Howard Wheeldon: Treasury throws Jaguar Land Rover to the wolves
May 7 2009 Birmingham Post
whilst similar in its shareholder treatment style to that of Railtrack and Northern Rock, at least in both those cases the Government did put up some real money.
Tata though, which has already put in close to £900 million into JLR since it acquired the company from Ford, and just when the global auto market first began to collapse, appears to be being treated by the UK government as nothing more than a mere pawn in the future recovery and growth process of JLR.
Such onerous demands also confirm that the government is not only going back on its word to Tata management, the hard working JLT workers and the British public it also suggests an attempt to make the Indian management into a laughing stock.
To make matters even worse the government appears to be ignoring the whole principle behind the European Investment Bank support idea – that of encouraging “green” technology development.
Given that government said only last month that it was prepared to underwrite around three quarters of the £340 million funds that the EIB would make available to JLT the decision to halve the amount it is now prepared to guarantee and by placing such onerous conditions on what remains will open the Government to even more ridicule.
After all, the £340 million was to have been part of a wider £800 million support package for JLR of which Tata itself has already agreed to fund around £100 million. The government has also ignored that while suffering sharply lower sales JLR has in fact managed to remain standing on its own two feet.
It has also chosen to ignore the fact that Tata was essentially requesting EIB funds for future new vehicle developments such as the LRX “baby” Land Rover project that would be the “greenest” vehicle ever to come from the Land Rover stable and for the hybrid Jaguar XJ project on which a big part of the future for the sports car maker will depend.
Such projects must now be in serious jeopardy and the possibility that plants could now be closed for extended periods and thousands of workers laid off would appear closer to becoming reality.
Tata Motors certainly does not deserve to be treated by the UK government in this way – tantamount to being a leper.
As implied earlier, in effectively turning its back on Jaguar Land Rover it appears to me that the Treasury could be trying to pick up JLR assets on the cheap.
For any government to attempt such an idea without putting a penny of taxpayer money in would be an absolute disgrace. Put nothing past this government though including back door nationalisation on the cheap.
Unusually, I am not blaming BERR or trade minister Peter Mandelson for this unnecessary mess, although if the latter really has fought and lost the JLR battle with the Treasury then I must feel that he is now obliged to resign to make omens to the rest of the struggling auto industry.
Certainly the onerous terms have the mark of the UK Treasury writ large all over them - with or even without direct oversight of Gordon Brown.
That the government has chosen to effectively walk away from guaranteeing an already fully agreed and justifiable EIB loan to JLR and that would allow the company to invest in its long term future in the UKis unacceptable.
And one could hardly blame JLR owner Tata for interpreting such disgraceful treatment at the hands of the UKgovernment as a signal to move these fine brands to India - lock, stock and barrel!
