Ian Nicholls, AROnline’s historian, turns his attention to Jaguar – and looks at its fall and rise in the 1990s, an era when the German manufacturers were beginning to take over the world.
Here, in Part Three, he recalls how Ford begins to put right the quality woes in the existing range.
Curing the cat
For all its fantasies about expanding Jaguar production with a new smaller saloon car, Ford found it had to fix the existing range first. Not only would it have to gut Jaguar’s plants to modernise them, it would have to gut its management, design and development structure which it deemed as not being fit for purpose.
Fortunately, Ford adopted a different attitude towards the senior staff it inherited in its new subsidiary to that which BMW subsequently utilised at Rover. BMW eventually took the view that its Rover Managers and Engineers were all next to useless and transfused large numbers of employees from Munich to do the job.
Ford took the attitude that, although the Jaguar way was the wrong way, the company was full of many outstanding individuals who had a lot to contribute. People like Mike Beasley; Engineers Trevor Crisp, Dave Szczupak, Bob Dover and Nick Barter; styling chief Geoff Lawson; and US sales and marketing chief Mike Dale.
First, the tough decisions
However, as 1991 dawned, it seemed as if it was Jaguar Cars that was doomed, and not Rover. In February, Jaguar announced plans to axe 1000 jobs, almost a tenth of the workforce. The Jaguar job cuts came on top of separate plans announced to put 8000 production workers on part pay for two weeks in every three.
On 1 May 1991 the revised and facelifted version of the venerable Jaguar XJ-S (above) was launched. Although it was the first tangible product of the Ford-owned Jaguar, the basic design work had been performed before the takeover. The revised styling originated in 1985 and the design and engineering work had been completed in 1989.
The aim of the project was to improve fit and finish on the bodyshell, and this involved 180 new or re-tooled panels. The new 4.0-litre AJ6 engine replaced the earlier 3.6-litre unit in the six cylinder variants. The most visual change was at the rear of the car with revised rear lights (below). Altogether, the changes to the old warhorse cost £50m, to produce a car that, although it more or less looked the same, was better built and cheaper to manufacture. The revised car also lost the hyphen in its name, it was now simply the XJS.
Job losses at Browns Lane
Jaguar was, though, now in big trouble as the world entered recession. By October 1991, Jaguar wanted 1400 workers to volunteer for redundancy. The company told union leaders that only 720 staff had responded to its appeal. It required a further 680 – if the target was not achieved, it would have to sack the rest. The cuts amounted to a reduction of one-third in Jaguar’s workforce, from 12,000 to 8000, in less than a year with 2500 jobs having gone already.
The company said it needed the deal by 1 November 1991. Its redundancy package was complicated and depended on length of service, it said, but it averaged out at £1000 for every year in Jaguar’s employ. Most staff had been working a three-day week for some months, although their pay was guaranteed. At the end of the month Jaguar duly made 470 workers redundant.
On 27 November 1991, Ford of Great Britain transferred the ownership of Jaguar Cars Limited to its parent company, the Ford Motor Company of Detroit. Martyn Watkins, a spokesman for Ford of Britain, said the transfer would not affect Ford’s commitment to Jaguar and added that the luxury car maker would keep its headquarters in Coventry, England.
Then, on 5 December 1991, it was announced that the head of Ford Mexico, Briton Nick Scheele, had been appointed as Vice-Chairman of Jaguar. Also during the month Jaguar started work on the X100 sports car to replace the XJS – it became the XK8 of 1996.
The big names start to go as XK8 takes shape
During 1991 a number of senior Jaguar executives left the company, the most notable being former Technical Director Jim Randle, who had been moved sideways with the arrival of Clive Ennos from Ford.
In March 1992, a Jaguar Styling Committee review was held to evaluate four clay models showcasing design proposals for the X100 sports car.
- Clay 1 was designed by Ghia of Turin, itself owned by Ford. It was a traditional luxury GT designed to appeal to existing XJS customers.
- Clay 2 was a product of Jaguar’s own Whitley Design Studio. It was avante garde and intended to break away from traditional Jaguar styling.
- Clay 3 was a split clay offering from Ford at Dearborn, USA. It was XJS derived and had styling cues reminiscent of the E-type, Mk2 and XK cars.
