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How Unilever, Coke And The Mini Car Got It So Wrong


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#1 mab01uk

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Posted 09 May 2011 - 11:57 AM

The Mini was Britain's best-selling car ever, with more than five million purchased over the years. But its sales success disguises a surprising story - consumers got a much better deal on the Mini than they should have done.

Ford bosses were mystified at how it could be produced for such a bargain basement price, so they decided to take one apart to see how on earth it had been done.

Former Ford Product Planner Bob Howe recalled: "We analysed the Mini, we dismantled the thing completely even to the point of breaking spotwelds and we costed every component.

"Based on our analysis, Ford would have incurred £35 of cost over and above the price they were advertising it at".

It looked as though every Mini was costing £535 to make and then being sold for £500
More:
http://www.bbc.co.uk...siness-13285504

Edited by mab01uk, 09 May 2011 - 11:59 AM.


#2 JOJC

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Posted 09 May 2011 - 12:11 PM

Crazy! Still made the money though!

#3 Ethel

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Posted 09 May 2011 - 12:24 PM

It couldn't be BMC had worked out how to screw one together 15% more efficiently than Ford?

#4 benb12

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Posted 09 May 2011 - 12:33 PM

It couldn't be BMC had worked out how to screw one together 15% more efficiently than Ford?


Precisely - because they had Longbridge, at the time the largest production line in the UK I believe.

#5 Andywade

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Posted 09 May 2011 - 12:40 PM

did ford think BMC had spent £35 on rust protection?

#6 yousmeg

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Posted 09 May 2011 - 12:42 PM

Interesting

did ford think BMC had spent £35 on rust protection?


:D

#7 Ethel

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Posted 09 May 2011 - 12:52 PM

If BMC's maths was better than mine they'd have known the actually needed under 7% cost savings over Ford's estimate to break even.

Perhaps if kicking BL/Rover hadn't become a national passtime it would still be here.

Gillette is celebrated as a business genius for selling his razors at under cost and inventing the loss leader. As we know, all too well, buying a Mini is only the start of the little so 'n so's wallet raiding activities.

#8 Dan

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Posted 09 May 2011 - 02:06 PM

Precisely - because they had Longbridge, at the time the largest production line in the UK I believe.


This is an important point, Longbridge at the time made more or less every single part of the Mini from scratch in only a few buildings with few finished components coming from outside or other facilities. Ford couldn't cope with that. The only company building cars like that today is Smart and it works for them too. People drag this old quote up all the time but there is no way on Earth any company would keep making a loss on a car for 41 years, especially BL. Also there is the point that it was great mechandising propeganda for Ford to announce this, they don't publish their other reverse engineering results. Why people choose to trust the Ford announcement more than the fact that the car stayed in production for decades afterwards is beyond me.

#9 Elfie

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Posted 09 May 2011 - 03:59 PM

Double post

Edited by Elfie, 09 May 2011 - 04:00 PM.


#10 Elfie

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Posted 09 May 2011 - 03:59 PM

Also something to take into account was the volume of parts they got through. Ford probably used the price per wheelnut in their calculations but didn't take into account the fact that BMC used millions and millions of these on many different vehicles, making each one significantly cheaper. It would be the same for a huge number of parts used in the cars, think of all the little things that were used in the mini but also used across the BMC range, reducing the cost hugely. Stuff like door handles, locks, brakes, pipes, bearings etc. You put in an order for 20 million of each of those the price per unit would be much better than an order for 1 million.

#11 mab01uk

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Posted 09 May 2011 - 06:21 PM

Unfortunately the BMC/BL merger/take overs of independent British car companies like Austin with Morris, Woleseley, Riley, Triumph then later Rover, etc were not followed by enough rationlisation so unlike Ford there were many models of similar cars and different engines all competing against each other for many years adding to costs and overheads.

Ford invented the assembly line/car mass production and would never have had a Triumph 2000 competing against a Rover 2000 (both with different 2.0L engines!) or allowed competing design teams within the same company to produce a Triumph V8 engine for the Stag when they also had a suitable Rover V8 engine (which many owners later swapped to the Rover engine for reliability!)
Then there was MGB v Triumph Spitfire sports cars and many more......... :D

There was that interesting article in Jan/Feb 2010 Miniworld magazine by Leslie Palmer who in 1969 became BL's first non-clerical, salaried female employee aged 22 taken on as a graduate management trainee to investigate new methods of working.
She gives several examples of finding management not really knowing if cars such as Coopers or Healeys were actually making a loss and relates how she discovered the Mini 850 was being sold cheaper than the 1000cc even though for 2 or 3 years it had cost more to manufacture its engine because the volume point meant having them specifically engineered. Customers who bought the cars expected smaller to be cheaper but it wasn't the case............

