The Man Who Broke BMC? (Part Four)

DTW completes its investigation into Sir Alec Issigonis’ career and legacy, and arrives at some conclusions.

Alec Issigonis, Technical Director of BMC in his office at Longbridge in 1959. (c) Wired

It is important to state from the outset that we make no insinuation that Sir Alec Issigonis was solely responsible for all the problems that beset BMC and, later, BL. The company’s failure was very much a collective one and there is plenty of blame to share around.

In the first instance, Leonard Lord, then Chairman of BMC employed Issigonis to replace Gerald Palmer, a talented and capable engineer with whom Lord fell out and summarily dismissed. Lord and BMC’s CEO, George Harriman, then promoted Issigonis to the post of Technical Director, a senior management position for which he demonstrably had none of the essential organisational, interpersonal or management skills.

This was extraordinarily ill-judged and the problems it created were exacerbated by Harriman’s excessively deferential attitude to BMC’s technical wunderkind after Lord retired and Harriman became Chairman and CEO of BMC.

A more astute leader might have either moderated Issigonis’ excesses directly or employed an equally senior counterweight from an automotive product design or marketing background. Their role would have been to ensure that the company was designing and producing cars that met the demands of the market and were styled to appeal on aesthetic rather than just engineering and packaging grounds.

Such an individual would admittedly have had a difficult task asserting themselves, given Issigonis’ apparent lack of respect for non-engineers. Even his engineering colleagues allegedly found Issigonis often intransigent and dismissive of their ideas.

Because he appeared for a time to have the Midas touch, George Harriman in particular felt he could trust Issigonis to intuit what the market required. This was, in retrospect, a grave error and, ultimately, an indictment of the management culture that characterised BMC under Harriman’s leadership.

The failure to manage Issigonis led directly to the market’s rejection of the 1800 and Maxi, two critical models for both sales volume and profitability. The 1800’s failure contributed to the serious profitability* and cashflow issues that prompted the UK government to push BMH and Leyland together in late 1967. The merger did little to help and the first cars BLMC released (the Austin 3-Litre and Maxi) merely compounded the problem.

It is also worth noting that, as Technical Director, Issigonis had overall responsibility for BMC’s entire range of cars, including the more technically conservative RWD models. He displayed little interest in these, delegating most of the responsibility to more junior colleagues. His dismissal of anything that did not interest him and his preoccupation with the technically complex and advanced vehicles he conceived led to an unbalanced product strategy, which put too many of BMC’s eggs in a single and, as it would turn out, Mini-shaped basket.

Issigonis also appeared indifferent to the profitability of his designs and, by implication, the financial health of his employer. Despite the apparent success of the Mini, it is widely believed that BMC and its successors never made sufficient return on its sales to fund a replacement. There is a (possibly apocryphal) story about Ford buying and dismantling an early Mini to analyse its cost of production, only to conclude that BMC must have been selling it at a loss.

Furthermore, Issigonis seemed to have little interest in further developing his cars once they came to market. He famously resisted changes being made to Mini and 1800, and seemingly contributed little to further refining and improving the highly successful 1100. Was it that he regarded his vehicles as completed masterworks, which would simply carry on indefinitely as launched until he brought an entirely new clean-sheet concept to market as a replacement? In his 1979 Vogue interview, he said as much with regard to the Minor.

This is simply not how the automotive industry has worked since its inception well over a century ago. Development is almost always iterative and meeting perceived customer requirements is crucial for commercial success. Issigonis, notwithstanding his extraordinary conceptual engineering talents, either failed to grasp or chose to ignore these truths, at great cost to BMC and its successor companies.

Issigonis undoubtedly enjoyed the status and trappings of his position as Technical Director of the BMC, a position he felt he had earned and fully deserved. However, he seemed to have little aptitude or patience for the day-to-day workload involved and singularly failed to develop a cohesive engineering strategy for the group, particularly with regard to powertrains.