- Clay 4 was another offering from Whitley and was intended to be evocative, to stir the emotions and appeal to younger buyers.
At this meeting it was decided that Clay 3, the Ford design, was too close to the XJS, and abandoned. This was another sign of the times and the changing culture at Jaguar. It has been claimed that one of the reasons that Lofty England quit Jaguar in 1974 was the decision by Managing Director Geoffrey Robinson to bring in outside Italian styling houses with designs for the XJ40. It just wasn’t done! Now Jaguar were to find that with Ford it was standard practice to bring in outsiders in order to stimulate the creative process.
On 25 March 1992 Jaguar Cars Limited announced that Nick Scheele would succeed Bill Hayden as Chairman and Chief Executive when Bill Hayden retired at the end of the month. Nick Scheele, was born in Brentwood, Essex in 1944 and joined Ford of Britain’s Purchasing and Supply Department in 1966 after graduating from university. He moved to Ford’s United States operations in 1978, where he continued his work in purchasing and supplies. In 1988, he was transferred to Ford of Mexico as President, where he put into effect programmes that rapidly improved the quality of parts from suppliers.
As President of Ford’s Mexican subsidiary, Nick Scheele was responsible for Ford’s plant in Hermosillo which made Escorts for the North American market. Its quality was the highest of any of the high-volume assembly plants examined by the MIT team. Nick Scheele had been expecting to spend the rest of his career overseas and had even taken out US citizenship when the call came to join Jaguar. He had been hand picked by Ford Chairman Harold A Poling for the job.
Already, Ford had trimmed its Jaguar sales target by a third. The original plan called for Jaguar to produce more than 150,000 cars a year by the end of the decade, including 65,000 units of the new BMW 5 Series rival that became the S-Type. Now the total target was 100,000 cars, about half of which would be the new, lower-priced model; the rest would be new versions of Jaguar’s existing models.
History is bunk…
Did Ford executives regret the price they paid for Jaguar? ‘That’s past. As Henry Ford once said, “History is bunk”,’ said Bill Hayden in an interview shortly before he retired. Despite Jaguar’s small size, Hayden said its culture was stifling initiative. Marketing didn’t talk to Engineering, and managers were afraid to speak up. Hayden discovered what he called ‘gross inefficiency and indiscipline in manufacturing.’ The break even point, Hayden added, ‘was higher than any number Jaguar had ever produced.’
On the face of it, this was a bizarre comment as Jaguar had been profitable until very recently on quite low volume. Perhaps what Bill Hayden meant was that, in order for Jaguar to self-finance its own regeneration to modern standards, it had to sell cars in volumes never attained before.
‘This company has never launched anything on time’
– Bill Hayden
‘This company has never, ever launched anything on time,’ said Hayden. The only new model introduced in the previous decade was the XJ40, he added, ‘and that was late and badly done.’
Bill Hayden said that productivity had now improved by about 35 per cent. After two years of hammering home Ford’s quality message, Hayden had reduced assembly-line defects by 80 per cent – and, by linking with Ford to buy parts, he had cut Jaguar’s purchasing bill by 12 per cent.
Bill Hayden figured it still took three times longer to assemble a Jaguar than a high-end Ford. One tiny example: a sunroof on a Jaguar took 28 minutes to build, compared with six minutes at Ford. He did not say how many hours of labour it took Jaguar to paint, weld and assemble a car, but he noted that Jaguar was unquestionably still behind even the relatively unproductive German luxury car makers. Jaguar had reduced its work force in 1991 by 4100 people, to 8000, and another 650 jobs would be eliminated in 1992.
Jaguar’s break-even point had been reduced to 34,000 cars, from about 50,000. Jaguar’s Browns Lane assembly plant was still working only three days a week because of slack sales. Bill Hayden said that there had been some recent signs that Jaguar sales in the USA were beginning to recover. ‘But really you need another two or three months to determine if it’s going to come back or not,’ he said.
Had Jaguar known it was in a mess?
In retirement in 1999 Bill Hayden reflected on the impact he had had on Jaguar: ‘They didn’t really seem to understand what a mess they were in. They seemed to think that just being Jaguar somehow they would survive.’
