As
the major auto-manufacturers continue to provide their Q3 earnings
figures, with recent individual stock movements reflecting bearish,
mediocre and surprise sentiments; many companies (excluding the best
operating or market-placed) as investment-auto-motives believed,
over-bought, and so rightly set for correction.
When
all eleven reports from the global players have been released,
investment-auto-motives will attend to the usual depiction of
'Coupled Ratios' analysis.
Before
then an observation of a firm at the very opposite end of the
spectrum: unique, privately owned and with what could be described as
a monopolistic small corner of car history, so well worth a view.
The
Morgan Motor Company, with the recent reported dismissal of the
firm's perceived operating- head and figure-head, Charles Morgan.
So,
the darkest of days or a positive new chapter?
Outline
-
Having
seemingly learned much from his father Peter, from when he took the
reins onward, he hardly ran the firm as a commercial 'play-thing',
recognising the enormous responsibility of maintaining the family and
commercial legacy. It was under his guidance that a very new era
began at the turn of the century, with what were then seen as radical
product steps providing the company with what appeared a more even
keel through the first decade of the 2000s. That seemingly successful
decade did however allow him to perhaps play-up to the role of the
archetypal 'Morgan Man', purveying the 'joie de vivre' associated
with marque and lifestyle. He was the external persona, ever
vivacious and well-mannered at the car-race meetings such as esteemed
Le Mans and vehicle jaunts such as the American coast to coast
adventure.
Yet
equally, from an external viewpoint – perhaps especially that of
any non-family co-shareholders within the Morgan Technologies Board,
the firm's policy formers - he seems to have been viewed as having
become overtly over-comfortable with a commercial entity that to date
existed under his familial and personal domain.
Reasons
for the dismissal include:
-
acting as Chairman without being elected as such.
-
non-agreed support of the associated Oak Racing team.
-
announcing that a new 3-wheeler would be forthcoming.
-
taking non-agreed fees for television appearances.
So
a board level view that whilst Morgan Motor Company remains private
and independent, its leaders must equally accord to strictures of
corporate governance.
This
then highly plausible.
Yet
there may be another viewpoint within. Perhaps any less brand imbued
stakeholders without the weight of Morgan history upon their
shoulders see a medium term financial windfall from a strategic exit
of their stakes.
Perhaps
for them the firm was and is too similar to its own Plus Four model,
seemingly wafting along under Charles' overt guidance, rather than
being transformed into more powerful Plus Eight version, and pushed
hard to release innate potential.
History
-
Far
more detailed accounts are available elsewhere, but in summary:
The
104 year precedence of Morgan Motors is legendary amongst car lovers,
and whilst the AC brand may indeed be slightly older and have its own
milestones, it unlike Morgan, has not had the unbroken existence.
From 1909 to this day Morgan has remained – whether 'stalling',
ticking-over' or 'revving' – resolutely at Malvern Link in
Worcestershire.
Founded
by the entrepreneurial 'HFS' Morgan, having opened a sales and
service garage and recognising the value of the broad auto
value-chain, the original raison d'etre behind vehicle production was
to help better mobilise the burgeoning new lower middle class, the
clerks, factory foremen and increasingly better educated young men
and women. Given that many were seeking to change from bicycles and
motorcycles into cars HFS saw the potential for an affordable
3-Wheeler vehicle, tried and tested through motor-sport and which
subsequently evolved into a range of cycle-cars with various
'comfort' and 'sporting' attributes.
Increasing
aspiration and the availability of higher purchase saw the popularity
of the cycle-car diminish, whilst at the same time sports-cars were
growing in favour amongst the upper middle classes, mimicking the
aristocracy and racing elite with time trials and hill climbs etc. So
HFS created a small roadster named the 4-4 in 1936.
Post
war demand for both lower cost utility vehicles and more exuberant
personal cars allowed Morgan to build both the 3 Wheeler in a sparse
guise and the 4-4, the former discontinued in 1952 with fallen
demand.
Thereafter
came a slow succession of ever modified evolutionary sports-cars
maintaining the original 1930s cosmetic and spirit, with IL4 engines
for the +4, the 4/4 and V8 power for the +8 and later more
step-change advanced Aero 8
[NB
Between 1964-7 there had been an aesthetically contemporary +4+
coupe model, but was 'lost' between two markets, unable to match the
best of prestige competition and viewed as overtly modern by the
traditionalists].
