APPENDIX 10
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:
Currency
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.
Sourcing
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.
Legislation
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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