How Jaguar Land Rover Leaped Out Of The Red

In February 3, 2009, the somber and depressing mood at the Birmingham International Convention Centre was just as icy cold as the outside winter weather. The awful reality that dawned on the participants was the fact that the prestigious Jaguar and Land Rover luxury marques are facing the worst financial crisis ever since losing the marque to BMW in the 90s.

Jaguar Land Rover CEO David Smith told the audience, In 25 years in the car industry, I have never experienced a time quite like this. Banks arent lending and consumers arent spending. Someone has to put oil back in the engine. We have suppliers going into bankruptcy every one or two days.

Various industry leaders affirmed the dire situation. Professor David Bailey from the Birmingham Business School said that the unprecedented crisis might see another 30,000 to 40,000 jobs erased. Tony Woodley, Unite joint leader conceded that JLR needed half a billion points right away.

After taking the marque off Ford Motors in 2008 as the global economic recession was getting worst, the first year of Tatas ownership was nothing short of a disaster. Within weeks of the gloomy prognostication of Smith, Bailey and Woodley, JLR disclosed a 280 million loss for its first 10 months of ownership ending March 2009. In another 3 months, Ravi Kant, Tata Motors Vice Chairman announced that 2,000 jobs were already lost with plant shutdowns underway. By June, unions had settled for pay freezes and working hour concessions to save 70 million for the company.

Notwithstanding the union compromises, the company in September disclosed plans to close down its historic Land Rover plant in Solihull or its Jaguar plant in Castle Bromwich. The possible closure prompted Unites national secretary for the countrys automotive industry to accuse JLR of plotting an exit strategy out of the UK.

Unfortunately for Britons, after nearly losing all its noted car marques to India (Land Rover and Jaguar to Tata Motors), Malaysia (Lotus to Proton), China (MG and Austin to Nanjing Auto), Germany (Rolls Royce to BMW and Bentley to Volkswagen), the US (Leyland to Paccar) and the Middle East (Aston Martin to Kuwaiti investors under a UK company), the countrys automotive industry is now just a small shadow of its former self.

Theres really nothing to stop owners from closing former plants in the UK which have higher wage costs than, say, in China, India or Vietnam.

Today, despite the closure plans still hanging like a Damocles sword, JLR has announced record profits of about 234 million from April to June, its 5th quarter of improved sales performance. For its fiscal year ending March 2010, a full year after its crippling 2009 performance, JLR posted a 32 million pre-tax profit.

Giving credit where it is due, the newly appointed executive team of Carl-Peter Forster, former GM head of operations in Europe and now CEO of Tata Motors, and Ralf Speth heading the Jaguar Land Rover company, has worked to turn around the distressed JLR.

Lord Kumar Bhattachgaryya, one of UKs most highly regarded automotive expert says that JLR has become more productive and efficient with fewer people to do more and now enjoy a good leadership team.