The decline of Matchless/AJS motorcycles, Woolwich

The decline of Matchless/AJS motorcycles and the rise of Honda
by Dave Ramsey

My paternal families the Ramseys and the Terrells have lived and prospered in Woolwich and Plumstead since the early 1800s. In a blue collar sense they derived prosperity from the innovative factories of the area and lived in a variety of pleasant rented Victorian terraced houses.

My father worked in the heavy gun factory at Woolwich Arsenal but my parents kept me on at grammar school, which he could ill afford, because they saw that poor management and underinvestment was leading to industrial decline. I can remember dad’s prophetic advice that the government was going to let the gun factory demise and that I should decline any job offers there. He evidenced this by showing me one of the huge lathe machines with its instruction typed into the metal in Cyrillic Russian. It had been destined for the Tsar’s Russia but the revolution changed its location to Woolwich and the piece of antiquarian interest was still the mainstay of production 45 years later. This was fairly typical of the lack of investment in riparian Woolwich factories from where 70000 jobs were lost between 1965 and 1975.

The Matchless AJS motorcycle factory was of interest to me because I passed it most days to go to school. The father of a friend worked there as a skilled project engineer and his Triumph Tiger was refurbished there during lunch breaks. The lack of management control, the boredom and lack of creative expression amongst the workforce speaks volumes about the underlying management problems that appeared in the early 1960s.

A look at the two photos below shows the differences of both of scale, industrial organisation and investment. It also shows the company director astride a motor bike touring the factory talking and smiling with the workers.

Soichiro Honda had invested time in his personal development as an engineer, taking up technical college to develop better piston rings, and also showing skill in identifying essential management talents he lacked but in appointing talent to fill the gap. His 1949 appointment of Takeo Fujisawa as managing director was one of these. Honda recognised that the collapse of the market in 1953 after the end of the Korean War. He identified that working people needed a cheap way to get to work and produced the Cub clip on engine for cycles to ensure Honda’s survival, by generating cash flow and keeping the skilled workforce together.

In 1956 the Norton Range consisted of a 500cc and 600cc dominator machines. They were designed in 1948 by Bert Hopwood, Norton MD from 1958, who recognised his signature on the production drawing in the 1956 production line. It had been stopped to allow for manufacturing improvements to the cams but they clearly had not been made. The loss of these production years represented profits forgone.

Alec Skinner, the finance director at Norton, devised a sound but simple early warning system at Norton, as a bank overdraft facility was not available to them. Skinner produced finance, production, labour and stock control figures for the Board and production unit alike. Alec’s simple little sheet of paper gave management all the necessary information to make the right decisions.

The AMC board at Woolwich introduced a complex and unsuitable cost control system, possibly similar to one used by ICI, intended to be used across the AMC company, Norton, Matchless/ AJS, James and Francis Barnet. It was data hungry, slow and unresponsive to the immediate needs of managers to control cash flow, stock and labour. Norton maintained its simpler faster system, probably leading to its continued success. Because of its simplicity, staff across the “coal face” understood it without explanation so lead to more responsive reaction to problems as they emerged, improving Norton efficiency.

Matchless hid behind import duties until the General Agreement on Trade and Tariffs swept them aside in 1959. By this time Honda had well established products with excellent engineering and sold 500,000 a year of these in 1959, when it launched into the American market. The quantity and quality of Matchless machines didn’t bear comparison. Bill Cakebread and Alan Jones believe the AJS Matchless annual production to have been 20,000 PA and Bert Hopwood believed Norton to be 10,000.

Norton designed 250cc and 125cc light weight bikes with 90% commonality of parts but the AMC rejected the idea. This is sad as the maximum engine capacity for a provisional license was 250cc after 1962. This may have let Honda into the young market and this people would have progressed to Hondas larger machines rather than AMC. A similar fate befell the one piece engine design for the heavyweight 250cc.

AMC was in fact five companies striving to produce their own range of motor bikes in competition with each other. Honda was one company with superb management leadership producing one unified range of motor bikes. Attempts by AMC to introduce commonality of parts were not successful, like the decision to replace the Villiers engines in Frances Barnet and James with new inferior ones manufactured at Woolwich. The decision by AMC to create its own dealership network in the USA was a costly mistake; Norton simply used the Berliner distribution network used by Ducati to sell its machines with great success. The risk of sales but also profits was born by Berliner, so Norton made a small profit but increased production, reduced unit costs and ironed out seasonal fluctuations in the UK market.

Honda was re-investing its substantial profits in the business while Matchless took profits that didn’t really exist, without investing in modernisation. Matchless had investors, creditors and banks to satisfy, Honda didn’t. During the post war recovery period, Japanese manufacturers were typically investing 30% of profits into its industry.

AMC, with its head office at Woolwich, used profits from Norton and Francis Barnet to bolster the flagging fortunes of AJS/ Matchless. In 1961 Norton was doing well with sales, particularly in the USA. It needed to expand production so was just about to buy a nearby factory, when AMC called in the £250,000 profit to cover a financial crisis at Woolwich. The Norton expansion did not take place and the potential profits from expanded production were forgone. This may have saved the AMC organisation had the right decisions been made.

The Japanese culture of looking after the workforce and massive industrial investment supported by a caring banking sector reaped its own success. In the 60s the Wilson Government tried to encourage replication of this model in the UK but was let down by a lack of desire to bring about a co-ordination with industry by the investment sector. And industrial leaders alike. A closer relationship between bankers and the industry would have revealed that the Norton financial control mechanisms and innovative bike and production design were head and shoulders above Matchless. Appropriate remedial action could have been taken much earlier.

With the failure of the manufacturing base at Woolwich and other Thames-side quality lead to the total destruction of the working class aristocracy that had given such stability and prosperity to East and South East London. The skilled young men emigrated to the old Commonwealth and elsewhere allowing prosperity to develop in those countries.

Conclusions

• AMC bought Norton in 1954 because of its wining habit in TT races.
• The take over seemed to have stultified Norton machine, production and marketing innovation.
• The Norton advertising advantage wasn’t pressed home across the whole of AMC
• Profits from James mc, Francis Barnet mc, and Norton mc were used to bolster AJS/Matchless less than sparkling performance.
• The Norton subsidiary couldn’t borrow money from banks because of the AMC group’s poor credit rating.
• Norton’s innovative one piece engine designs for its 125cc and 250cc with 90% commonality of parts, reduced oil leaks and production costs.
• The Honda advertising slogan “you are never alone on a Honda” lead their marketing campaign to sell machines to non motor cyclists who simply wanted to get to work. Freedom from oil leaks allowed this as people could keep clean without specialist clothes.
• Norton survived beyond the AMC collapse, and went on to develop a 160 MPH machine loved by police forces for their speed and safety. But the investment money wasn’t there to develop it.


DR, Sunday, 04 July 2010