Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum submitted by Leyland Trucks Ltd

  Leyland Trucks Ltd was formed out of the receivership of Leyland DAF Ltd in June 1993. As a Management Buy Out, Leyland Trucks performed efficiently and profitably for five years until it was acquired by PACCAR Inc in June 1998, PACCAR being the second largest heavy truck manufacturer in the world owning such brands as Kenworth, Peterbilt, DAF and Foden.

  Whilst Leyland Trucks operated efficiently and profitably for the five years between 1993 and 1998 it was unable to self generate the substantial funds required to finance future new model programmes and as such the acquisition by PACCAR has allowed Leyland Trucks to achieve new product developments previously unachievable.

  Since the acquisition, PACCAR has focused on Leyland Trucks as the facility that will provide future truck assembly capacity for the group within Europe. In September 1999 PACCAR announced the closure of manufacturing operations at Foden in Sandbach and the subsequent transfer of vehicle assembly and parts warehousing to Leyland. This transfer is now complete with all Foden production, from June 2000, being delivered from the Leyland Assembly Plant in Leyland, Lancashire. In addition, the parts warehouse transfer was completed in September 2000 and all Foden after-market parts are now delivered from the Leyland facility.

  Over the same period in time DAF has transferred production of its 65 Series model from Eindhoven and by December 2000 Leyland will be assembling all 65 Series Left and Right Hand Drive models and the majority of 85 Series Right Hand Drive models. Currently the DAF models are manufactured from components supplied in bulk from DAF in Eindhoven. However, during the first Quarter 2001 these models will be integrated into the Leyland Logistics systems and all material logistics for these vehicles will be managed from Leyland.

  Since the acquisition by PACCAR output has risen at Leyland from approximately 35 vehicles per day to the current rate of 65 vehicles per day, with output planned to expand to 70 per day from December 2000 and to 80 per day from December 2001. All of this output is achieved on a single assembly line and on a single shift and currently Leyland Trucks achieves the highest single shift daily output of any PACCAR plant worldwide.

  A large part of Leyland Trucks' success stems from a modern approach to industrial working practice where employees are valued and encouraged to contribute to the business above and beyond their normal every day functions. Leyland Trucks operates a "Team Enterprise" culture where the four cornerstones are Involvement, Empowerment, Training and Team Building and there is no doubt that this culture has allowed Leyland Trucks to achieve some of its recent successes.

  Another key element of Leyland's success stems from the use of world class operating systems. In 1996 Leyland embarked on a four year journey to replace every business system with a state of the art, full integrated Enterprise Resource Planning system (ERP). This is a journey that many companies have attempted and few have succeeded in finishing. However, the Leyland Trucks ERP system was fully operational, on time, mid-1999 and has been a critical success factor in allowing Leyland to absorb production from other PACCAR locations.

  Finally, PACCAR has now designated Leyland Trucks as its worldwide centre for light and medium truck development and currently Leyland Trucks is the centre of a truly global automotive project which involves the design and development of a new medium truck in the UK, with sourcing undertaken in North America, with vehicle assembly being undertaken in Canada and sales in Canada, North America and Mexico.

  The issues that face Leyland Trucks largely relate to:


  Where we are the last volume truck manufacturer in the UK with 40 per cent of our output being exported to mainland Europe and as such both our export and home market sales have to compete against vehicles, all of which are manufactured in the Euro Zone. Typical examples of our competitors are Iveco, MAN and Mercedes who on currency alone have the ability to sell at a 15 to 20 per cent price or margin advantage.


  Where as a result of currency and the global restructuring of suppliers, our sourcing tends to move away from the UK. In the short term this has little impact on Leyland Trucks but in the long term will lead further to the reduction of the automotive sector in the UK.


  The truck industry can demonstrate significant efficiency improvements over the last 20 years which have substantially reduced the amount of medium/heavy commercial vehicles on the road and also reduced the amount of emissions made by the vehicles. We must ensure that legislation is driven for the correct health and safety perspective and not simply to be anti truck or anti car for political purposes.

  There is no doubt that Leyland Trucks has turned the corner and is now a very successful member of a global truck company. The success has been achieved without any external assistance and future success must be achieved in the same manner.

  However, Leyland Trucks operates within the UK automotive industry and it is vitally important to the future of our business that all strands of this automotive industry from other Original Equipment manufacturers such as MG Rover and LDV to Customers, Suppliers and Dealers remain in a healthy state and are encouraged and allowed to flourish by the Government of the day.

16 October 2000

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