Press Comment : Is this really time for new management at JLR?

John Cranage, Industrial Editor, Birmingham Post, 12th November, 2009

With General Motors’ European boss Carl-Peter Forster tipped to join Tata, Industrial Editor John Cranage looks at the possible implications his appointment would have for Jaguar Land Rover.

General Motors’ U-turn over its plan to unload its European carmaking business has left one of the automotive industry’s most respected executives looking for a job.

It was reported last Friday that Carl-Peter Forster, the head of Vauxhall and Opel, was leaving GM after the Detroit group reneged on a deal to sell the British and German operations to Canadian car parts group Magna. Two days later, on Sunday, it was claimed he was set to join Tata Motors, the Indian owner of the West Midland luxury car group, Jaguar Land Rover.

Neither Tata Motors nor JLR has so far commented on the speculation, which seems to have been based on the automotive industry rumour mills in Detroit and Frankfurt. JLR told the Birmingham Post it was a matter for Tata, while a Tata spokesman in London referred us back to JLR.

However, while the two companies’ respective Press Officers were playing pass the parcel, speculation mounted about the future leadership of JLR just as it is emerging from the most savage recession in the history of the car industry. The obvious questions – assuming that Tata Motors really is recruiting Mr. Forster – are these:

Will he replace Tata Motors’ Non-Executive Vice-President Ravi Kant as the man charged with keeping a close eye on the group’s £1 billion-plus British subsidiary?

Will he be a one-man new layer of management between Tata and JLR?

Will he take over direct day-to-day management of JLR from Chief Executive David Smith, the man who has helped to steer the business through a torrid spell?

These are, so far, questions without answers and the likelihood is that they won’t be answered for some time.

The obvious questions – assuming that Tata Motors really is recruiting Mr. Forster – are these:

Will he replace Tata Motors’ Non-Executive Vice-President Ravi Kant as the man charged with keeping a close eye on the group’s £1 billion-plus British subsidiary?

Will he be a one-man new layer of management between Tata and JLR?

Will he take over direct day-to-day management of JLR from Chief Executive David Smith, the man who has helped to steer the business through a torrid spell?

These are, so far, questions without answers and the likelihood is that they won’t be answered for some time.” John Cranage, Industrial Editor, Birmingham Post

One normally-reliable source has told the Birmingham Post that Tata Motors really does want Mr. Forster on board. Indeed, he was originally offered a job some weeks ago but chose at the time to stay with Opel/Vauxhall on the grounds that he supported the Magna deal.

However, if Mr. Forster were now to arrive at Tata/JLR, it can be taken as read that somebody would have to go to make way for him. That’s because, unlike JLR’s former owner Ford, where central management in Detroit was intertwined with Ford of Europe which in turn was entangled with Premier Automotive Group, the stable of prestige brands that at its height encompassed Jaguar, Land Rover, Aston Martin and Volvo (each with their own managerial hierarchies), the Tata/JLR format is simplicity itself.

A three-man Supervisory Board consisting of Tata Group Chairman Ratan Tata, Ravi Kant and David Smith make policy and set the strategy. Below that, Mr. Smith heads an executive team responsible for day-to-day operations.

The set-up freed Jaguar Land Rover from Ford’s bureaucratic network of overlapping business units, each with its own turf to defend, liberated the energies of its employees and created a leanly-managed, fast on its feet, business. From that point of view the advantages of creating a new layer of management are hard to identify.

The problem is that, no matter how efficiently a business is managed and no matter how well-meaning its owner is (and, despite the prospect of the closure of one of JLR’s two West Midland plants, Tata is desperate for its high risk move into the premium car sector to succeed), politics always raises its ugly head.

An example emerged earlier this year when Ravi Kant stepped down as Managing Director of Tata Motors when he turned 65 on June 1 but stayed on the board as Non-Executive Vice-Chairman with responsibility for overseas operations. He was said at the time to be taking a much more hands-on role at JLR, a signal interpreted by some observers as meaning Tata was concerned in some way about the way the British operation was being managed.

It was said, but never confirmed, that Tata was especially worried by Mr. Smith’s apparent failure to persuade the British Government of the need for state aid to help protect one of the country’s most important manufacturers. Contrary to ill-informed criticism of JLR, the company was not asking for a bail-out but commercially-rated loan to replace the normal credit flows that the banks had so resolutely shut off.

It was said, but never confirmed, that Tata was especially worried by Mr. Smith’s apparent failure to persuade the British Government of the need for state aid to help protect one of the country’s most important manufacturers… The fact that the conditions the Government sought to impose on JLR in exchange for aid – it wanted a seat on the board and a say in setting strategy – says more about the Brown administration’s approach to manufacturing than about Mr. Smith’s negotiating skills.” John Cranage, Industrial Editor, Birmingham Post

The fact that the conditions the Government sought to impose on JLR in exchange for aid – it wanted a seat on the board and a say in setting strategy – says more about the Brown administration’s approach to manufacturing than about Mr. Smith’s negotiating skills.

Mr. Smith has otherwise earned admiration for his handling of a downturn that forced JLR to cut shifts and jobs and freeze pay for a year. He largely kept workers and trade unions onside, although labour relations turned sour in September when JLR said it was drawing up plans to shut either the Land Rover plant at Solihull or the main Jaguar assembly plant at Castle Bromwich in the middle of the next decade.

However, the protests that that announcement engendered ignore the fact that a company producing only about 100,000 vehicles a year simply cannot afford to run three assembly plants (JLR also has Halewood on Merseyside).

Outside JLR’s Gaydon headquarters in Warwickshire, Mr. Smith has emerged as a quietly-spoken but significant champion of the wider manufacturing industry with a seat on the board of the Regional Development Agency, Advantage West Midlands.

Would Mr. Smith survive the arrival at Tata of Carl-Peter Forster? If sentiment counted for anything, he would. However, this is the car industry and sentiment counts for nothing.

[Source: Birmingham Post]

Posted in: AROnline News
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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