She later needed the basic totals of cars produced and sold each week to make sales projections, etc. Before computerisation this was worked out by hand on a paper spreadsheet. What was built on plant versus what was out at the dealerships and what was sold proved impossible to find out as there was a discrepancy of at least 20% a month. No one knew exactly where all the cars were or how many there were. She found the guy responsible for the figures only to find this had been the case for 12 years! It seems every Friday night a man went out with a torch and wandered round the Longbridge plant counting cars. It turned out the cars were being moved around to make space for more, the paperwork stuck to windscreens often got blown away and once lost mean't the now unidentified cars stood for months on end effectively lost in the system (or lack of one). She says that before 1969 the volumes of Minis, etc, produced were still small enough to keep control of with the old system but from 1969 until about 1978 the explosion in volume plus labour disputes, supplier disputes and lack of enough car parking, along with the workers holidays coinciding with the August registration suffix sales boom compounded the problems.

She goes on to say the Mini Coopers never made money due to the low volumes with high cost of many non-standard parts fitted and that the price premium made it less desirable as a new car but very popular as a secondhand model. The 1275GT replacement was however highly profitable due to mainly using standard parts but John Cooper would not compromise on this, she insists it was this rather than his £2 per car payment that caused the Coopers to be discontinued by BL. "There were huge arguments as the Cooper was a very popular model internally with staff, but the Cooper wasn't selling enough. The 1275GT made money the Cooper didn't."

Edited by mab01uk, 09 May 2011 - 06:28 PM.


#12 mk1leg

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Posted 09 May 2011 - 07:36 PM

Thats always been a well known fact the mini was under priced even god (Alec Issignosis) himself said so :D

#13 Cooperman

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Posted 09 May 2011 - 07:53 PM

Unfortunately the BMC/BL merger/take overs of independent British car companies like Austin with Morris, Woleseley, Riley, Triumph then later Rover, etc were not followed by enough rationlisation so unlike Ford there were many models of similar cars and different engines all competing against each other for many years adding to costs and overheads.

Ford invented the assembly line/car mass production and would never have had a Triumph 2000 competing against a Rover 2000 (both with different 2.0L engines!) or allowed competing design teams within the same company to produce a Triumph V8 engine for the Stag when they also had a suitable Rover V8 engine (which many owners later swapped to the Rover engine for reliability!)
Then there was MGB v Triumph Spitfire sports cars and many more......... :D

There was that interesting article in Jan/Feb 2010 Miniworld magazine by Leslie Palmer who in 1969 became BL's first non-clerical, salaried female employee aged 22 taken on as a graduate management trainee to investigate new methods of working.
She gives several examples of finding management not really knowing if cars such as Coopers or Healeys were actually making a loss and relates how she discovered the Mini 850 was being sold cheaper than the 1000cc even though for 2 or 3 years it had cost more to manufacture its engine because the volume point meant having them specifically engineered. Customers who bought the cars expected smaller to be cheaper but it wasn't the case............

She later needed the basic totals of cars produced and sold each week to make sales projections, etc. Before computerisation this was worked out by hand on a paper spreadsheet. What was built on plant versus what was out at the dealerships and what was sold proved impossible to find out as there was a discrepancy of at least 20% a month. No one knew exactly where all the cars were or how many there were. She found the guy responsible for the figures only to find this had been the case for 12 years! It seems every Friday night a man went out with a torch and wandered round the Longbridge plant counting cars. It turned out the cars were being moved around to make space for more, the paperwork stuck to windscreens often got blown away and once lost mean't the now unidentified cars stood for months on end effectively lost in the system (or lack of one). She says that before 1969 the volumes of Minis, etc, produced were still small enough to keep control of with the old system but from 1969 until about 1978 the explosion in volume plus labour disputes, supplier disputes and lack of enough car parking, along with the workers holidays coinciding with the August registration suffix sales boom compounded the problems.

She goes on to say the Mini Coopers never made money due to the low volumes with high cost of many non-standard parts fitted and that the price premium made it less desirable as a new car but very popular as a secondhand model. The 1275GT replacement was however highly profitable due to mainly using standard parts but John Cooper would not compromise on this, she insists it was this rather than his £2 per car payment that caused the Coopers to be discontinued by BL. "There were huge arguments as the Cooper was a very popular model internally with staff, but the Cooper wasn't selling enough. The 1275GT made money the Cooper didn't."


My old company did a lot of work for BLMC, or whatever they were calling themselves that month, and I can tell you that they were an absolute shambles. At one time I drove a Granada 3.0 Ghia coupe and one of their senior managers borrowed it for a couple of hours when his Princess 2200 was in for repair (again). he said, "Oh, I wish we could make a car as good as that). They really were so disorganised that they only survived with the application of public money under the Labour gov't. When that dried up, they were bound to fail.
Fantastic design concepts ruined by lack of management and production engineering skills.

#14 mab01uk

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Posted 09 May 2011 - 10:14 PM

Now on iPlayer, the Mini :withstupid: is featured in the middle part of programme after Persil but before Coke:
Link:
http://www.bbc.co.uk...Doomed_Designs/

#15 GreaseMonkey

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Posted 09 May 2011 - 10:33 PM

I'm sure someone once told me of a Bmc related car that came out the factory with drum brakes on one side and discs on the other :withstupid:




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