Morris, MG and the Mini
By Geoff Wheatley
Morris, MG and the Mini
It's impossible to tell the story of why MG almost disappeared in the mid 1930's without including the activities of Morris motors and of course the founder of the Morris empire.
For Billy Morris the great war had been a boom… his share of vehicle contracts was the highest in the country mainly because he made reliable vehicles that were simple to drive and maintain just like his mentor Henry Ford. The general opinion of the world economists was that the war would end sometime around 1919/20 based on the idea that America who was now in the war would have the economic ability to defeat the enemy and bring peace to the world. However the best laid plans etc proved this idea to be wrong...Germany and its allies collapsed and sued for an armistice in the summer of 1918 and the war came to a sudden end.
All of the manufacturers who had been suppliers to the war machine were suddenly left with large amounts of inventory including vehicles, with no market. On top of that the policy of the day was for governments to pay after delivery not before. Many manufacturing companies went under including the Wolsley car company that Morris managed to buy for fifteen cents on the dollar which was the start of the ongoing disagreement between Morris and Austin that would last for years. Morris sold off what ever he had at cost or even less then went on a purchasing spree buying up any company that had supplied Morris motors with parts during the war. To do this he raised private money and ran these companies as Morris enterprises …separate from Morris Motors. MG was one of these in company with SU Carburetors, Crowley Press Steel. Liberty Radiators and a few others. He was the sole stockholder while at the same time holding the position of chairman of Morris Motors with thirty percent of the shares. Mrs. Morris, now Lady Nuffield, with another ten percent. What's known as keeping it in the family.
It's also important to know that the controlling board of Morris Motors included Miles Thomas and Leonard Lord, men who will play an important role in this review and the eventual circumstances.
Lord had a similar background to Morris, born in humble circumstances. His father died when he was twelve and he was left with a mother and sister to support which meant that he was working as soon as he left school at fourteen.
Although Morris had the same background the difference was that the Morris family supported him with his early ventures even giving up half of their home so that he could have a showroom to sell his bicycles. His sister who was a trained secretary kept his books. Later his father joined the venture as a manager.
Another difference between these two men was that Lord believed that qualifications were the only path to success and so at every opportunity he studied. By the time he was thirty he had three engineering qualifications and a university degree in finance. Morris also considered him self an engineer however, as he often said, he graduated from the hands on college.
At thirty two Lord found himself in a senior management position at curtails the International Chemical Company that was/is famous for the creation of nylon. One of the strong points of Lords career was organization skills coupled with good financial control. He had created quite a sound reputation within the British industrial fraternity and was being considered for a board position with the UK Operation of Curtails.
Morris... Now Lord Nuffield had virtually purchased every important supplier to Morris motors...the Wolsely Motor Corporation... Morris Commercial Corp and of course MG. As indicated with the exception of Morris Motors which was a registered public corporation with public investment.... all the other interests were in the hands of a single owner Lord Nuffield and was simply known as Morris Investments.
In 1926 the British tax authority presented Nuffield with a tax demand in excess of two million pounds saying that he was now in the super tax bracket. He fought this ruling but went through the same process two years later. His advisors recommended that he sell his control of Morris Investments to Morris Motors and call the new venture a public corporation inviting current and new shareholders to invest. On paper this seemed the simple answer to the tax problem . The public corporation was created and shares sold to investors. In 1933 the corporation was an official part of the British industrial structure with an estimated value in excess of nineteen million 1933 pounds. About 80 million 1933 dollars.
In order to maintain control of this new empire… at a distance of course... Nuffield hired or rather bribed Leonard Lord away from Courtals and appointed him, what today we would call, the CEO of the new corporation.
From all reports this was with the approval of the board with the exception of Miles Thomas who had seen himself in that position. This was to play an important part of the future development of Morris Motors as I will explain later.
With everything resolved Lord and Lady Nuffield decided to take a world cruise and departed leaving Leonard Lord in control of the enterprise. I use that term as the combined operation was certainly too big to be simply called a company . (A situation that Henry Ford experienced on the other side of the Atlantic a few years later.)
The first annual shareholders meeting took place in the spring of 1934 with Leonard Lord presiding. Over two hundred share holders attended which was quite a large number of people traveling to oxford get a free lunch and hear the success of the new venture that had been made possible with their investment...all of the financial reports from each of the once independent companies but now part of the Morris motors empire, showed a decent return however one company did not match the performance of its colleagues... in fact since its creation in 1929 it had only reported one years profit and that was modest. For the other years of 1931..32 and 33 it had operated in the red and only kept going through the financial support of Lord Nuffield.
As it was a private company this situation was never published but now that MG was part of a public investment structure the company was answerable to the investors. The actual figures taken from the records of the meeting were disastrous.
Between 1929 and 1930 MG had shown a trading surplus of four hundred and nineteen pounds representing the entire profit for the year.... It gets worse…the total loss for the period 1931 to 1934 was twenty four thousand pounds.
To be fair this did include a total of eight thousand pounds that funded the MG racing division that was…, like all such operations, a costly toy for a company that was seriously in financial trouble. How did this financial disaster happen over such a short period? Simple.. None of the production ran for more than three years. Furthermore it was the policy of the management to keep offering new and/or modified cars regardless of the cost or demand. Furthermore there was no real cost control operating at Abington...in short who needed it with Lord Nuffield simply throwing a few ...thousands each year into the company.