There was also a pervasive ‘cult of Issigonis’ perpetuated by the motoring press which he did little to refute; the eminent engineer happy to bask alone in the limelight while giving no credit to colleagues who had worked so hard to realise his concepts. This was not only selfish and graceless on his part, but probably very damaging to morale.

But for all of these shortcomings, Issigonis was someone who would today be labelled a disruptor and would be highly valued. He dispensed with conventional orthodoxies and brought radical new thinking to the industry. Other manufacturers were undoubtedly influenced by his ideas and capitalised upon them through further development and refinement.

Issigonis’ own tastes were a curious mix of the ascetic and austere, such as the modest Edgbaston bungalow he shared with his mother, and the extravagant: he enjoyed holidaying on the French Riviera, quaffing Martinis and rubbing shoulders with the likes of Princess Margaret and the 1960s glitterati.

Despite moving in celebrity and establishment circles, Issigonis may still have suffered from unspoken discrimination because of his Greek-German heritage and suspicions about his sexuality. His notorious abrasiveness might well have been simply the defensiveness of a person who knew that, for all his talents, he would always be regarded as an outsider and not one of us in that notoriously class-ridden and prejudiced era.

Issigonis’ legacy is not dissimilar to that of other brilliant British inventors, whose creations were profitably productionised by others who were capable of the pragmatism and flexibility that eluded them. This was a tragedy, both for him personally, and ultimately for the company at which he spent the majority of his working life. The wider industry, however, undoubtedly benefitted from his vision and radicalism, and that should be recognised and appreciated.

Issigonis leaves what must be viewed as a somewhat compromised and decidedly uneven legacy, one which amounts to so much less than his talents and abilities once appeared to have promised, at least as far as BMC/ BL is concerned.

Ultimately, however, the failure of BMC/ BL was a failure of successive management and not of a single individual. The company had a prodigious talent in Issigonis, but singularly failed to channel his extraordinary engineering skills into the design and production of commercially successful vehicles. A more astute and effective management could have made so much more of his brilliance.

*                                     1964/65       1965/66     1966/67

Sales:                                886k            846k            694k
Profit:                             £33.4m       £34.4m      £12.4m
Profit per Unit:                £38              £41            £18

 

Author’s note: While this series carries my name, I must acknowledge the involvement of DTW’s Editor, Eóin Doyle, who provided a great deal of background information and many very useful insights, for which I am most grateful.

 

Author: Daniel O'Callaghan

Shut-line obsessive...Hates rudeness, loves biscuits.

28 thoughts on “The Man Who Broke BMC? (Part Four)”

  1. What an interesting, well written, top quality set of articles you have given us Daniel and Eóin. Thank you.

  2. A superb series – it’s almost a shame it had to end!

    Many thanks for this, gentlemen!

  3. Definitely worth an A-star plus, gentlemen. And a very good morning to you.
    Ultimately the failure of any business is a result of poor management; in the case of one as large as BL the failure of whosever manages the managers. There may be many outside events and influences which contribute, but it is the management which fails to find a way of dealing with them. Issigonis undoubtedly contributed a great deal to the positive development of the motor car; would he have been better placed at Ford? Perhaps not – and it’s all academic now anyway.
    Thank you for a great series of highly instructive articles. Not to mention entertaining responses.

    1. Hear, hear. Very enjoyable and even-handed articles, and interesting and intelligent comments which add to the stories. As Robertas says, below, one of the enjoyable things about this site is that it makes you think, through the new perspectives it brings.