Following the Ford takeover, the Jaguar workforce was nervous about Ford’s intentions. Hayden used that fear as a tool in starting the turnaround. ‘I wanted fear; I did want fear. I wanted people there I could get on with. I thought I could provide the fear. But you had to get their attention.’
‘He got our attention. At times, my relationship with Bill Hayden was difficult because he was a very hard taskmaster and he had a very forthright manner. But it was because of a man of his character and leadership that we were able to adopt those Ford processes, which I think was absolutely critical,’ said Mike Beasley, Jaguar’s Executive Director of Engineering and Manufacturing.
Nick Barter, future Jaguar Product Development Director, likened an encounter with Bill Hayden to being stuck in a closed alley. ‘There’s a bulldozer coming at you with a blade as wide as the alley. There’s no escape, and you’re slowly walking backward. He’s coming at you with questions and more questions,’ he said.
Bill Hayden died at the age of 86 on 11 August 2015.
Nick Scheele arrives
Nick Scheele officially became Chairman and Chief Executive of Jaguar on 1st April 1992. In a 1999 interview he recalled when he heard Ford had bought Jaguar. ‘Two and a half billion dollars? I thought we must be nuts. But it was none of my business. My business was running Mexico. I had no knowledge of where Jaguar stood.’
Shortly after he had arrived at Jaguar, Nick Scheele went to the water booth at the test track, where cars were tested for water leaks and found new cars scoring in the 90s. That seemed good according to USA practice, where results were scored on a scale of 100, but the Test Engineer pointed out that at Jaguar, the score meant a vehicle had 90 leaks!
Three weeks into his reign Nick Scheele gave some interviews. When asked when Ford would get a return on its investment in Jaguar, the new chairman replied: ‘My boss at Ford said it took us close to 40 years to get any benefit from the acquisition of Lincoln. I hope it doesn’t take us 40 years to get any benefit out of Jaguar.’
Nick Scheele insisted that, even with annual sales of 100,000 cars, Jaguar would be able to generate a respectable return. ‘It really depends on what price you get for the product, which depends on how good the product is,’ he said.
Product recovery rolls on
First on the product development list was a replacement for the XJ40. He confirmed reports that the XJ40 replacement would not be a totally new car. It would use many structural components of the existing XJ40 model, as well as its glass, roof and suspension.
This was confirmation that the XJ90 project had bitten the dust. The former Jaguar Technical Director Jim Randle in a 2004 interview with Michael Scarlett for Jaguar World Monthly, stated. ‘When Ford took over, we got the replacement for XJ40 in place, which was called XJ90, and that was a re-styled job, slightly taller, slightly longer, a very pretty car, which we finished off while Ford was there in fact.
‘Hayden, when he saw the XJ90 styling model, said he was going to have an orgasm!’
– Jim Randle
‘Hayden, when he saw it, said he was going to have an orgasm! But everything hit a stone wall in 1991. The car had to be stopped – after I left, they took the centre section of XJ40 and put the nose and tail of XJ90 on, and that became the car (X300/308) that then ran on.’
Next was a new version of the XJ-S grand touring coupe and convertible. Nick Scheele said Jaguar had been able to accelerate its development program by about a year. One reason Jaguar thought it could accelerate its new car introductions was that Ford was designing the process and making the tools for stamping body panels. As for quality the number of defects per 100 cars coming off the assembly line had plunged to fewer than 500, from 2500 in early 1990.
Nick Scheele claimed that customers were already noticing the higher quality – an assertion backed up by dealers in the United States and by consumer research conducted by Auto Pacific Group Inc., a California-based consulting firm. ‘Jaguar’s quality now is right up there with Infiniti. But it’s probably the best-kept secret in the world,’ said Hugh Weidinger, Vice-President of the Hempstead Auto Company, a big Jaguar and Infiniti dealership in Hempstead, Long Island, USA.
In response to the many critics who wondered whether Ford had the expertise to make Jaguar a success, Nick Scheele insisted that the skills needed to succeed in the luxury and high-volume segments were not ‘tremendously different. In both, they define the product, define the customer, establish a programme, deliver the programme and satisfy the customer,’ he said.
