Press Report : Research money would stop JLR becoming the next MGR

Tom Scotney, Birmingham Post, 29th June, 2009

A  deal on crucial research and development money for Jaguar Land Rover needs to be done by the end of the summer – or the firm could suffer the same fate as MG Rover.

The claim from an industry expert came as bosses at JLR owner Tata Motors said job cuts were a possibility and ramped up their war of words with the government after the Midland firm announced it had made a loss of £281 million in just ten months. JLR is still negotiating to try to get the Government to approve a £350m European loan for new development at the firm.

Professor David Bailey, of Coventry Business School, said: “JLR will get through this, but the question is in what state. If it falls behind in research and development it damages the firm, and ultimately that’s what killed off MG Rover.

“It will get through the recession, but it’s no good if it’s too small. Longer term it really depends on how well the products sell and what new products there are. The lack of research and development at MG Rover was a huge issue. It’s got to be sorted out pretty quickly too, a deal has got to be put in place by the end of the summer.”

JLR will get through the recession, but it’s no good if it’s too small. Longer term it really depends on how well the products sell and what new products there are. The lack of research and development at MG Rover was a huge issue. It’s got to be sorted out pretty quickly too, a deal has got to be put in place by the end of the summer.” Professor David Bailey, Coventry Business School

The investigation into the collapse of MG Rover has finally been completed and handed on to the Government, it was revealed this weekend. The report by independent inspectors into the £1.4 billion collapse at Longbridge in April 2005, with the loss of 6,500 jobs, took four years to complete. It is not yet known when its findings will be made public.

JLR has been hit badly by the drop in consumer confidence caused by the recession, but industry experts, and the company itself say it has a viable and profitable future if it is kept afloat during the economic downturn – which includes keeping R&D going.

Tata, which bought Jaguar Land Rover last year, has been looking to the UK Government to support the industry, as has been the case in many European countries. But the Government has not yet released any money to carmakers, despite Lord Mandelson setting up the £2.3bn Automotive Assistance Programme in March.

It is also blocking the release of a £340 million loan agreed for R&D at JLR by the European Investment Bank. The EIB loan needs to be backed by the government, but Tata and the government have not yet managed to agree on the details of the guarantee. Tata said it would be taking “a number of urgent and long-term measures” to stem profit losses at its subsidiaries.

We cannot afford to see any more jobs being lost because they will not come back. I feel that the long-term future of JLR is best served by maintaining the people who, before the recession, have created the wealth for the company and will continue to create wealth after the recession is over.” Dave Osborne, Head of Automotive, Unite

This weekend, Tata Motors Vice-Chairman Ravi Kant said more job losses and plant closures were a possibility if things carried on as they were. He said: “There have already been 2,000 job losses. We may be looking at more job losses, more plant shutdowns.”

However, Dave Osborne, the Head of Automotive at the Unite union, said Tata’s willingness to consider job cuts was a worrying sign, and a plan that could end up permanently damaging the company.

Mr Osborne added: “We cannot afford to see any more jobs being lost because they will not come back. I feel that the long-term future of JLR is best served by maintaining the people who, before the recession, have created the wealth for the company and will continue to create wealth after the recession is over. A smaller company after the recession is over is not what we think Tata wants.”

Mr Osborne said he would be seeking urgent clarification from Mr Kant over the future of JLR jobs and plants.

[Source: Birmingham Post]

Clive Goldthorp

About the Author:

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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