The shareholders were not impressed and demanded a second meeting in a few weeks to advise what steps had been taken to resolve this financial loss. There was a motion from the floor to stop all production activity at MG until a new policy could be introduced, if nothing else this would stop any further financial bleeding. However, the final straw came when it was reveled that MG also owed payments to the SU carburetor company and to the press steel company for components used at Abington...as they were fellow Morris companies this debt would affect to final return of the group for the year.
Three days later the board of Morris motors met to discuss the situation. The majority led by Miles Thomas wanted to close the factory and use the space to expand the Crowley operation… the long term view of the majority.
Lord was requested to contact Nuffield.. Telegrams were sent...regretfully no answer had arrived by the time of the next share holders meeting ten days later.
It was now Leonard Lords call as he addressed the investors. For reasons that are still not quite clear he rejected the idea of closing the MG factory or stopping the production of MG cars. Instead his solution was as follows. First the racing operation would cease in company with the independent design team... All future development would be handled by Morris motors. No more special cars would be produced and where ever possible Morris motors parts would be used to make future MG's... certainly the engines and drive trains, lights and what ever else could be utilized. As the design was now at Crowley they could ensure this happened.
Note... the 1936 new MGTA incorporated all of these requirements with unfortunate results like engines designed for the family car being driven like a sports car and blowing up!
It seems the shareholders were satisfied especially when an extra ten percent bonus was given when Nuffield returned from his absence and once again sat in the chairman's chair. If nothing else the workers at Abington were pleased with the change as they were now part of the Morris motors pay roll and received their wages in line with the Morris employees. they also enjoyed another perk, the ability to buy any Morris car at cost, paid for out of deductions from their wage packets. Morris always endorsed this policy on the principle that the more of his cars were the road the better the sales would be.
We know that soon after this Lord left the Morris empire...there are various suggestions; mostly from such people as miles Thomas that the parting was over money and that Lord had expected a substantial increase for his work, while Nuffield was way. Looking at the facts relating to Lord and his departure I think this was not the issue. It was far more complex than a simple question of money. Nuffield believed in paying for the best, that's how he kept his best workers and could counter the unions. This policy also applied to his managers and fellow directors...in short he is not going to lose the likes of Leonard Lord for a few extra bucks.
To get a better picture of this situation we have to go back to 1934 when the British government fearing the outbreak on another European war created what was known as shadow factories to make war equipment including aircraft and tanks etc. They were called shadow because they were operated under cover of the normal production centers in order that this policy was not seen by would be adversaries.
Example: Longbridge home of the Austin Motor Company also produced the Hurricane fighter... Rolls Royce engine and parts for the famous Spitfire.
While Nuffield was away Lord had agreed to allow Morris to join this operation and be part of the government controlled shadow operation.
When Nuffield returned he was not pleased with this arrangement on the grounds that he was the chairman and he was not going to take orders from any government employee. This put Lord in a difficult position as the CEO of one of the largest companies in Europe he had given his word and signed an agreement which now he had to reverse. Without Nuffield's blessing he could not honor this arrangement and I suspect this was the prime reason why he left.
It has been suggested the they parted on bad terms but once again facts do not support this. Six months after his departure Nuffield asked him to become the executive director of the Nuffield trust... an operation controlling millions of pounds. He accepted holding the position until 1940 when Austin Motors invited him to be the CEO of the company. A move that created yet another twist in this story as I will reveal later.
Miles Thomas was appointed to replace Leonard Lord. However, Morris motors was still outside of the government shadow production plan and Thomas was concerned that should a war come the Morris corporation would end up getting the odd jobs production rather than the locative contracts. Let me explain the way that this system worked. There was no cost control. The company simply made the product and charged the cost plus ten percent... furthermore what ever was required was provided by the war ministry. Example: Austin Motors were making fighter planes so every item used to produce the plane was charged at cost. Then ten percent. Every worker was charged at his actual cost with an additional ten percent. There was no way that any company within this program could lose money in fact the lowest return was ten percent even if the product proved to be below the required standard. The fact that the Morris empire was not included in this give away government program certainly upset the Morris board and Miles Thomas.
With cap in hand Thomas renegotiated with the government and signed on for the shadow program in the fall of 1938. Nuffield was not pleased but it seems he faced reality and agreed. However the work that came their way was nothing compared with the likes of Austin and all the others who had signed on much earlier. (The situation did change once the war had started when every production center was taken under the wing of the government, like it or not!).
The final punch line to the story is that when the British Motor Corporation was created in 1951 the chief executive appointed by the government was Leonard Lord. The man who would control the future of Austin, Morris, MG, Triumph and a few others. The creation of the Mini was certainly a product of Lord's management as he provided the funding for the development of this icon of motoring history when his board refused to fund such development.
However, I suspect the various set backs that MG and Morris Motors encountered after the creation of "The British Motor Corporation", stemmed from the CEO's past experiences within the Morris empire. In short, Leonard Lord had a long memory.
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