But
as is evident, since the introduction of the Aero 8, the company has
become more ambitious; by the way it unabashedly showcases itself,
the way it seeks to grow its 'brand equity', done so by reviving HFS'
own appreciation for permeating and expanding the automotive value
chain via the creation of newer associated enterprises.
As
such a new division named Morgan Technologies was created in 2010,
acting as an umbrella for Aero Racing Ltd (dedicated to Performance
aspects) and Morgan 3 Wheeler Ltd (dedicated to espousing this model)
As
a privately held company Morgan is not obliged to externally
communicate the outcomes of boardroom dealings around which its
articles of association are drawn, nor obliged to utilise the
non-executive influence that a publicly listed company should deploy
for “good governance”.
As
such, given the fondness in which broader public and business circles
hold the firm, any fundamental change within the seemingly very staid
company inevitably comes as a surprise.
An
External Eye -
In
1991 Peter Morgan allowed the BBC's television cameras into their
domain as part of the Troubleshooter series. The fact that son
Charles had been an ITN cameraman may have been an influence.
As
is by now well understood, the info-tainment ambition was to have the
revered ex ICI and 'consulting guru' Sir John Harvey Jones to visit
the factory so as to cast a shrewd eye over general operations. Then
to recommend strategic and tactical alterations designed to
streamline the firm into a more efficient entity notionally capable
of greater success.
Harvey-Jones
was warmly welcomed and the family absorbed his critique of the very
apparent parts inventory and production line inefficiencies within
the firm. Specifically those of the bye-gone methods which partially
served to underpin the hand-crafted mystique of the vehicles, and so
the yesteryear character of the marque. Yet also because of the
organic yesteryear approach, the methods and culture – itself
reflecting the company owners own historically conservative approach
– meant that by equivalent modern standards, the cost of the man
hours involved per car build dramatically reduced profitability
margins. It seems that even during the 1950s heyday of the 'time and
motion man', when Britain was becoming dedicated to necessary
efficiency, Morgan remained untouched.
It
was the inevitable 'catch 22' of a heritage firm whose customers
relished the products and the seemingly relaxed culture, aswell as
the years long anticipation for delivery. But whose customers were
typically of an upper age bracket and who only really appeared during
the improving steps of the economic cycle.
Morgan's
Managerial Chronology -
To
the outside world the company appears the very essence of a heirloom
entity. Founded by 'HFS' Morgan in 1910 and run under his direction
until passing in 1959. Thence his son Peter took the helm until 2001
or so leaving a few years before his passing. Charles Morgan entered
the business full time in 1999, but perhaps because of a lack of
imbued auto-sector and company experience brought in Alan Garnett
between 2003 and 2006. This 'co-piloting' role expanded with Steve
Morris, Tim Whitworth and Matthew Parkin becoming involved in 2006;
Parkin leaving in 2010.
Thus
until recently MD Morgan acted as seeming final decision maker and
figure-head, but it now seems that a board level / shareholder
recommendation sought his removal; the MD's role given to Morris.
Business
Model -
If
two words were to sum-up the firm's historic commercial attitude they
would be 'cautiousness' and 'flexibility'. These intrinsic traits
have underpinned the long survival rate: spanning 114 years, 2 world
wars, two depressions (1929 and 2008), multiple recessions and the
fashion vagueries of the niche car market, which themselves have
created real “here today, gone tomorrow” volatility amongst
sub-tier niche suppliers.
Given
the long outlook, the massive contraction of UK plc's engineering
base and the general sector dynamics, the firm's very survival has
depended upon pragmatism, a pragmatism born from HFS and Peter
Morgan's observations of the pitfalls of high finance and overly
unrealistic business plans that have existed within the niche vehicle
industry.
This
conservatism shown by the unstated up-side of the Harvey Jones
critique: that the firm was able to gain deposits years in advance of
deliveries, thus a portion of the working capital was essentially
free of cost, the very opposite of most businesses, and a manner that
no doubt suited the firm well.
The
availability of this no cost capital has shrunken as delivery
schedules have shortened to meet new customer expectation, the
contracted time scale presumably compensated by the rise in orders
and so still useful cash cushion.
As
to a basic interpretation of overall costs:
Bill
of Materials (BOM):
The
construction materials used are relatively low cost given the premium
product pricing: aluminium sheet (hand-formed and angle-bonded),
section and sheet ash (hand-cut to shape and jig constructed) and
steel section (welded), and leather / cloth (via sewing machine)
Labour:
The
stability of the workforce, who themselves recognise the personal
value of steady employment in the region, especially regards manual
labour, plus the innate willing flexibility of the staff means that
labour rates are contained. Many of the families that have worked at
Morgan have lived its history and seemingly recognise the need for
wage restraint, themselves understanding that lower cost labour is
available from the locally unemployed and newer immigrant workers.
