Land-Rover on track to enter new pastures: Michael Harrison on a breakthrough that reverses the European trend of laying off workers

DEEP inside the Honda Motor Company's Tochigi research centre, three hours north of Tokyo, sits a four- wheel-drive leisure vehicle stripped down for minute examination.

The vehicle is not a Honda, not even Japanese and certainly not American. It is British. Honda's engineers are finding out what makes the Land-Rover Discovery tick.

This is much more than idle curiosity. Next year Honda's 400 Japanese dealers expect to sell about 2,000 Discoveries badged, not as Land-Rover vehicles, but as the Honda Crossroad. It is a rare accolade.

Japanese car makers do not lend their names lightly to vehicles designed, developed and built elsewhere.

The breakthrough helps to explain why from today production at Land-Rover's Solihull site in the West Midlands is being cranked up for the second time in three months to 1,830 a week - 40 per cent up on the level in January.

The increase in production will not only create 300 new jobs at a time when the rest of the European motor industry is laying off thousands, but it will also put Solihull on target for new production records - if not this year, next.

In 1980 Land-Rover produced about 50,000 vehicles with a workforce of 9,000. Next year, with 8,500 workers, as many as 80,000 vehicles are expected to roll off the line.

Today's Land-Rovers are still recognisable as descendents of the first off-road vehicle bolted together in 1948 by Maurice and Spencer Wilks, then respectively Rover's chairman and chief engineer.

Throughout Land-Rover's 45-year history two things have remained constant. All its vehicles have been four-wheel drive and all are built from aluminium panels.

But there the comparison ends. Over the past 20 years the company has undergone a quiet revolution that has transformed its model range, markets and production methods.

The transformation is graphically illustrated by what has happened to Land-Rover's customer base. In 1980 it had two basic models - the Series Three and the Range Rover, launched as an alternative to the bone-shaking austerity of the traditional Land-Rover.

The line-up now consists of three models spanning the utility, lesiure and luxury markets - the Defender, which, with its 200 Tdi engine develops a fearsome 188 lb ft of torque, the Discovery, Land- Rover's biggest selling model, and finally the Range Rover, led by the long wheelbase Vogue LSE version.

In 1980 the company relied on the Third World for 83 per cent of all sales while developed markets accounted for a meagre 17 per cent. Today that ratio has been more than reversed. The developed markets of the West and Japan now account for 89 per cent and the Third World 11 per cent.

Farmers in more than 100 countries may still swear by the traction power of the Defender, but the nearest most Discovery owners are likely to get to off-road driving is when they mount the kerb outside the local patisserie.

'If we still had the same customer and market profile today as we had in 1980, we would be dead,' says Terry Morgan, managing director of Land-Rover Vehicles.

Of the 65,000 or so vehicles Land-Rover will build this year nearly half will be Discoveries and more than two-thirds of the total will be exported to developed nations. Sales are up 136 per cent in Australia, 140 per cent in Japan and 32 per cent in North America.

Unlike the Japanese, Land- Rover was undoubtedly late in recognising the burgeoning middle-class market for urban four-wheel drive vehicles that were fun, affordable and appealing to women.

Neverthless, when the decision was taken to move the two marques apart, creating a gap for a leisure vehicle, Land- Rover did not hang about.

From a standing start in 1989 the Discovery has captured a quarter of the leisure 4x4 market from the likes of the Mitsubishi Shogun, Isuzu Trooper, Nissan Patrol and Toyota Land Crusier, and has met the challenge of new entrants such as the Vauxhall Frontera, Jeep Cherokee and Ford Maverick.

'People ask why anyone should buy a Range Rover when they can buy a Discovery more cheaply,' Mr Morgan says. 'But the choice now is not between a Range Rover and a Discovery but between a Range Rover and a Lexus or Mercedes.'

Land-Rover has also rationalised its UK dealer network from 500 five years ago to just 130 now. 'In 1988 dealers were selling Land-Rovers alongside combine harvesters and tractors,' Mr Morgan says. 'Now there is a good deal of difference in the way a customer is dealt with.'

In tandem with the radical overhaul in marketing strategy have come huge leaps in factory performance. Productivity, as measured by the number of man hours it takes to make each vehicle, has risen 25 per cent in three years. Inventory costs are down 60 per cent.

An integral feature of Solihull's revival has been the 'New Deal' working arrangements introduced across the entire Rover group. All employees are referred to nowadays as 'associates' and clocking on has been abolished.

Each of the 300 recruits now being taken on will go through a three-day selection process. Once on site they are likely to join one of the 135 discussion groups or quality circles that have sprung up since 1991.

John Stride, a Land-Rover employee for 36 years and chairman of one of the discussion groups, says: 'The change in attitude from where we were in the 1970s is unbelievable.'

Initially there was opposition from unions, he says, because they did not understand the concept.

'The breakthrough came when we got one of the most militant shop stewards to join the group,' he recalls.

The combination of booming sales, rising productivity, industrial harmony and the cachet of the brand name has made Land-Rover a money- spinner and the object of overtures from rivals including General Motors and Fiat.

It is also one of the reasons why the group's overall losses have been held in check during the recession and break-even is forecast for this year.

Would not the profitable republic of Solihull like to declare UDI and go its own way? For now the answer is probably no, Mr Morgan says.

'The benefits we have from being part of Rover Group are enormous. If we were a stand- alone business we could not afford the level of investment put into us.'

That, however, does not preclude closer links with Honda, with whom Rover has collaborated since the end of the 1970s. 'There are no plans at present, but we are keeping an open mind,' Mr Morgan says.

(Photographs omitted)