The British Motorcycle Industry: Rise and Fall

Miscellaneous History
1

In the '50s motorcycles were Britain’s third export, after cars and spirits. By the end of the '70s this thriving industry was all but gone, with a few hoplelessly outdated or poorly engineered units bearing history-laden names rolling out of small workshops. How this came to be?

According to who you ask the blame rests on the shoulders of strike-happy unions, incompetent management, bumbling politicians or even the Japanese “Big Four” (Honda, Yamaha, Suzuki and Kawasaki) practising a bit of old fashioned “unfair competition”. I have always been a big British motorcycle buff: in fact when I discovered the historic Triumph brand was being resurrected in the '90s I immediately put out an order for one. This bike (and its successor) are long sold but in the meantime I have formed a certain opinion about why such a tragic fate befell this once thriving industry.

Before the Great Depression, motorcycles were big business all over the world. There were literally hundreds of brands to choose from from the US, Italy, Great Britain, Germany, Belgium, France etc. The Great Depression hit like the proverbial ton of bricks. In no country this was more evident than in the US. Historical and innovative brands like Cyclone, Jefferson, The Flying Merkel, Thor etc were wiped out by the Depression leaving only Harley-Davidson and Indian to “square it out” among themselves. In 1932, at the height of the Depression, Crocker Motorcycles was founded and it looked like this brand could really give the two survivors a “run for their money” until the owner, John Crocker, turned to a more lucrative business at the opening of WWII (aircraft components) and closed his motorcycle business for good.

In Britain the Depression had been less severe, only leading to a general “reorganization”, meaning a certain number of brands were united under common ownership. This reorganization went on immediately after WWII. For example Associated Motor Cycles owned AJS, Matchless, Francis Barnett, James and went on even to absorb the iconic Norton brand.

When WWII came to an end the appetite for motorcycles resumed as never before. The main market was for cheap, easy to build and easy to run, vehicles, often of the “motorized bicycle” type like the French Velosolex, to provide personal transportation. Honda, now by far the largest motorcycle manufacturer, started out by building motorized bicycles in a delapidated workshop. Of course, there was also a pretty strong demand for “proper” motorcycles and here the offering was pretty limited. With historical brands like BMW, Moto Guzzi, Gilera etc busy rebuilding their business this only left two ready suppliers: the Americans and the British.

The Americans soon became synonimous with Harley-Davidson since Indian went bust in 1953. H-D concentrated their efforts on large displacement, expensive, not particularly good machines, mostly based on 1920’s vintage or military (read: not performing nor economical) designs. That left the field wide open to the British. They had the added bonus HM Government had decided for a massive devaluation of the pound immediately after the war, both to help repay their enormous wartime debt and to “help the exports”.

Most machines available in the late '40s and early '50s were based around '30s vintage designs but nobody complained. After all the war had brought about a complete stop in R&D and this was as good as people was going to get. British machines soon started to arrive in good numbers in both the US and Continental Europe. It’s exactly at this point that things started to go wrong.

Motorcycles were profitable business, generating good profits. You’d expect part of these profits would be reinvested in R&D, new tooling and building brand new production lines to build larger numbers of vehicles to satisfy the ever increasing demand. And you would be dead wrong. Profits were “reabsorbed” by the parent company, which usually owned other far less profitable firms, leaving the “cash cows” struggling with barely sufficient budgets. Bert Hopwood, the famous engineer, recalls in his memories (which I am going to quote extensively) the working condition at the Norton works in Birmingham. The only dynamoter available (necessary to see how good an engine really was) was so dilapidated it spouted massive amounts of water and oil on street, leading to an official complaint by local residents to the police. This problem was not fixed by buying a new dynamometer but by posting a worker armed with a huge broom on the street to “do the best he could”.

In all fairness it must be said salaries paid to workers were relatively high and, in the case of the Triumph Meriden plat, considerably higher than the Midlands average. Sadly this doesn’t mean workers were particularly productive. This didn’t stem from a propension to strike or being lazy but to the insufficient capital investment in these lucrative enterprises. Motorcycles were completely assembled by hand and, through the aforementioned funding problems, vital parts were often in short supply as suppliers could only be paid for small production batches. This meant weekly output varied widely, often leaving dealers and distributors with empty warehouses during the crucial Spring months. At the same time in Japan Soichiro Honda was laying the basis for the first truly modern motorcycle factory, the now legendary Suzuka plant, designed using his own experience with large volume manufacturing during WWII and further improved by studying carefully the ultraefficient Volkswagen works at Wolfsburg.