Capital
Expenditure:
The
fact that seemingly all of the build process is by hand means use of
tried and tested methods; which in turn means use of old machinery
and tooling. Much of what could be termed capital equipment is many,
many decades old, from 1920s scroll rollers, to 'English Wheels' to
wooden ply forming jigs from the 1950s. In a very astute money-saving
manner, it indicates that the phrase 'CapEx' has been rarely uttered,
presumably primarily over the years for maintenance of the site's
facilities. So when undertaken regards a new project, a very real
analysis of its contribution.
The
adoption of bought-in components such as the super-formed (heated and
mould blown) aluminium fenders for the Aero8 is one such investment,
recognising the cost and quality advantage involved in a complex
single sheet panel.
Assets:
Beyond
the previously mentioned low value antiquated tooling, and the use of
near zero-cost practical solutions (eg home-made wooden axle stands
for the chassis dress), the major asset of the company is the factory
site itself. Bought by HFS' father given its adjacent standing next
to the old family home.
For
what is general external commentary, it would have been acutely
impertinent to have researched the value of the site – either from
company accounts submissions or from a local property investigation.
But it seems probable that over the last century or so that the site
was either bought freehold, or that any previously outstanding loan
has been paid. So that HFS, Peter and Charles wisely chose the
freedom provided by total ownership over any supposed advantage from
drawing equity from the property. This then a major strategic pillar
in providing a steady basis for the firm, so reducing overheads,
securing management and staff employ, and providing for a virtuous
circle of stability.
Family
Fortunes -
Much
of the conservatism arises from the company's familial origins and
the desire for commercial steadiness and longevity, but also
importantly because of the innate responsibility undoubtedly felt for
the livelihoods of its 190 or so employees, many themselves the sons
and daughters or other relation to former employees. The rural
location of Malvern Link meant that as agriculture became mechanised
at the beginning of the 20th century, so other forms of
work were sought, the light industry basis and stability of the firm
providing the income for successive generations.
Thus,
as with many of Germany's steady and successful Mittalstand
companies, the Worcestershire firm has ostensibly always undertaken a
CSR stance, one vital to its well being.
Production
Volumes:
These
as garnered from web research are recorded as approximately
1990:
400
2000:
500
2009:
850
2011
1000
Finances:
As
a private concern understandably little is communicated externally
given internal confidentiality and the desire to avoid loosing
competitive intelligence.
However,
it was stated in 2011 that the annual turnover was approximately £35
million, which based on the approximate 1000 units gave an averaged
per unit top-line revenue of £35,000, the details of BOM, labour,
S&M and overhead costs obviously not given.
Whilst
publicly Morgan says that it has a profit margin of 12%, so beating
most of the volume premium and sports-car makers,
investment-auto-motives would expect a margin closer to 15-18%, which
if verified would demonstrate the business acumen within the firm.
Vehicle
Range -
Today
the model range consists of 3 distinct groups, with 4th
'cross-breed'.
1.
'Classic' evolutionary cars based upon the now renowned ash-wood
frame, (historically evolved)
2.
'Aero' revolutionary cars based upon then all new alloy frame
architecture (2001 onward)
3.
'3-Wheeler' “retro-lutionary” car, using a steel tubular
spaceframe (2011 onward)
4.
the Aero series spawned Aero Plus 8, which uses 'Classic +8' external
styling cues.
[NB
to the uninitiated the model series names of the 'Classic' roadster
range are today confusing given its engine-orientated origins: the +4
four seater (as would seem befitting), a +4 two seater and the 4/4
two seater].
Product
Strategy -
Under
his tenure Charles Morgan has aptly demonstrated 'future-forward' and
retrospective “visioneering” so previously desperately required;
achieved with the Aero8, the Three Wheeler, the Aero+8 and the
latterly showcased Eva GT.
