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  • Jaguar's Inevitable Sale Unless Corporate Change Means Profitability

The TGWU's national secretary has launched a scathing attack on Jaguar and parent company Ford with its handling of the Browns Lane Sale.

Dave Osborne told of how the TGWU and its members felt "betrayed" when Ford went back on its word claiming the company "bribed its employees into submission."

"British workers are a soft option as we have the weakest employment laws in Europe which makes it easier and cheaper to sack British workers. Jaguar told us three years ago it would achieve profitability by 2007, but it is still losing money", he said.

An internal analysis of Jaguar prepared for Ford executives revealed the luxury carmaker to have reportedly lost $715m for 2006. Jaguar's financial woes are set to continue with forecast losses in '07 totalling $550m and $300m in '08 respectively.

The company has been and continues to devour and haemorrhage money at an alarming rate with little in recompense for Ford's loyalty and continued investment. Ford acquired the British car maker in 1989 for $2.5m but hindsight has shown the American giant may have played the vanity card when it did so.

Having talked with officials from both Ford and Jaguar, Dave Osborne believes the company's future is far from certain: "Jaguar is in a dilemma and it is losing money. This makes it difficult for the company to ask Ford for more money when it too is in financial turmoil.

"In all honesty, I cannot see Jaguar making money anywhere close to the value it has lost", he added. Ford has reportedly invested $10m to date and recently provided a cash injection to the value of $1.2bn in '05.

Although Ford considered the Coventry plant to be the "most efficient plant by its own standards", over capacity and the absence of a paint and body shop contributed to its closure.

Mr Osborne added: "I remain unconvinced that the sale of Browns Lane will provide the same quantity of jobs and same quality of employment that Jaguar provided when it had ownership of it."

Closure of the company's Browns Lane facility in '05 led to employees being transferred to Castle Bromwich and Gaydon, with some employees being offered early retirement packages which Jaguar claimed helped to offset net job losses to 100.

The loss making company hopes the inevitable sale of the Coventry plant, soon to be announced within the coming weeks, will aid the "financially strained" company generate the "necessary funding" crucial for refocusing of the brand.

Jaguar's Director of Corporate and Government Affairs, Don Hume admitted the company's losses were an issue being addressed in the hope of stewarding the company back to profitability once again.

"It is true Jaguar has been losing money for some years, but the recovery plan put into place in September 2004 is on track and is beginning to provide results, even though we always said it was not a quick fix.

" An aspect of the recovery plan which has angered the TGWU is Jaguar's new production regime where mass manufacturing would be abandoned in favour of selling more luxurious cars with a higher mark-up in price.

"That's ok for Jaguar, but it isn't ok for my members as they are judged on volume. A company can cost cut its way to profitability, but it cannot cost cut its way out of a crisis, and that is what Jaguar's facing", Dave Osborne stressed.

Jaguar's total volume of car production at its three UK plants has fallen by over half to 75,000 in '06. Sales of cars in its core market of North America have plummeted - a mere 21,000 cars found new homes in '06 compared to 61,000 in '02.

An ageing model line up and the company's failure to secure diesel power trains sooner than it did has attributed to the British company's demise, where consumers have turned to fellow luxury marques such as BMW and Mercedes.

Both existing and potential customers have been lost, and Jaguar has been working hard to win them back. The forthcoming Jaguar XF which replaces the current S-type has received much media acclaim for its new design approach in helping the company shake off its 'old man' image and appeal to younger drivers.

Dr. David Morris, former head of Coventry University's business school said: "Ford desperately wants and needs to get into the premium sector. They've always expressed a desire which they hoped to achieve with Jaguar.

"There is no doubt you can have a successful luxury car division, but clearly there are evident signs of operations having been over stretched. For this to be successful, some form of part sharing would be needed", he revealed.

Jaguar has shown considerable defiance, telling of the wide ranging changes it has undergone with which Ford has been pleased, but that couldn't be further from the truth.

Off-loading Jaguar to a potential buyer is an option which has not been disregarded by Ford's CEO Alan Mulally, as Mr. Osborne explained: "Ford hierarchy will look at Jaguar in 12months time. They rule out the sale of Jaguar, then breathe and pause, then say 'for now'"

Motoring industry analysts have forecasted 18 months in which Jaguar must prove to Ford it can compete in a market where it appears lost.

Dr. Morris said: "Despite the setbacks, Ford has shown an awful lot of faith in Jaguar and we shouldn't forget that, but undoubtedly the company will be sold as a growing concern. Jaguar is actually a success story, but obviously not as successful as Ford would have hoped", he added.

Article courtesy of Jason Craig

Published 6 March 2007 Melanie Carter

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