‘To me, the sports saloon is not the all-important model. Really, the all-important one is the first one we bring out, because it has to be a success from day one,’ he added.
Less than a week later another interview with Nick Scheele appeared. Much of the media interest was from the United States, Jaguar’s biggest market. ‘We have to persuade people that there’s a big difference from four or five years ago, that you don’t need to buy two Jaguars because one’s in the garage all the time,’ said Scheele.
Quality starts to improve
In the USA, Jaguar said warranty repairs on 1991 models were down by 15 per cent from the year before and had fallen by 25 per cent on 1992 models. Labour relations had also made a huge shift. The old Jaguar had been hampered by acrimonious management-labour relations and by restrictive union practices. When workers reached their daily quotas, for example, they just stopped work. All that was swept away in the contract signed in November 1990.
‘Our members have a new realisation that they are the company, that customer satisfaction starts inside the factory,’ said Chris Liddell, a union leader.
The main problem for Jaguar was now Lexus, Toyota’s luxury brand, which sold more than four times as many cars as Jaguar in the USA in 1991. Nick Scheele said Lexus was now ‘the key competition.’ Thanks to improved quality, Jaguar was finally able to enter the fast-growing leasing business. For years, resale value on a Jaguar was much lower than on a comparable Mercedes-Benz.
Thus, if Jaguar matched Mercedes’ per-month price on a lease, it would be stuck with a car worth much less than a comparable Mercedes at the end of the lease. But Jaguar was now so confident that its new cars would hold their value that it started offering leases in 1991. Leasing now accounted for a quarter of its US business.
Some time in April 1992 Nick Scheele approached Ford in the USA about getting official backing for the AJ26 V8 engine. He later said: ‘At the time, when I went to the Board for the money for the engine, there was a lot of scepticism. “Why does Jaguar need its own unique engine? What’s wrong with the (Ford) Romeo V8, which is a superb engine?” The commitment that Ford management and the Board showed was remarkable. That sent a whole signal to Jaguar people throughout the company and around the world that Ford was deadly serious about keeping Jaguar unique.’
In June 1992 another Jaguar Styling Committee review was held to assess the three surviving designs for the X100 sports car. This time it was Clay 1, the Ghia design that bit the dust. The next month a photographic clinic in the USA was held to assess the two surviving designs for the X100. This favoured Clay 4, but it was further refined into Clay A which had a shorter boot. Clay 4 was re-designated as Clay M.
Key decisions taken
On 19 August 1992 Jaguar announced the appointment of James Padilla as Executive Director of Engineering and Manufacturing. Padilla came from parent company Ford. He was born in Detroit, Michigan, attending the University of Detroit and earning bachelor’s and master’s degrees in chemical engineering and a masters degree in economics.
Jim Padilla joined Ford in 1966, starting as a Quality Control Engineer. Padilla was promoted to management in product engineering and manufacturing in 1976. Jim Padilla was the first prominent American to join Jaguar.
On 25 August 1992 Ford announced that it was to invest £100m in its Bridgend factory in South Wales to build the AJ26 V8 engine (above) for the next generation of Jaguar cars. This was the first big production project undertaken for Jaguar at a Ford factory since the luxury car maker was taken over in 1989. The AJ26 would go into production in 1996.
A Jaguar spokesman said production of six and 12-cylinder engines for Jaguar’s existing model range would continue at its Radford factory in Coventry, though clearly its days were numbered. ‘Bridgend has spare capacity and is a modern plant. By producing the engine there we can save at least 15 per cent of its costs – and in today’s economic climate that is a vital component,’ Jaguar’s Chairman, Nick Scheele, said.
Although the investment would not mean more jobs, it was welcomed by Bridgend’s trade unions. Andy Richards, the Transport Workers Union Convener, said: ‘It’s very good news. This will protect the long-term future of Bridgend and give Wales an added export boost because it diversifies the range of engines we will be making.’
This was confirmation that Jaguar had persuaded Ford to finance its own bespoke engine and not utilise an existing off-the-shelf Ford unit. Although the AJ26 had now got the green light, the X100 sports car, which would be the first car to use it, had still not got the backing of Ford in the USA.
