By David Benson
The bitter irony of his position cannot have escaped Sir John Egan, chairman of Jaguar, as he contemplated the move by Ford to aquire 15 percent of his companies shares- a pre-emptive strike that can only result in the Coventry-based factory he saved from oblivion falling into foreign hands, Now, here he is, a white knight looking for his own Sir Lancelot to preserve his modern Camelot of the motor industry. Barely five years ago he escaped from the clutches of a large motor company when he privatised Jaguar out of the debris of British Leyiand, which had once promised so much when it had earlier swallowed up the once proudly independent Jaguar. Sir John says:
“I believe in the best interests of the shareholders, the customers and the employees to remain an independent company â€” particulary when you remember that BL couldn’t give it away in 1980. Even though the Ford move came as an unwelcome surprise I suppose it is a bit flattering to think that we have created something worthwhile with good products, good dealers and good customers that so many very much larger companies now appear to want.”
Sir John has no stomach for getting into a battle of words with Ford ot this stage. But he does want the message relayed that there is notfilng wrong with the cars and the workforce at Coventry, and he feels confident that he can be competitive well into the next centiuy. And it will not be the first time that Jaguar has had to face apparent adversity that would have destroyed a lesss resilient company, and emerged triumphant.
When he was apointed chief executive of Jaguar in 1980 by Sir Michael Edwardes, he was told that if he did not come up with a solution the company would have to be wound up within months, as British Leyland could not afford its huge losses. Egan, who will be 50 in November, set about the task with a will. He gathered Jaguar’s workforce and told them It was to be a fight for survlval. He talked to suppliers and said that if the quality of the products didn’t match his standards the goods would be returned and not paid for. He set about rationalising the entire factory and giving it new heart. His first priority was to restore Jaguar quality, as the cars had gained a dismal record for unreliability in world markets.
Then he had to sort out. the dealerships and improve their service image. All this was achieved in a remarkably short space of time and by 1983 he had been awarded the Castrol Cold Medal of Ihe Institute of the Motor Industry. A year later the company was ready to be the first part of British Leyland to be returned to the private sector. In 1986 he was knighted fur his efforts. But the real battle to survive had only just begun- A new XJ6 boosted worldwide sales already climbing because of the revived reputation. But with 75 per cent of of Jaguar production going to export markets the company became extremely vulnerable to currency flucluatlons. Egan found that he was less in the car business and more involved in currency trading and speculation.
Hence the catastrophic drop in half-year profits he reported last week which sparked off the Ford bid. To cash-rich Ford the problem was blatantly obvious, and they could see that the long-term survival depended on profits being generated to fund future model programmes. Jaguar has to produce a new sports car soon to replace the ageing XJS and Egan has already reached prototype stage with the F Type replacement. But it probably needs Â£100 million to get it into full scale production in the kind of quantities that will make it a world seller. Meanwhile Ford â€” and General Motors â€” have plenty of money for investment. But neither company has a car to properly compete in the Jaguar, BMW, Mercedes segment of the American market.
Their Lincolns and Cadillacs appeal to an older and more middle class market. The European models appeal to a younger, more technology minded buyer â€” a market segment previously unexploited by the Japanese. Now Nissan and Toyoto have produced new models aimed directly at BMW and Mercedes and are about to sweep the United States market Ford and GM want a piece of that market segment, and they can see it through the acquisition of Jaguar.
Both companies could provide considerably larger outlets through the U.S.A for Jaguar products, and could produce the finance to expand the Coventry factory and double the present 50,000 cars a year production. Where Ford scores over General Motors is the availlability of Europe’s most advanced research and development centre at Dunton in Essex. It is at this centre that future Jaguars could be planned, with access to the most sophisticated computers and high technology available. Ford see themselves as providing Jaguar with a life-line into the next century while gaining an increasingly imporant slice of the quality car market. The magic of Jaguar grew out of a humble company which in the Twenties, specialised in building sidecars for motor cycles.
Egan’s impact has been spectacular and in the Eighties he has managed to rekindle that magic. He even put Jaguar back into motor racing, winning at Le Mans and taking the World Championship for sports cars in 1988. There can only be pride in what he has achieved and with his determination, if there is a way to keep the company independent and British he will be the man to find it.
“We believe it is In the best interests of the shareholders, the customers and the employees to remain on independent company. Only five years ago we escaped from the clutches of a large company and we have built something worthwhile with good products, good dealers and good customers. In 1980 you couldn’t give the company away, so I suppose that Ford’s unwelcome surprise on Tuesday is a bit flattering,”
Sir John Egan, Jaguar Chairman