The
+4 and +8 models were previously and unsurprisingly designated as the
'Classic' series with periodic limited run variants, maintaining
steel ladder chassis, wooden body tub and aluminium skin panels. UK
base variant prices range between £33,075 to £85,200 (inc UK VAT)
The
Aero Eight was designed to highlight Morgan's ability to leap into
the future with an all-aluminium frame and skin panels, and now
includes '8', AeroMax coupe and SuperSports coupe T-top variants. UK
base variant prices range between £99,950 to £126,900 (inc UK VAT)
The
3-Wheeler was designed to provide a more affordable vehicle so as to
re-crystallise the marque's origins with the cycle-car 'Runabout',
and to open the door to a new motorcycle orientated market – having
witnessed the massive growth of expensive 'leisure bikes' previously
- and to lower the brand entry price point for new buyer groups. UK
base variant prices range between £25,950 to £29,162
The
Eva GT concept show at Pebble Beach in 2010 uses the basic bones of
the Aero SuperSports coupe to create a cosmetically new vehicle. One
which draws influence from its forebears and broader retro-culture
yet also from modern supercar forms. Its general styling, crease
lines - and when applied two-tone paintwork - echo the dramatic very
aero-influenced custom built luxury coach-built coupes of the 1930s,
such as Bugatti, Delahaye, Hispano Suiza, Delage, Talbat Lago et
al; a similar face to the Bugatti Veyron aswell as arguably mimicking
the rear of the Bristol Fighter and Noble supercars. Use of overlaps
and cut-aways to create an organic retro-futuristic form, critically
without running boards, instead obverse cut-aways at sill level. Thus
able to raise the innate perceived value of the Morgan marque
itself, via direct historical association and indirect association
with a 1930s heyday and with a 21st century juxtaposition.
Importantly
for Morgan the Eva GT's prime raison d'etre appears to be that of a
'product bridge' between the roadster inspired Classic and track
inspired Aero; with apparently improved usability and functionality
and no doubt to be priced as the “best of both worlds” car; hence
the GT moniker.
Spin-Off
Products -
Beyond
the car range other product types have been explored. Perhaps most
visible in recent times has been the scale sized 3 Wheeler Pedal Car
for toddlers, made on a commission basis; so broadening the
merchandise offering to personal private customers.
Also
Morgan has custom adapted a standard golf buggy to produce what
presently seems a one off Morgan Golf Cart by grafting on the front
and tail sections of a standard car; this no doubt to explore
additional income stream avenues from the leisure sector, from
Chinese golf courses to American country clubs.
[NB
This buggy is a far better adaptation than the heinous mock
“Rolls-Royce” grilled carts that were popular on the US west
coast in the late 1970s, given its modesty and friendly organic
face].
Marketing
-
It
has become apparent that over the last few years that Morgan has
indeed sought to raise its profile and attractiveness as the economic
consequences of the financial crisis were doused and renewed hope
emerged, especially so in the US, Britain and the slowed but strong
EM regions.
Well
recognising its past and potential customers anyone who spends time
in central London, such international business people, upbeat bankers
and financiers and the wealthy dilettante of Chinese, Indian, Arabic
and Latin American origin, cannot have failed to notice the periodic
showcasing of new Morgan Motors alongside the 'heritage-richness'
invoked by older gleaming though often happily ragged Plus 4's and
Plus 8's that appear on the streets between spring and autumn. That
show-casing has taken place in various forms, perhaps most notably
via the 'Best of Britannia' initiative, exactly a year ago, the
company, its vehicles and associated merchandise depicted amongst
likewise 'hand-made' products ranging from bicycles to shoes to
couture, and exhibited last year via a Barings Bank sponsored 'trade
export' window situated opposite Charing Cross Station in The Strand.
Beyond
central London, in the broader UK and elsewhere, beyond local dealer
marketing activities it has perhaps been youtube and similar video
websites which have conveyed the Morgan message. Achieved via the
plethora of auto-dedicated video production efforts from the
professionally known to to the youthful start-up who seek to build
their own name by getting under the skin of auto-culture; though
their innate knowledge may be more enthusiast than industry expert.
Hence there are various factory visits to view on the web so as to
see the very inner workings at Malvern Link, and coverage of classic
and contemporary vehicle events ranging from the likes of Pebble
Beach's concours d'elegance to the less prestigious but more hands on
local amateur car show.
Racing
Fever -
Motor
racing has been intrinsic to the firm's vehicles from its beginnings,
mostly as a supplier to privateers, latterly expanding to run an
in-house team in the Le Mans Prototype 2 series and sponsoring its
single-make Challenge Series for head to head track racing, and
single-make Speed Championship for against the clock 'sprint' and
'hill climb' runs.
However,
investment-auto-motives suspects that it may be the associated costs
that the company must endure to sponsor all of these initiatives that
may have contributed to the recent rift between the board and Charles
Morgan.