But at the moment this problem could be overlooked. There was a genuine appetite for British motorcycles and buyers were ready to wait long to own one. After all no other manufacturer could supply comparable products. The situation started to change when Italian, German and, at a slightly later date, Japanese manufacturers started offering proper small diplacement motorcycles (between 51cc and 200cc) instead of cheap motorized bicycles. The only thing the British industry had to offer was the BSA Bantam, which was really a German DKW design whose rights and blueprints had been handed to Britain as part of the war reparation plans. In a typical move Ed Turner, the (in)famous Triumph head honcho, said the British should be grateful to the Japanese for building small bikes at a loss, bikes which would train future riders who, in turn, would buy British machines. Ed Turner, like his colleagues, simply could not concieve the Italians and the Japanese could not only not lose money on these “small bikes” but actually made good profits out of them. It wasn’t long before Piaggio Vespa scooters and Honda Cub’s were buzzing through the very streets of Birmingham in large numbers.

The aforementioned lack of funding not only affected production, but R&D as well. As foreign competitors began to put out completely new designs, British motorcycles began to be dated. The engines in particular were starting to “feel the heat”. Truth to be told engineers, who had to keep up to date with progress, had been submitting new designs on a regular basis. They considered themselves lucky if a few prototypes were built. Hopwood was genuinely surprised when an engine he designed for Norton, the Dominator 500, was actually put into production. This led to a sort of “nip and tuck” design policy, in which hopelessly dated designs were squeezed to their very limit in an attempt to make them palatable to the buying public who now was starting to have serious alternatives. This of course affected reliability and, coupled with the hoplessly outdate engine case design, produced the image of the British motorcycle leaking oil in copious amounts and breaking down every Thursday. When Hopwood informed one of his superiors (Donald Heather of BSA fame) about this reliability crisis the answer was incredible and deserves to be quoted in full “Most motorcycle owners love to spend their Sunday mornings taking off the cylinder head and re-seating the valves”. Mr Heather probably could not concieve most motorcycle owners would like to take a leisurely ride on Sunday mornings instead of busying themselves with spanners! As Hopwood commented “No wonder they decided to go Japanese!”.

This complete ignorance of the outside world reached a breaking point at the end of 1968 when, during a BSA-Triumph Board meeting, one of the Marketing Directors, whose job was to keep up to date with what the competition was doing, threw a bombshell “Honda is going to introduce a four cylinder 750cc machine next year”. The Board responded with a stunned silence which betrayed both disbelief and panic. Disbelief because up to that point production four cylinder machines had been hugely expensive luxury models, like the pre-war FN, Militaire and Ace. If Honda was going to market one it meant it would carry an affordable price tag. How was that even possible? Panic because so far large displacement machines (mostly in the 650cc engine range) had been the main profit turner for the company, especially on the US market, where Honda was already making huge headways. This led to a mad scramble of the “do something, fast” type. The end result was a 750cc three cylinder engine sketched by Hopwood in his spare time was quickly put into production with utmost haste, leading to the Triumph Trident and BSA Hurricane models. While the racing version was highly succesful (mostly because Honda had withdrawn from competitions in 1968), the production models failed utterly. The Honda was simply a completely superior machine. Norton’s response was even more pathetic: they did nothing at all.

To aggravate these problems the two only remaining British motorcycle groups, Norton-Villiers and BSA-Triumph, had started to suffer from elephantiasis. Consultants and managers were hired in large numbers with handsome pay to boot. It is unclear if this stemmed from a desperate attempt to revert the declining fortunes by applying supposedly “modern” management technics or if anybody promising a miraculous cure was simply given a job. This led to an even more complete decisional paralysis due to the large numbers of committees being formed and increased costs consistently in a moment when painful and crucial decisions were to be taken.

In 1973, when it was far too late, the British Government decided to step in a negotiate a merger between the two groups: thus Norton-Villiers-Triumph (NVT) was born. A bold industrial plan was decided upon, based on a modular engine approach plus a Wankel (the world being Wankel-crazy in the ‘70s). Since motorcycles had been deemed a vital export HM Government pledged very consistent no interest financing. Sadly this was not to be. In 1974 the Conservatives lost the General Election and the new Labour cabinet proved much less amenable, completely cutting off NVT the dole. NVT folded in 1978, with what was left of Triumph being handed over to the Meriden Workers’ Committee (which in 1983 sold the rights to John Bloor) and the Norton Wankel program being auctioned off.

