Erin’s Financial Disasater: The 1979 Crash
Erin reported there best earnings to date in 1976, with 5 models on sale, 2 factories and dealerships across Europe. Export to America had also widened their customer base, especially with their luxury models. This success had also greatly increased 3rd party investment, that had now put the company in an ample position to expand.
But, there was disagreement over how this should go about. Then CEO Marco Erin, son of Dominic Erin, was split between supporting his design chief Harold Forgely and his main advisor Arnold Clark, who wanted to revamp current models and maintain Erin’s position as a slightly exotic, slightly unusual brand, and the Board Of Directors, who wanted to expand into more ‘normal’ markets and start directly competing with the British and Germans with saloons and hatchbacks.
This dispute went on for years, and gradually got worse and worse. Marco wanted to hold his company’s status and expand at the same time, but feared a loss of faith from Clark and was concerned that developing so many new cars may end up being a fruitless endeavour. At the same time, the disagreements also meant that Erin’s new cars weren’t being designed in the same way. For instance, the second generation Comprida, launched in 1978, wasn’t approved by the Board of Directors and was essentially self-funded by Clark and Forgely’s design team. At the same time, the new Civera and Nedala were approved by the Board of Directors and looked completely different to the Comprida. Erin was losing its touch.
Then, the downfall began. A number of factors triggered this. The first sign was the failure of the Mk 2 Nedala; the Board of Directors had completely misunderstood the current market trends and failed to realise the lack of demand for such a car. It would stop production just 11 months after its launch. Then, there was the lack of trust from their customers. The new Comprida suffered greatly from this because of how different it was to other Erin’s, and production also had to be halted. The discontinuation of these two cars led to Erin’s many investors pulling out over the year of 1979, gradually reducing the companies potential funding, and the company would be facing huge losses unless it cut production of the majority of its cars - which it did.
All but the Merna and Lira remained in production by the end of 1979. The shock move led to the laying-off of over 7000 staff members, and also saw Arnold Clark and Harold Forgely resigning after 19 years at the company. Marco also fired his entire board of directors for the failings, and the company was left in tatters, barely making a profit.
While ErinSport continued to operate with much success, Marco knew that 1980 was the make or break year for the company. Erin would have to completely reinvent itself, its image and rebuild on a massive scale. Thankfully, there was hope.
A development project, called the ‘Advanced Sports Coupe’, had been in the works since the late 70s. It had resulted in designs for a mid-engine, aluminium bodied low-end sports car, and with some extra funding, it could be brought to production. So, Marco oversaw the hiring of a whole new design team, led by post-graduate design student Chris Famerley. He envisioned a whole new design style for Erin, one that would look futuristic whilst being contemporary. Despite being just 25 years old, Marco was confident that his designs for the new sports car would save the company. That car became known as the Nasaro.
Launched in 1982, it was an immediate success. Marco had also hired a new team of advisors - having axed the board of directors - who helped to market the Nasaro excellently, and allowed it to cover a number of price ranges and customer bases. But, this wasn’t going to be enough; Marco had had to tap into his own family’s savings to fund the car, and needed to get a stronger income base.
This would almost certainly be reliant on a new Merna, the Mk 4. But, the company still had two factories that were currently not being used, and decided to launch alongside the new Merna two other cars - the Visto and the Berlose. To reduce costs, these cars were developed with Toledo engines. And even then, more was needed to cement Erin’s recovery.
The Visto and the Berlose would be successful, but only because of the help of one company: Saminda.