Charles
Morgan obviously enjoys the motorsport aspect, having been a period
participant since his Rover powered +8 days. And it is undoubted that
there exists a positive feed-back loop between +4, +8 and Aero8
racing, both in vehicle research-work and building the brand and
client relationships. The main benefit being that the cars raced -
classed as 'GTs' – are lightly modified road cars, so closely
resemble those standard production cars that leave the factory gates.
However,
as has been the case with other overtly ambitious niche firms, the
entry into LMP2 racing is typically costly and whilst bringing
glamour and some technical learning, the very fact that the cars do
not resemble the GT race cars nor production cars means that the
bottom-line commercial benefits from LMP2 racing are highly
debatable.
Thus
any involvement must be cost-effective. And in this regard
investment-auto-motives is unsure of the basis for involvement beyond
co-branding. Ordinarily Morgan would notionally provide a number of
aluminium chassis to partner Oak Racing for race adaption. However,
Oak uses its own carbon-fibre based monocoque (from Pescarolo) which
includes: open cockpit and aerofoiled race body, cockpit technology
installation etc and uses Nissan for power-train partners. Thus the
Morgan technical contribution appears minimal, except maybe
suspension and wheels.
Thus
there appears no real Morgan brand story around LMP2 besides
affiliation. Without substantial technical affiliation, it may be the
case that the affiliation is effectively paid for, ie as little more
than a branded sponsor for the car to wear its nose-badge.
Basic
logic infers that the EvaGT concept would be developed into a GTE
type race car so able to insert itself in a race class between the GT
class and LMP2, but this is no doubt a costly exercise. Even if of
theoretical strategic fit.
This
is the cause of the rift between Charles and the board of directors.
Having
undertaken a snapshot view, investment-auto-motives must side with
the latter, recognising the contribution that GT type racing
involvement brings, and indeed possible GTE, but doubting the present
goodwill and commercial benefits of LMP2. Morgan should have more
slowly climbed-up the race class ladder, rather than 'stretch and
backfill'.
Commercial
Expansion -
Given
the specialist nature of the cars themselves, the select used vehicle
arena and specialist repair and maintenance necessary, it is
understood that Morgan Motors has long offered Finance and Insurance
services to its customers.
So
as to both express and nurture the firm's innately unique culture, it
was recognised that a 'brand experience' be developed.
This
meant improvement of client and public relationship management,
though not in the formulated CRM methods of big business. But it did
involve learning from elsewhere, and thus a Visitor Centre and Museum
were duly created, in addition to the Factory Tours that had always
been an informal part of the external-facing persona.
An
in-house lifestyle magazine titled 'MOG' was introduced, then in
web-based format – though not available when checked on 05/11/2013,
which suggests probable changes by management.
[NB
the marque is affectionately named 'Moggie' - akin to the yesteryear
Morris Minor]
As
previously mentioned, two sub-divisions have been formed to expand
enterprise.
'Aero
Racing' operates a three pronged strategy:
A.
Lifestyle – a conduit for Morgan's sponsorship of its Morgan
Challenge Cup and Speed Championship, Track Days and Morgan Club
Events
B.
Performance Parts – sales of performance parts for privateers and
road users
C.
Vintage – photos and film from the firm's archives
'3-Wheeler
Drive':
Using
presently 2 black and yellow vehicles numbered #1 and #2, this was
set-up as a driving instruction school to new, prospective 3-Wheeler
owners, and provides 'brand experiences' for those who who are either
enthusiasts or as gift recipients.
Environmental
Credibility -
From
a vehicle emissions standpoint there are only perhaps EVs and Hybrids
running in electric model that are able to beat the low emissions
values of Morgans, enabled not by sophisticated powertrain
technologies, but simply from the lightweight nature of the cars.
Moreover,
from a production emissions perspective, as a niche manufacturer the
absence of the heavy industrial equipment used by major manufacturers
which itself requires substantial energy inputs, with instead a
reliance upon dedicated low volume hand-crafting using certain
renewable materials, means that the manufacture may be regarded
'green'. (Indeed nigh-on a template for the 'i-stream' ideology which
underpins the business model for the T25/27 eco city-car concept)
Furthermore,
the fact that older Morgan cars maintain their value means that the
majority have typically been renovated as opposed to scrapped.
These
aspects combined provide a fortunate serendipity by which this old
fashioned firm's methods are consistent with ever broadening global
eco-consciousness.
This
positive halo further enhanced with the creation of the 2009 'LIFE
Car', a fuel-cell powered one-off based on the Aero8, with technical
and financial contribution from one defence company, academia, an
eco-car start-up firm and government.