Strikes were only sporadical until the very last agonizing years: after all the workforce was well paid (by Midlands standards) and until the late '60s layoffs had been very rare indeed, so there was little reason to protest. And, truth to be told, with sales dwindling to a trickle (by 1971 BSA-Triumph had over 11,000 unsold units in the US alone) this didn’t matter as much as other problems.

So what we are to make of this? In my opinion the main culprit here is the management. They simply seemed fixed on milking the business as much as possible without too much thought about the future. Capital was not lacking, as the industry was giving very good profits and, being a critical export sector, HM Government was more than ready to allow favorable taxation. Shareholders seemed to content themselves with reaping the dividends and paid no attention until it was far too late. When the cash cow had run dry it was simply left to die in the the middle of the field.

2

You could very well be correct, that it is just bad management decisions that caused the death of the British Motorcycle industry.

But I think you need to look at two areas:

  1. Incentives, specifically tax incentives and regulations. How friendly were the regulations to unions? How much power did unions have over wage and benefit negotiations? How hard was the government on these companies for other labor regulation? Did the government interfere directory or indirectly in the business decisions of these companies? How hard was it for these companies to get parts or even completed units from other countries? Did the government prevent stronger competitors in Europe or Japan or somewhere else from buying one of these companies?

And

  1. Most importantly, How hard was it for these companies to get access to capital, specifically real capital? If the government is taking on loans or raising taxes then there is less real wealth to go around. And how much capital was stolen from this and other industries to fund speculation and government excess? The people in these industries are the UNSEEN victims of Keynesian economic policy and inflation. These labor and capital intensive industries can not raise prices to keep up with the onslaughts of taxes and regulations. Look at the USA and UK. It seems like NYC, Washington DC and London are thriving while the rest of the cities in these countries are struggling. The reason is that the government capitals have more money to buy votes and the financial centers have more cash to speculate with.

So if you decide that management is the issue then are their other similar industries that once flourished and are now in the dumps? For example what about autos? Mini-Cooper has had a rennisance but what about Triumph? And what about other transportation industries or other heavy industries, have these folks done better than motorcycles?

3

As I said before until the very last days, when hope was all but lost, unions weren’t very active. I’ve already outlined the reasons: pay was very good by Midlands standards and layoffs were very occasional. At the Meriden works (Triumph), widely renown as the most “unionized” factory there were actually only two strikes in the '50s and the ‘60s: one was over the layoff of 16 workers (this being ineffective since most workers refused to strike since the laid off workers had accepted compensation) and the other over pay rise, which was settled when one of Board members overruled the Factory Managers by offering a pay rise actually in excess of the unions’ demands. As the climate became more uncertain, strikes became the norm but at this point it didn’t matter anymore: the consumers had already opted for other products and there was no new product in the pipelines to redress the situation. Contrary to the car industry, which was actually nationalized (and which would deserve a separate treatment) and suffered horrendously from massive labor unrest, the motorcycle industry was never nationalized: HM government had simply applied the same “cure” proposed by Keynes to make the British aircraft industry more competitive: forced mergers. It would have been interesting to see what would have happened if the zero-interest financing promised by HM Goverment to NVT would have actually materialized. While the products designed by Hopwood and other designers were undoubtely appealing on paper and designed as to cut production costs considerably, the factories themselves would have required massive overhauls and huge investments to modernize the ancient tooling: the bore drill used by Triumph in the early '70s dated back to the '30s and had actually survived the Coventry Blitz.

As far as capital goes, the problem doesn’t lie in government taxation. Profits after taxation were often over 7%, a massive figure by any standard. Since motorcycles were a vital export (like cars, spirits, aircraft parts etc) there were substantial tax breaks for R&D and retooling. The problem is the profits were invariably reabsorbed by the parent company, often to cope with losses in other companies, instead of being partially reinvested to improve productivity and offer new products to the consumers. For example the after the Norton brand was taken over by AMC, it was agreed Norton would be able to use a quarter million pound of their own money to purchase or build a new factory, since the Bracebridge Street works were little more than a Victorian era slum. After the deal had been finalized, the AMC board forced Norton to call off the deal since a “cash crisis” had come about. Norton was forced to remain at the old, highly inefficient plant and the quarter million pound disappeared from their books. Instead closing down or reorganizing the less profitable brands (an euphemism for money pits), the more profitable brands were milked dry both to pay off shareholders and keep them afloat. That’s just bad business.

