We are trying to keep our JLR promises, insists Tata
Birmingham Post editor Marc Reeves spoke to Tata chairman Ratan Tata in Mumbai about the consequences of continued Government inaction over Jaguar Land Rover.
When Tata bought Jaguar Land Rover exactly one year ago tomorrow, crucial to its wooing of the UK Government and its new workforce was the promise to maintain the company’s three main UK plants.
Halewood, Solihull and Castle Bromwich were all safe in Tata’s hands, promised the chairman in March 2008. In March 2009, what has changed?
“We made that promise in the process of taking over the business long before the global finance system collapsed in front of us. The promise was made and kept in those circumstances,” said Ratan Tata, chairman of the Indian Tata conglomerate.
“There was a concern we would rationalise the plants after we bought the company. We did not.
“But to say we should be held to the same promise after the meltdown? It’s a new set of circumstances. The whole collapse in the market place is something no one foresaw. What we’re trying to do is to keep that promise, but we need to have funds to sustain ourselves through this period.”
The exasperated industrialist is in no mood to mince his words over what he sees as the failure by the Government to support one of the country’s leading manufacturers.
Highlighting the potential cost to the company and its employees if the government does not come forward with the requested loan guarantees, Mr Tata raised the prospect of JLR’s development projects being wound down, halting progress on a new sports roadster and leading to lay-offs among development staff.
As the luxury car maker still waits for the government to agree to guarantee commercial loans to fund its working capital needs, the 71-year-old head of India’s largest company said the UK Government didn’t seem to understand what it was his company was asking for.
Speaking in his office in the centre of Mumbai, the day after the launch of the Nano, dubbed the world’s cheapest car, Mr Tata said: “For some reason, our interactions with the Government and members of the Government seem to come back to ‘Tata is seeking a bailout for JLR. We’re really not but we have nowhere else to turn.
“The entire banking system has come to a halt in the UK, the US and India, but with one big difference. In the UK the banks have virtually been taken over by the Government. They’ve bailed them out.
“When you go to the banks, they don’t say they won’t lend you the money. They set covenants you couldn’t possible accept and then say we couldn’t come to terms.
“All we’ve been asking is for the Government to ask the banks they now own to give us a commercial credit on our balance sheet that will enable us to get through this period. £500 million is what is required.”
Since the JLR crisis started in late 2008, the role of the Treasury and outside advisers has been called into question by observers who accuse them of having little understanding of the manufacturing sector.
Mr Tata said: “The Government has advisers who seem to think the Tatas are trying to fob the problem on to the British Government. The Government thinks that, because we’re approaching them for help, we must be asking for a bailout. But all we’re seeking is the Government’s facilitation of a commercial loan via the banks they own.”
JLR’s new product development programmes would be most at risk if the Government failed to act, he said.
“We went into the downturn with a range of exciting projects in place, spanning new models and new hybrid and materials technology. It’s imperative we come out of the downturn with all these in place.
“But it’s likely that these projects would be the first to take the hit.”
The 12 months since the takeover have seen Jaguar Land Rover’s hi-tech research and product development programmes bear fruit, most notably in the diesel model of the XF – the greenest and most efficient car of its class.
Mr Tata said: “There’s another important issue that the Government doesn’t seem to understand. We took a company which had two parts. One was the gold standard in off-road vehicles and the other a venerable respected British brand that had gone through its ups and downs.
“Jaguar was on the verge of coming out with new products in the XF and new XJ, and JLR as a whole had new developments in hybrids and aluminium architecture. We encouraged this and invested in it. We even reinvigorated a project shelved by Ford to produce a new roadster.
“We went into the downturn with all these projects in process. It’s imperative we come out of the downturn with them all in place.
“We must come out of the recession with two British brands on their way back to their old glory. That would be my dream.
“But I need to sustain myself. The worse thing I can conceive is us coming out of the downturn no further forward than when we entered it – as though time stood still.
“And what’s likely is that these projects would be first to take the hit, with terrible long-term ramifications, but it’s the easiest thing to do.
“And that would be a real slap in the face for what we undertook to do with the brands.”
What would happen if it becomes clear that the UK Government is not going to come forward with the help JLR needs?
“What will happen, inevitably, is that we’ll keep cutting, we’ll keep denying ourselves. We’ll cut this project and that, laying off the people involved. And we’ll keep cutting until finally we have a company that’s stood still or moved backwards.”