Broad
Skills Workshop -
Given
the largely self-reliant attitude engendered by H.F.S, the factory
has sought to be as self-contained as was possible. This led to a
plethora of craft skills being developed across steel fabrication,
carpentry, leather-working and body panel forming.
At
the present time Morgan's very anti-thesis, the Ford Motor Company
has engaged with a DIY innovation outfit named 'TechShop', which
essentially offers the equipment for enthusiastic innovators to start
creating, so as to infuse Ford with ideas and strategic
possibilities.
With
far fewer financial resources, but with old and modern tooling and
master crafts-people in situ, plus a massive pool of willing
youngsters abound, as well as a flexible local UK and foreign
supplier-base Morgan should be seen as an ever present 'TechShop'.
The
manner in which it has evolved, leapt forward and indeed
re-communicates the green credentials of its methods and products
demonstrates the fact.
Into
the 21st Century -
Thus
we see that Morgan Motors has formulated a business template that
simultaneously looks both backwards through history for inspiration,
but also forwards through technology and brand / product positioning.
Importantly recognising the need to both bolster the brand's inherent
equity and grow its recognition and repute across the globe,
especially regards new EM markets that will provide a new revenue
stream balance versus the traditional UK, European and American
markets.
This
has only been achieved thanks to the multiple efforts of Morgan,
Garnett, Morris, Whitwirth and Parkin, their immediate support staff
and all at the factory.
Yet,
now it seems that with a new company template formed, along with
successful products, a new shareholder watershed may have arisen,
unfortunately manifesting itself through board level power-struggles.
It
seems likely the case that the non-family stakeholders (shareholders
or not) may be seeking a strategic sale exit for the company,
understandably to the chagrin of Charles Morgan who has been with the
firm full time since 1985.
Undoubtedly
having seen the cross share-holds and total acquisitions by major
auto-firms of what were struggling concerns (ie AML previously, Rolls
Royce, Bentley, Lamborghini), Charles Morgan might well be amenable
to the partial acquired subordinate interests a of major VM, but
understandably unlikely to wish to relinquish a 50%+ or indeed total
control.
Other
shareholders, from a more remote position, may wish to see this as
the ideal divestment outcome.
Divestment
Exit Routes -
Perhaps
the most obvious route for what may be termed 'activist' (ie maximum
profit-seeking') shareholders would be a Trade Sale to a volume
manufacturer
1.
TATA Motors
Given
aluminium structure development of Aero8 so as to merge into the more
advanced capabilities of Jaguar Cars (of JLR). Serendipitously,
Morgan used the moniker F-Type 80 years before Jaguar. This would
then obviously build TATA's stable of British marques.
2.
BMW
Given
the 4.8L V8 engine supply into Aero8 and +8 and similar aluminium
structure interests (see Z9, M-series cars and now elements of the i3
and i8), plus mutual cycle-car/motorcycle aspects there seems to be a
basis for strong synergies. Like above, such a deal would develop
BMW's stable of British icons beyond Rolls-Royce and Mini and could
be deployed alongside its engine supply interest in Weisman Cars,
“Germany's Morgan”. Latterly the Z-series cars could be restyled
as Morgans.
3.
Mazda – Ford
Given
that the Japanese company (itself partially owned by Ford) is today
perhaps best known for its iconic MX5/Miata model, which re-invented
the modern sparse sportscar with its Mk1, and the fact that Morgan
utilises Mazda transmissions for Classic and 3-Wheeler ranges, it
seems possible that as part of its own and indeed Japan's
re-emergence, and the Japanese love of british heritage, it could
hold possible appeal to commercially inter-link the MX5 and Morgan
product and technology bloodlines. (This seen with the SuperDry
3-Wheeler). Moreover, the Ford supply of 4 cylinder engines for the
Classic range indicates a possible interest if it seeks to rebuild an
adjunct division; was was the previous case with PAG.
4.
Daimler
Given
the Stuttgart corporation's interest in synergising its AMG division
with Aston Martin Lagonda, expecting a cross-shareholding to
incentivise; it would seem likely that Daimler would seek to build
its marque stable in an orderly manner. Morgan's small packaged
sports cars and basic but highly flexible platform engineering
methods could be used to expand the AMG performance brand to include
2 seater track-biased roadster and coupe models.
5.