  4. I’ve always wondered where it all began to go wrong, and I think one has to go back so far as to the birth of BMC and the merger of Austin and Morris. It itself created such a vast conglomerate of factories and brands they couldn’t even figure out up until the 1960’s if they were profitable or not. Somewhere a company grows too big to handle but not too big to fail, it just takes wins if time before anyone could figure out they were failing. In the fifties England was the world’s biggest exporter of cars, they had fifty percent of global exports. Simply because most makers only catered to their own domestic markets with not much thought on exports. Think about that one for a minute, fifty percent of global sales. There were Land Rovers exported to every continent, the same with Leyland buses, the same with cars. Austin even helped Nissan get their shit together and kick-started Japanese car production. The fact they squandered that opportunity in less than two decades is without a doubt the saddest story in car history. Of course there’s a million reasons it went that way, and Issigonis is one of them. But I think the company had been doomed even without him. Just remember the Austin version of the 1100 was deliberately held back for a full year just to give the Morris dealers something to chew on….

  5. A highly informative and enjoyable read that is clearly the product of much research and thought. Thank you both.

    (With series like this one, DTW will likely not be successful in remaining “The World’s Least Influential Motoring Site”.)

    I am minded to wonder if there was anyone at all at BMC/BL/ARG etc. who was doing strategic good.

    1. The only candidate to spring to mind (for doing strategic good) is Michael Edwardes. But yet again, his tenure came too late in the day.

    2. Yes – there were lots of good people – George Turnbull immediately comes to mind. He had success at BL and then went on to have several key roles elsewhere.

    3. Thank you both JTC and Charles. I read Michael Edwards’ autobiography when published and recall it did seem to be about clearing-up a mess but as it withered away subsequently I presume he was indeed appointed too late in the day. George Turnbull I have been informing myself about. He seems the man to have been able to have done strategic good: a great pity he was not put in charge at the first opportunity.

  6. Without isignonis, BMC would have failed earlier.

    BMC was merged by the UK’s first and second largest car companies meaning they produced more than twice as much as Ford UK in 1952
    In 1959 / 1960, BMC made 669122, while Ford UK was 575417 in 1960.
    It is easy to see how fast the prospect of Ford UK is

    Considering Ford’s significant advantages in management, cost control, market analysis, and marketing
    as well as the fact that they invested more than BMC in 1960 and that Cortina will arrive in 1962
    Without isignonis’ revolutionary FWD product, BMC would have been overtaken by Ford in the early 1960s

    No wonder Lord (or Harriman?) Would say
    he needed isignonis to develop something for him that would hold Ford back for at least eight years
    The trust in isignonis was clearly driven by despair

  7. Daniel – I had to read your article three times over with thinking time in between. It’s an admirably concise and clear summation of the man’s character and his impact on the Morris and BMC / BLMC body corporate.

    A few thoughts provoked.

    Both Austin and Morris were strangely insular businesses. Until the British Leyland era they rarely brought in engineers, designers and managers from elsewhere, and did not look at what Ford and GM were doing in terms of corporate structure, or possibly more pertinently how Fiat, Daimler-Benz, Renault, and Peugeot functioned. Compared with their rivals, the BMC companies’ engineering departments were chronically under-resourced, and research and development were a combined function, rather than separate entities.

    George Harriman emerges rightly as a villain of the deepest dye. Complacency was his worst failing, not recognising that even successful products would eventually be bettered by their competitors. There was denial when failures occurred, for example the Vanden Plas 4 Litre R, which required a rare intervention from honorary “President” Len Lord to prevent disaster. Even more significantly, the Maxi’s design – or very being – was not reconsidered in the light of the 1800’s poor reception and failure to meet targets.

    Perhaps issigonis’ greatest contribution to automotive progress was securing a supply of mass-produced British-made Rzeppa joints in time for the Mini’s launch in August 1959. Even that was led by a tip-off from MG’s Managing Director Syd Enever – another unsung hero in the front wheel drive saga – to alert Issigonis to the low volume production of Rzeppa joints by the Unipower company of Shipley, Yorkshire.

    The machinations which followed saw Unipower absorbed into GKN’s Hardy Spicer division, and soon everyone had access to this complex but essential component, once thought to be prohibitively costly for mass market cars. Dante Giacosa was at last able to develop the front wheel drive car he had wanted Fiat to make for decades, and thereby started the real revolution.

