operated its exports divisions on a franchise / dealership basis. When Leyland took over that very successful business model was dismantled in favour of Leyland’s overseas divisions and company policy. Another serious error in Lyon’s view.