Volkswagen Group
Given
VW's desire to own the best marques (Bugatti, Bentley, Lamborghini,
Porsche, Ducati etc) there may be commercial interest from Wolfsburg
given the Bugatti-esque overtones displayed in Eva GT. Creating a mix
and match technology strategy that could interweave Bugatti, Bentley
and Morgan along with the more mainstream enabling systems
technologies made available via Porsche, Audi, VW.
Alternatively...
6.
Caparo Group
Another
supplier (for brake callipers and systems) to Morgan is Caparo AP
Braking, a sub-division of the steel orientated Caparo Group, which
also includes Vehicle Technologies which created the Caparo T1 road
legal track car. Caparo Group is seen to be eager to climb the
technology ladder and so value chain, so as to partially extract
itself from low value steel. Thus Morgan could be viewed as either a
potential acquisition or offer its current shareholders a
cross-shareholding so diversifying their respective interests.
Otherwise....
To
a Private Equity firm, itself acting as the refining intermediary
before a latter trade sale.
Setting
Out Its Stall -
The
manner in which Morgan has both modernised and entrenched into its
roots indicates that over the last decade or so its shareholders have
sought to create not only a tenable company - as was always the
desire of HFS and Peter – but more, so as to better integrate
Morgan's product range and base technology with that of the
automotive giants, themselves seeking high-value marques which
espouse both high technology content, a proven provenance (such as Le
Mans racing) and that all important asset, strong emotional ties.
It
seems apparent to investment-auto-motives that Morgan has indeed
sought to intentionally spread its wings widely across the VM
spectrum so as to both create a broad basket of supplier
relationships, but also to possibly attract a latter-day broad set of
highly competitive well financed potential buyers or stakeholders.
Conclusion
-
Presently
it seems that internal works may be afoot which, though not stated,
may seek to begin a process of commercial rationalisation and
streamlining which evolves Morgan into what could be a very different
entity, one far more interwoven with the giants of the automotive
world.
As
with other British niche vehicle manufacturers, and indeed the not so
niche (eg Aston Martin now enchanting Daimler having previously
benefited from Ford), Morgan's past initiatives have demonstrated the
inevitable reliance upon technically capable 'business partners'.
Most notably the Aero Eight with BMW power-train technology and Hydro
designed aluminium structure.
Relationships
which in actuality have been little more than that of a notionally
gracious system supplier assisting a production minnow, though
obviously the former gaining associative kudos and cache, and the
latter high quality 'mix and match' technology.
Greater
interaction with the auto-giants is perhaps inevitable, but as shown
the Morgans have always managed to achieve successful commercial
relationships without depending too heavily upon any single one
supplier, indeed their mantra has been to de-risk by involving many.
So exactly how this process will continue will be most interesting to
see.
But
inevitably with the EM expansion of the car market and a growing
number of current and potential wealthy client groups means that the
legendary names of automotive history may have become renewed 'manna'
for the auto-majors, so their interest always more than purely
philanthropic. The more historically meaningful and characterful, the
more the potential attraction.
Presently
the removal of Charles Morgan, by hook, by crook or however,
indicates that the remaining directors may wish to 'sweat the assets'
of the firm; largely its brand equity and inherent global goodwill.
But
equally, things may not be as they seem.
The
news of his apparent dismissal could be a ruse to attract and gauge
the commercial interest of outside parties and simultaneously
jivvy-up UK government to better assist SME and so Morgan in the
process, given its role as cornerstone of British light industry
Indeed,
why should Morgan not successfully replicate itself across the UK
within the remaining similar small-scale Victorian and Edwardian
red-brick sites elsewhere, using such places as flexible expansion
and indeed contraction capacity as required and in turn training a
new generation of apprentices and engineers.
Only
time will tell.
If
ultimately in years to come such an expanded Morgan Motor Company's
destination is as a listed entity on the stock-market, it would
indeed be ironic, since as understood, it was the family income
gained from the bond and stock markets in the first half of the 20th
century which itself was used to fund the firm through its own
periods of hardship.
Whatever
the eventual outcome however, Morgan without its figurehead and the
all important lineage which imbues the firm with far more than the
sum of its parts, might well externally undermine the company to the
detriment of all.
Morgan
is more than a niche car company, it is a representation, even if
idealised, of the way things ought to be, of how capitalism, paternal
values and enormous goodwill can be combined in a successful
formulae. Indeed, the UK's broad fortunes across many of its SME
would do well to apply “the Morgan Method” of business.
Cooler
heads should prevail, so as to further build-upon a century of toil, and not all
too easily erode what is for many a slice of how the world should be.
