NEW YORK TIMES
When John Egan was named chief executive in 1980, Jaguar was in sorry shape. Sales worldwide had slumped to less than 14,000 cars a year, from 30,000 in the early 1970’s.
Once a symbol of British excellence, Jaguar had become the butt of jokes, including the crack that you needed to own two Jaguars to have enough spare parts to keep one on the road. In 1980, Jaguar’s losses of $74 million (at today’s exchange rates) were so bad that its parent group, the state-owned British Leyland, considered shutting it down.
Today, production and productivity have tripled at Jaguar, which was sold to private investors in 1984. Despite the hefty spending on its new XJ6 model, scheduled to go on sale next month in the United States, Jaguar reported pretax profits of $193 million on sales of $1.3 billion last year. The specialty car maker, based in Coventry, in the West Midlands, is now one of the country’s leading exporters. Overseas sales totaled $900 million last year, well ahead of the Scotch whisky industry, for example.
”Egan has done a heroic job,” said Robert Heller, Britain’s best-known management author.
The heroics included attention to the smallest details. After running tests, for example, Sir John found Jaguar was ”buying” 60 percent of its defects from suppliers. He attacked the problem with ”evangelical fervor,” one executive recalled. He and other Jaguar officials visited suppliers’ shop floors, advising them on improvements. In a few cases, Jaguar personnel effectively took over the management at these operations.
Jaguar gave suppliers plenty of incentive to meet its toughened standards: Sir John demanded that all suppliers agree to pay replacement costs and labor charges for any parts with a failure rate above 1.5 percent.
To cut losses and boost productivity, Sir John slashed the work force from 10,500 to 7,000 employees.
”I told the unions that if they didn’t agree to 7,000, the number would be zero,” he recalled. ”We had a lot of hidden unemployment in the company, with two men doing work that should have been handled by one.”
And he drove home his message about staying competitive through his ”hearts and minds” program. He showed videotapes that stressed the need to match the standards of Jaguar’s West German rivals: Daimler-Benz’s Mercedes and Bayerische Motoren Werke’s BMW. He also set up regular meetings between workers and managers, instituted ”quality circles” and offered bonuses based on plantwide production.
The program worked. The number of cars produced per worker, at 1.3 cars in 1980, jumped to an annual rate of 3.9 cars a worker last year. Sir John’s goal – five cars a worker annually – would still place Jaguar below the six cars per worker at Mercedes Benz. But he says that Jaguar probably should trail somewhat, because more hand work goes into his company’s cars. Only cabinet makers can create the cars’ fine burl woodwork, and each crafted leather seat takes 15 worker-hours to complete.
Workers at Jaguar seem to take pride in the emphasis on quality. Before Sir John took over, said Tony Redfern, a 53-year-old assembly technician, ”we would point out problems and it went no further than that.” Now, he said, ”management takes notice and changes are made.” That attitude seems to trickle down from the top. ”Sir John is the sort of person who comes to the shop floor,” Mr. Redfern said.
Jaguar is one of the few British comeback companies whose employment has climbed back above the level it reached in 1979, before the company started its efficiency drive. It now has 11,000 workers, who made 42,000 cars in 1986, three times as many as in 1981. This year, the production target is 47,000. And most of the growth has come in the United States, where Jaguar gets two-thirds of its sales (and one-half of its stockholders). The company’s luxury sedans range from $38,000 to $44,500 in the United States.
Sir John joined British Leyland in 1971, after working for General Motors in its AC Delco parts division. He left in 1975 to work for Massey-Ferguson, but in 1980, Sir Michael Edwardes, then chairman of British Leyland, lured him back to BL to run Jaguar. He promised Sir John complete independence from BL in dealing with Jaguar’s troubles.
The trim 47-year-old is a staunch believer in the Thatcherite formula.
”The policies of the Thatcher Government have revolutionized many British companies,” he said, ”including this one.”