Truth to be told there were no foreign buyers lining up to buy Norton, Triumph or whatever. Nobody was interested. I am sure HM Government would have been overjoyed to flog them off to Johnny Foreigner: after all the Rootes Group (Hillman, Talbot, Sunbeam etc) was bought by Chrysler in 1967 without anybody complaining. The forced merger was a desperate attempt to keep the shops open.

Triumph is now actually doing quite well: their business model is halfway between H-D and the Japanese and they have a growing customer base. Norton has been resurrected for the nth time but differently from Triumph they are just a small niche manufacturer and I personally don’t see much future for them.

4

Kakugo, if you’re up for it, I’d really like to hear your explanation/opinion of the fate of the British automobile industry and the rise and demise of British Leyland. I think this is a great case study to use against critics with varying assertions, such as: libertarians are corporatists, the government has to bail out large industries and companies, nationalization isn’t so bad, government propping up industries and companies in the face of foreign competition is good, competition between domestic rivals is bad for the national economy etc. etc.

5

I am not really a car person. I should have a chat with my brother about BL since he’s far more knowledgeable than me in that sector.

What I know is that, again, the original decision stemmed from Keynes’s paper on the aircraft industry. British Leyland was the forced merger between British Motor Holdings (BMH) and Leyland Motor Corporation(LMC) in 1968, the same year the Rootes Group was bought by Chrysler. While LMC was a very succesful group (mostly manufacturing lorries, buses and agricultural tractors), BMH was pretty much bankrupt.

BMH’s faults are almost legendary. When they introduced the famous Mini (branded as Morris and Austin), other manufacturers simply could not understand how they could offer such a car at such a low price. Ford Europe even went as far as buying a number of Mini’s (through their own employees) and had their technicians and engineers take them apart and study every single component, desperate to see where BMH had cut costs. They hadn’t. The car was actually sold at a loss. This loss was to be recoped by forcing other brands which actually turned a profit (Jaguar for example) to turn in their money, leaving them cash-stripped. As you see it seems to be a pattern when post WWII groups are taken into account.

HM Government’s hope was the LMC management could “turn BMH around” and make them profitable again: after all cars where Britain’s premier export and no stone should be left unturned in saving the industry. Of course this was not the case. Lord Stokes, the LMC chairman, (no relationship with the bloke who designed the famous WWI mortar), was according to his own memoirs “horrified” when he discovered the state of BMH. The main seller (Mini) was actually generating losses and there were no new models in the pipelines to replace their completely obsolete models like the infamous Morris Minor. Worst still, BMH had an immense number of factories, most of them losing money, and a redundant and very bellicose workforce. Sadly there was very little Lord Stokes could about it. Since this was a merger and not a takeover every decision had to be agreed between the two managements. The first decision was the crash program which led to new models which, sadly, were often nothing more than what in the motorcycle industry we call “parts bin specials”, meaning as many components as possible were recycled from existing, invariably obsolete, models. The most infamous results were the Morris Marina and the Austin Allegro which were atrociously bad cars already but had the added penalty of having to compete with excellent products from the likes of Ford and Volkswagen and, if things weren’t bad already, the very first Japanese cars which proved to be so reliable as to put everything else (even German products) in shame.

It’s about at this period that strikes, epitomized by the image of workers huddling for warmth from a bracier outside the factory gates, became endemic. It’s often called the Industrial Turmoil of the '70s. There are two basic reasons for this: the first is the obvious push by Lord Stokes and LMC management to close down the least profitable factories. The second is the idiotic policies adopted by the Conservative Government of Edward Heath (1970-1974). To tackle the high inflation which had become endemic, pay caps were imposed. As workers became unable to keep up with increasing prices, they began to strike. Coal miners were particularly active: apart from strikes they adopted a strict work-to-rule attitude, meaning they did the absolute bare minimum required by their contracts (to avoid getting fired) and following safety procedures to the letter. This led to a massive drop in coal production which, coupled with the Oil Crisis, led to a serious electricity shortage. In turn this led to another idiotic move by the Heath Cabinet, the Three-Days Week of 1974. In short large industries were limited to three working days a week to save electricity: this came at a moment when assembly lines in Germany and Japan were working around the clock. As short lived as it was (the new Labour Government abolished it in March), it wrought immense damage on an already crippled industry.

Nationalization came about in 1975, after the so called Ryder Report had recommended, and took the form a new holding, British Leyland Ltd, of which the government was the major shareholder. The company went through a rollercoaster from now on. The Thatcher Cabinet in the early '80s decided keeping it was becoming too costly and “sold the family silver to Johnny Foreigner”.