Post
Script -
Harvey-Jones's
Case Studies -
In
addition, and of possible value so as to provide a more rounded
picture of late 1980s, early 1990s UK manufacturing, and critically
serving as a juxtaposition to M.M.C., it may be useful to momentarily
view the fortunes of its then counterparts.
Apricot
Computers:
Liquidated
in 1999 (late in outsourcing integrated manufacture)
Churchill
China:
Listed
on the LSE's AIM in 1994 (family retained partial share-hold)
Copella
Apple Juice:
Sold
to Tropicana, then to PepsiCo
Norton
Motorcycles:
Became
defunct, a DTI fraud investigation followed, debt and rights sold to
various American PE firms, 2008 brought new leadership and revival,
and 2011 government export loan
Shropshire
Health Authority:
Morphed
into latter-day 'Primary Care Trust'
South
Yorkshire Police:
Ongoing,
though heavily criticised for dishonesty in a high profile case.
Velden
Engineering:
Ongoing,
expanded interests in specialist engineering, design and development
and property.
Thus
as seen, a mixed bag of outcomes. The much respected Harvey-Jones did
indeed pertinently highlight the challenges for each organisation but
to believe there may have been catch-all solutions to what were a
diverse set of companies was to be naïve. Each firm had a its own
specifics in terms of sector dynamics, core capabilities, managerial
appreciation and balance sheet strength.
Apricot
Computers were effectively far too small scale and too introverted to
ride the major sector specific changes that were under-way,
especially so between the research-work in in the US and its use of
low cost mass production across Asia.
Churchill
China sought recapitalisation via the notional venture listing within
the London Stock Exchange, and saw a collapse of confidence in 200,
but positively restructured, ever since experiencing positive market
cap climb to a new record presently.
Copella
Apple Juice appears to have ridden the early 1990s popularism for
health oriented foodstuffs, and looks to have been effectively
created for major player integration; serving its founders well,
today one of the pro-health sub-companies of PepsiCo.
Norton
Motorcycles had seen various attempts at resurrection since its mid
1970s demise, in retrospect seen as the creation of shell-type
holding enterprises leveraging the highly emotive Norton name for
what was possibly unethical ends. Seemingly properly resurrected in
2008 and able to deploy effective web-communication the brand appears
externally to be stable, able to deploy its Cafe Racer appeal
alongside other revivalist efforts (eg Ace Cafe and Goodwood Revival)
Shropshire
Health Authority:
This
public entity became integrated within the national Primary Care
Trust system as what seems the inevitable partial privatisation of
the NHS as greater population demands outweigh publicly available
income.
South
Yorkshire Police:
Remains
effectively intact, and though heavily criticised for specific cases
of mis-dealings and thus the shattering of public trust, very
probably does so given its developed structure relative to the
regionally specific challenges such as social deprivation, racial
diversity, urban vs rural affairs.
Velden
Engineering:
This
company seems an unlikely success story as what was once seen as an
out-dated hangover of an industrial past, based in Bolton and
established in 1973 in the midst of the UK economic woes. Starting as
a basic fabrication shop, it managed to survive the 1970s and beyond
during the UK's prolonged domestic industrial contraction – seeing
foreign firms introduce mass manufacture. Doing so by investing in
modern technology, achieving quality standards equal to those of
large industry, maintaining labour flexibility, positioning itself as
a specialist to large clientèle to provide good margins, and finally
able to acquire strategic and value adding small UK engineering
interests.
It
can be seen that the outcomes of Harvey Jones' case studies might
surprise.
Whilst
the Police and NHS public organisations have inevitably developed
within the microcosm of their politicised and national budget worlds,
in this select group the private enterprises demonstrated that the
arguable economic split between supposed backward 'old industry' and
future-facing 'new industry' was not as prevalent as would seem.
Of
course for the failure of Apricot came the success story of
Cambridge's ARM Holdings. Churchill China demonstrated its growth
capabilities by expanding its range across china-porcelen, general
ceramics, glass and wood, along with an innate heritage appeal using
the suffix '1795' in its web identity. Norton did indeed suffer
versus its Japanese and German competitors, but other micro problems
and macro trade internationalisation issues were undoubtedly afoot
far beyond the innate capabilities of British engineering.
But
perhaps it has been Velden Engineering along with Morgan Motors that
stand rightly proud for adapting both technologically and
commercially as was necessary to suit the much changed climate.
Both
today seemingly in good operational health.
To
reverse the established saying...”an old dog can indeed learn new
tricks”, and must do to survive and prosper in an ever growing
global pack.
