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Want proof of that statement?  British Leyland, a car company that went through £11 billion of inflation-adjusted British taxpayer money, or $16.5 billion, in the ’70s and ’80s before going out of business. All that is left of the company now are memories of cars like the Triumph, and a painful lesson in the limited effectiveness of bailouts.

Historically, British Leyland’s roots stretched back further than Henry Ford’s Model T. The company controlled 36 percent of the British market well into the 1970s, with mass-market brands like Austin and Morris and premium lines like MG and Jaguar. But rising competition from Japanese and German automakers, shoddy workmanship and a breakdown in labor relations brought the company to near bankruptcy by 1975.

BMH had produced several successful cars, such as the Mini and the Austin/Morris 1100/1300 range (which at the time was the UK’s biggest selling car). While these cars had been advanced at the time of their introduction, the Mini was not highly profitable and the 1100/1300 was facing more modern competition.

The lack of attention to development of new mass market models meant that BMH had nothing in the way of new models in the pipeline to effectively compete with popular rivals such as Ford’s Escort and Ford Cortina.

Immediately, Lord Stokes instigated plans to design and introduce new models quickly. The first result of this crash program was the Morris Marina in early 1971. It used parts from various BL models with new bodywork to produce BL’s mass market competitor. It was one of the strongest selling cars in Britain during the 1970s, although by the end of production in 1980 it was widely regarded as a dismal product which had damaged the company’s reputation. The Austin Allegro (replacement for the 1100/1300 ranges), launched in 1973, earned a similarly unwanted reputation over its 10-year production life.

The company became an infamous monument to the industrial turmoil that plagued Britain in the 1970s. At its peak, BLMC owned nearly 40 different manufacturing plants across the country. Even before the merger BMH had included theoretically competing marques which were in fact selling substantially similar “badge engineered” cars. To this was added the competition from yet more, previously LMC marques. Rover competed with Jaguar at the expensive end of the market, and Triumph with its family cars and sports cars against Austin, Morris and MG. The result was a product range which was incoherent and full of duplication. In addition, inconsequent attempts to establish British Leyland as a brand in consumers’ minds in and outside the UK, print ads and spots were produced, causing confusion rather than attraction for buyers. This, combined with serious industrial relations problems (principally, the company’s relations with trade unions; the 1973 oil crisis; the three-day week; high inflation; and ineffectual management meant that BL became an unmanageable and financially crippled behemoth whose bankruptcy in 1975 was assured.

Michael Edwardes, who took over as British Leyland’s chief executive in November 1977.  Wildcat strikes consumed more than 32 million worker-hours in 1977, and the company became a symbol of labor strife, with some employees walking out the door with spark plugs in their coat pockets and engines in the trunks of their cars, Mr. Edwardes said.

Mr. Edwardes immediately began reducing the company’s work force of roughly 200,000 — to 104,000 within five years — and closing 19 factories. He appealed to the Thatcher government for aid, arguing the money was needed if British Leyland was going to be able to afford to lay off workers while investing in new models.

Eventually, the government put up £3.6 billion, equal to £11 billion in today’s money. But the rescue did not do much to preserve British Leyland’s labor force or market share in the long term.

By the time it received its last government infusion of cash in 1988, Mr. Rhys said, British Leyland’s market share had slumped to 15 percent. British Leyland evolved into MG Rover, which was eventually acquired by BMW, then spun off, finally going bankrupt in 2005.

According to Mr. Rhys, just 22,000 workers remain at British Leyland’s successor companies, about 10 percent of its work force in the mid-1970s.

“It was a very poor return,” he said. “We felt collectively and nationally that we got our fingers burnt, and this was always used as a reason to avoid bailouts, both by Labor and Conservative governments in Britain.”

Soure: The Wall Street Journal story.

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Tags: austin, austin allegro, blmc, bmh, british leyland, jaguar, lord stokes, mg, mini, morris, morris marina, range rover