    1. There seems little question that Harriman was out of his depth – he was certainly viewed as something of a pushover by contemporaries in the industry. Joe Edwards was apparently pretty scathing about matters when he rejoined the business in 1965, having been appointed Managing Director of the BMC car division following the absorption of Pressed Steel Fisher that year. Ten years away, he said and nothing had changed. Edwards, a far more forceful and dynamic character than Harriman had perhaps originally been in the running to replace Len Lord, but the two men fell out rather spectacularly, with Edwards either walking out or being sacked (opinions on this differ) in 1956.

      Edwards seemed to have a reputation of speaking truth to power, which was unlikely to have sat well with the authoritarian Lord. It could be argued that in dismissing both Gerald Palmer and Edwards, Lord set BMC on an irreversible course. Lord himself cannot be ignored when blame is being attributed. Seemingly holding a grudge against his former employer (Morris Motors) he did nothing to foster common cause between the two rival companies following their 1952 merger, which lead to a fatal atmosphere of distrust and ‘not invented here’ which permeated the business throughout the ’50s and ’60s.

      He was also directly responsible for both the appointments of Harriman as successor, and at the very least, approved Issigonis as Technical Director. Both appointments were classic examples of individuals being promoted to their respective levels of incompetence – the well-known Peter Principle.

      It’s interesting to me that Harriman essentially stepped back in favour of Edwards in 1965 – was it a tacit acknowledgment of his limitations I wonder? Certainly, Edwards hit the ground running, but unfortunately a combination of government interference, a hostile press and a suspicious, ill-treated workforce combined to rob him of the necessary time to address matters before BMC was to some extent press-ganged into marriage.

      He walked out shortly after the merger with Leyland, allegedly accusing Stokes of delusions of grandeur. It’s rather difficult to argue against that view.

    2. What would have been the consequences had BMC under better management decided to attempt to maintain their hold over the Unipower Rzeppa joints by possibly taking over Birfield Industries before it was taken over by GKN or another route with a similar goal?

  8. A well wrought series, thank you both.

    Unfortunately, BMC/ BLMC/ BL/ ARG/ RG/ MGR was not the only tale of a British industrial giant destroyed by what comes down to a dire combination of terrible management decisions, poor labour relations, radical union action and political interference. British Ship Building, Steel Making, Coal Mining, Aviation, Industrial Chemicals, etc. all have miserable tales of decline and fall which can also be attributed, to a lesser or greater degree on the aforementioned factors.

    Maybe it should best be called ‘the British disease’, but we all failed to see the greater, long term common good and so pull together to do and live with what was necessary at key junctures in time. The US, Germany, Japan and now China all seemed/ seem, for different reasons, to have the necessary conditions to make and execute better management (including those of the political persuasion) decisions when the chips are down. The top level facts are that we had it all and gradually let it all slip from between our fingers.

    1. Don’t forget the British motorcycle industry which also went from leading the world to bankruptcy in even less time by much the same factors. There also is one man -Edward Turner – who takes most of the blaming.

  9. Thank you all for your very kind and complimentary words. Eóin and I are very happy that the series has been so well received and enjoyed. We’re not quite done with BMC/BL yet: Eóin has an interesting piece coming up concerning the circumstances surrounding project 9X, Issigonis’ unfinished symphony.

  10. Daniel, Eóin thank you both in whatever measure is appropriate to each for a very good series. I have read many many articles on the Leyland saga, and Issigonis so I was not expecting too much new here – I was wrong – some new – at least to me – insights and thought provoking commentary on the political quagmire that was BL and its antecedents and descendants. Chapeau to you both.

    Thanks also to the many illuminating replies from the DTW commentariat.

    Some day all motoring websites will be made this way? If only!

  11. I have just signed up; this the first issue received into my email. There is something that I have wondered about for many years. You may have already answered it.

    The question is: On page 340 of “W.O. Bentley~Engineer” is a sketch that Donald Bastow attributes to 1949. It illustrates a fwd car with a layout similar to the Mini. Was this an idea floating around engineering offices at the time? Something he’d just heard of? or an original thought that W.O. couldn’t pursue at the time?