Only three days later Jaguar said it would cut 700 jobs at its plants in Coventry and Birmingham. Jaguar said sales in 1992 would, at best, match 1991’s 23,000 units because of the downturn in its main markets. There was no sign of recovery, either in 1992 or well into 1993. Jaguar said the latest job losses would be voluntary where possible, but that compulsory redundancies would not be ruled out. Nick Scheele, the Chairman, said Jaguar would have closed by now had it not been taken over by Ford. ‘At the moment we are looking at frightening levels of loss which an independent company could not sustain,’ he said.
Jaguar made a loss of £226m in 1991 compared with a loss of £66m the previous year. That October, after a secret styling clinic at the NEC in Birmingham, Jaguar decided that Clay A was the way forward for the X100 programme. In November, Bob Dover, the X100 Project Manager began Early Sourcing meetings in order to decide what components would be used on the car. Early on it was decided not to use the XJ-S rear suspension, first seen on the E-type and designed by Bob Knight, but to use that of the forthcoming X300 XJ saloon.
Resources being put to good use
A sign of the changing times at Jaguar was the policy of delegation in developing new projects. Whereas in the past people like William Heynes or Jim Randle had personally lead the development process of a new product, Ford men Clive Ennos and Jim Padilla delegated the task of developing the X100 to former Land Rover Engineer Bob Dover, who had been with Jaguar since 1986.
On 30 November 1992 the last Series 3 Jaguar of all, an XJ12, came off the Browns Lane production line. Production had ended to make way for the next-generation of XJ12, the much delayed XJ81 (above), which was announced in February 1993.
In preparation, Jaguar had introduced a revised XJ40 bodyshell the previous year. Costing £35m and featuring 140 new or modified panels, at last the XJ40 could be fitted with the V12 engine, now enlarged to 6-litres and mated to a four-speed automatic gearbox. Jaguar had managed to build 1375 of the outgoing XJ4 based XJ12 in 1992. In 1993 they built 3,072 XJ81s in its various guises, its only full year of production.
Nick Scheele said of this period: ‘The market drop-off in the 1991-92 period was a major hit for Jaguar. Volumes dropped from 49,000 in 1988 to 20,000 in 1992 and Sterling went up against the dollar. The combination was just devastating to profits. By that stage it had become clear there were some problems with XJ40 which absolutely needed fixing.
‘We had to tackle the quality problem and had to get some costs out of the business to survive. That delayed the third programme. In hindsight, that was great because, had we tried to launch a third car line as soon as the acquisition had taken place, it could not have succeeded. Those were terrible, terrible years. We started losing money at the rate of more than $1 million a day.
‘Those were terrible, terrible days. We started losing money at the rate of more than $1 million a day’
– Nick Scheele
We were losing better than 25 to 30 per cent on turnover. We were losing our shirt. The real issue was, could we ever get the thing turned around? We had already reduced the size of the company by half. In April 1992, we approved funding for the new engine. We approved what became X300 (the revised XJ). We really bet the whole company on that sedan being a home run from day one.’
X100 development falters
Meanwhile, work on the X100 project continued. Clay models were shown to the US Dealer Council. They wanted a leather hood cover, wire wheels and a chrome window surround, but nevertheless gave the car a standing ovation.
In May 1993 Jaguar announced the new 6-litre version of the XJS, now with a four-speed automatic gearbox. During the month Joe Greenwell, Director, Communications and Public Affairs was promoted to head Jaguar Overseas sales, and he was in turn replaced by Martin Broomer.
However, the future for the X100 programme remained uncertain with another cheaper alternative being floated around. This was codenamed NPX, and was a re-skinned XJS with a budget of £70m and an annual sales target of 2000. The X100 project was then put on hold.
On 9 June 1993 several members of the Ford Board met with British Prime Minister John Major and Trade and Industry Minister Michael Heseltine. The purpose of the meeting was to discuss a possible Government grant for its proposed Jaguar expansion. It was becoming clear that no grant would mean no AJ26 V8 engine and no X100 sports car.