    Allan B. Lewis

    1. Could it have been a design by Laurence Pomeroy for a transverse-engined front wheel drive “Mini-Motor” featured in the 7 February 1939 issue of Motor?

    2. The pre-war DKW was a front wheel drive car with a layout similar to the Mini.

  12. To be fair to Issigonis he did move to Alvis to avoid the chaos of the merger between Austin and Morris to form BMC, so did not have a chance to develop his own cars beyond the FWD Minor prototype despite the A-Series Minor, Oxford II and Isis carrying his residual influence. Unfortunately he preferred not to refine his exiting designs.

    Leonard Lord’s purging of Morris personnel, many of whom were said to have been very good at cost-control and sidelining of the likes of Reginald Hanks (aka Reggie Hanks) until the latter’s retirement in 1961 certainly did not help matters.

    Neither did William Morris attempting to sabotage the Minor and Mile Thomas’s other plans for investment / modernization help, with even Vic Oak becoming increasingly frustrated that William Morris was continly blocking ideas coming from his department.

    Issigonis could have probably benefited from Reggie Hanks and Vic Oak remaining a presence at BMC and in prominent positions to reign in his excesses, with Gerald Palmer somehow being persuaded to remain at BMC a bit longer (before moving to Vauxhall in 1957-1958 instead of 1955) to focus on the RWD cars that did not interest Issigonis (essentially a demotion for Palmer in all but name to complete the development of Twin-Cam B-Series to make it reliable plus the Twin-Cam C-Series prototype as well as a new generation of RWD cars).

    However the question then becomes who at BMC would have been an adequate replacement for Gerald Palmer to compensate Issigonis’s lack of interest in RWD cars after 1955-1958 (depending on when Palmer leaves)?

    Roy Haynes comes to mind though he was recruited by Joe Edwards in 1967 and that was after the role he played in responsible on both the design of the 1966 mk2 Cortina as well as worked on the design for the 1966 mk4 Ford Zodiac/Zephyr, unless there was other prior work that Haynes was notable involved in which would have entailed him joining BMC earlier had Joe Edwards managed to succeed Leonard Lord in 1961.

    That just leaves MG’s Syd Enever and the Abingdon engineering team (another otherwise neglected department together with Duncan Stuart’s Research Department at BMC) to potentially step up to the plate, with their role being expanded from designing sportscars to also RWD saloons on common platforms upon Gerald Palmer’s demotion and later move to Vauxhall in the mid/late-1950s.

  13. Congratulations on a very well done series Daniel and Eóin; together with the additional comments by the DTW readership a level is reached that is rarely seen these days. Looking forward to the next!

    1. Hi Jack. Thank you for the additional information. That alleged meeting between Barke and Harriman would give anti-trust authorities a fit of the vapours these days.

  14. I have often heard the story regarding Ford claiming that BL/BMC/Austin etc. made a loss on each Mini sold.I have always wondered if it could possibly ever be true. The rational, thinking person could never see this as a road to success, selling below cost can surely only lead to disaster? I’m aware of large companies “subsidising” items to build brand awareness, gain “free” advertising or in the hope of selling up onto product lines which do make a profit, but purposely selling below cost with no apparent gain, they weren’t that daft. Were they?

    I design electronic modules. I have a target price in mind when setting out and I try to bring my design in below that target. Sometimes this is a higher price than a competitors product as we feel ours is superior, warrants the extra cost and that extra cost can be justified. Mostly we try to bring it in below the cost of the competition, with superior features as a bonus for our customers. Sell below cost? No! If we can’t make it and sell it at a profit we don’t bother, that would be poor business.

    To get back to my point. Could the Mini ever actually have been sold below cost? If so, why did no one ever consider raising the price to compensate? I’d love to see DTW put some authority behind this story and find out once and for all the truth behind it.

    1. My understanding of it (drawn mostly from Jon Pressnell’s “Mini: The Definitive History” and Gillian Bardsley’s Issigonis biography, is that Ford’s analysis of the Mini did occur (they were distinctly unnerved that BMC was selling such a technically advanced car for less than their very conventional 105E Anglia) but the conclusion that Ford came to was that *Ford* couldn’t build it profitably, not that BMC was neccessarily losing money on the Mini. However Ford were pretty confident that if they, with all their cost-control and economies of scale, couldn’t make money on the Mini at its initial price then BMC almost certainly wouldn’t. Presnell quotes John Bacchus (Ford of Britain product planner in the 1960s ) who states that Ford calculated that the Mini would have cost about £7 more to build per car than the Anglia, when the Mini was on sale for over £50 less than the Ford! (Incidentally Bacchus also says that his department were “baffled” as to why BMC even bothered with the Mini when the ADO16 was already conceived and in development “other than as an interesting concept to show how small a car you could make”. I think there’s a lot of truth to that!)

      What was of greater concern to the people at Dagenham was that they couldn’t lower the price of the Anglia to match or undercut the Mini. Presnell also quotes Dagenham MD Allan Barke, who had an informal meeting with George Harriman, informing him of their findings and proposing that both companies would raise the price of their small cars by the same amount – BMC would make a profit on the Mini, and Ford would make more profit on the Anglia. Harriman dismissed the notion, telling Barke that “the product will push the price” whatever that means!

      One of Presnell’s other sources states that Ford, in a further market analysis to try and combat the Mini, calculated that the Mini was so fundamentally good that BMC could have raised the price by £20 or even £30 and not materially affected sales while greatly improving the car’s financial basis. But Harriman insisted that, due to BMC’s different cost bases and accounting standards the standard Mini made a profit, albeit a slim one, while the likes of the Cooper, Super Deluxe, Countryman/Traveller and Wolseley/Riley had greater margins. Quotes within quotes, but an unnamed BMC executive in Graham Turner’s “The Car Makers” summed up Harriman’s philosophy as “Sure, they could easily have made £10 more on each Mini, but they weren’t thinking of sales in the first 12 months but over ten years. They were thinking of millions. If they make less on each car to start with, that doesn’t matter.”

      That’s certainly one way of going about it, I suppose, and there’s a strong argument that this approach could have paid off if BMC was ever able to make and sell enough cars – the Corporation bet its existence on being able to make 1 million cars per year by 1965 and that never happened, partly due to production and labour problems, partly due to Ford and Vauxhall taking increasing domestic market share and partly due to the UK’s joining of the EEC being blocked in 1963, which BMC management had been assured by the Macmillan government was virtually a done deal.

      What the story also suggests is that Ford put much more effort into working out the product plan, accounts and marketing strategy for the Mini than BMC did!

    1. I had a look at that one. The 6% figure is interesting as it means it could be the result of cautious cost accounting; it could also be a signal from Ford´s analysts to Ford engineers (they didn´t do this work for anyone else) and as such a “politically” biased analysis. However, the figure is probably somewhere near the mark rather than wildly wrong. It could perhaps be that the profit margin was 6% or 5% or so. Either way , whether there was a slight profit or slight loss on the Mini it was not a big profit they were taking.
      I accept the general point that companies can´t always insist on a profit right away as it would foreclose start-up phases in new markets and mean excessive conservatism. Tesla has been lucky in having the money to withstand this loss for a sustained period. However, in many cases such conservatism is well-judged. Peugeot and Ford have not often broken the mould though often deliver excellent cars that are just innovative and good enough to be compelling products.

    2. Hello Richard – yes, and the Japanese are often similarly conservative, depending on the circumstances, of course.

      BMC / BL often agreed publicly that the Mini’s profits we’re marginal – why wouldn’t they? It wouldn’t do sales any harm to say they were selling things very cheaply, even if that wasn’t actually the truth.

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