On 7 July 1993 a junior Trade and Industry Minister wrote to Jaguar informing them that there would be no Government grant for the X100 project as the car was going to be built anyway. As a consequence of this all funding for the X100 was frozen. During the Summer holiday of 1993, Jaguar’s assembly plant received some long overdue investment. Over a three week period in August 1993 the Browns Lane assembly plant received a £8.5m refit to replace outdated equipment. At last the ex-Standard assembly line was taken out and replaced by modern equipment.
What has never been satisfactorily explained is why Ford had to finance the replacement of Jaguar’s outdated manufacturing technology? For nine years Jaguar had been owned by the state and part of the 1975 Ryder Report’s remit had been to update British Leyland’s manufacturing capability. Why, then, after nine years of ownership by the state was Jaguar still using outdated equipment? Who decided what needed updating and where?
Did Jaguar’s management push for an upgrade of its plants, did they think modern technology would actually make a difference and, more to the point, were they even aware of how antiquated the company’s plants were? The most tangible sign of taxpayers investment was the Castle Bromwich body and paint plant, which until Jaguar had taken control of it in 1980, was responsible for poor quality bodies and even worse paint work, which had to be rectified in the condemned paint shop at Browns Lane.
In September 1993 Jaguar began running X100 running prototypes, most of which were XJS mules. Also that month it was revealed that the Ford Motor Company had re-capitalized Jaguar by investing £300 million. As a result of Jaguar’s continuing heavy losses, £180 million of inter-company debt was transformed into equity to strengthen its balance sheet.
Overseas production plans considered
The Portuguese Government had offered Jaguar a grant of between £19m and £25m if it built a car in Portugal. In the Summer of 1993 Manufacturing Director Mike Beasley had gone to Portugal to investigate the possibility of building the X100 sports car there.
On his return he recommended a plant at Azambuja, much to everybody’s horror at a meeting in October. Jaguar had now obtained from Ford £10m towards development costs of the X100 project. On 1 November 1993 Jaguar gained a crucial ally when Briton Alex Trotman became Chairman of Ford. Like Nick Scheele and Clive Ennos, his Ford career had begun in Essex, not Michigan.
In December 1993 the X100 project (above) began to move ahead. The Government granted Jaguar £9.4m plus additional training support. Wayne Booker of Ford then wrote to the Portuguese Government thanking them for their offer of a grant, but declined it. Then, on 9 December, the Ford board gave full backing for the X100 programme.
Small steps towards recovery
As the world recovered from a deep recession, Jaguar sales began to recover. The combined effects of a global recession and the negative view of the XJ40 had conspired to hit Jaguar hard. In 1993 XJ40 production had been 24,910, while 5192 XJSs had been produced.
An annual production of 30,102 cars might have delighted Sir William Lyons, but by the 1990s it simply was not enough to generate a profit, what with all the inward investment required to bring Jaguar up to scratch.
In June 1994 the last of 208,706 XJ40 saloons (above) was produced at Browns Lane. Once the great white hope of the British motor industry, the XJ40 had nearly brought Jaguar to its knees as a brand. Developed with an engineering staff of around 300, customer requirements meant that the car was to complex to be made reliable with Jaguar’s then limited resources.
With an 11 year gap between the launch of the XJ-S in 1975 and the XJ40 in 1986, few people within Jaguar had any experience of how to manage a major vehicle project and it showed.
S-Type plans begin to form
On 20 August 1994, Jim Padilla, Jaguar’s Executive Director of Engineering and Manufacturing, revealed that the forthcoming X200 small Jaguar was likely to share its principal components with the next generation of the Ford Granada.
He said that it made sense for the cars to share platforms – the modern equivalent of a chassis, with engine and gearbox – but to fit a typically Jaguar body and interior. He also confirmed that the new Jaguar – which would compete with the BMW 5 Series, would not necessarily be built in Britain.
‘We are looking at all the options. We have not even definitely decided to go ahead with the car yet,’ Jim Padilla said. He explained that, with the volume of the new car likely to be about 50,000 a year, the company could not justify a completely separate platform.
Jaguar’s Browns Lane plant in Coventry now had a new production line and better working practices which had more than doubled the factory’s productivity since 1991, while cutting the number of faults by 80 per cent. This, Jim Padilla said, had increased the plant’s chance of building the new car, though he said a decision would be made on hard commercial lines.