The Great Debate UK
Jaguar will make it through the recession – but in what shape?
- Professor David Bailey works at Coventry University Business School. The views expressed are his own -
The UK operations of Jaguar Land Rover lost £673.4m last year after a £640 million surplus the year before, it was revealed last week in accounts filed with Companies House. Adding in actuarial and pensions adjustments, “total recognised losses” at JLR topped almost £1.2bn last year. Not that this is much of a surprise of course. This is a “once in a century” downturn as JLR boss David Smith put it, and most car makers have posted record losses – including Toyota, for the time in its history.
JLR has announced the cessation of X-type production at Halewood at the end of this year, leaving a huge question mark over the viability of the Halewood plant. On current volumes (without the X type) it is difficult to see how JLR can keep open three UK plants.
To keep Halewood operating (which at full capacity is a very efficient plant), the LRX Range Rover concept vehicle needs the green light soon for development and production. This means accessing the EIB loan of £340 million which is already on the table from Europe.
That, of course, brings us back to the loan guarantee from the British government which is still under discussion after months of haggling. Quite why it has so long to sort this out is beyond me. The latest rumour mill suggests that the government has dropped some of its more onerous conditions like appointing the chairman, and is now prepared to offer JLR a guarantee for a £175m commercial bridging loan over six months.
However, that’s way short of what Tata was looking for, both in terms of the scale of the guarantee and the term. Just six months of guarantee seems to ignore the reality of the credit crunch facing Tata, and a guarantee covering just 50% of the EIB loan is better than nothing but well short of the 75% I was expecting.
Indeed, Tata had originally asked for loan guarantees for commercial financing of around £500m and for a £340m European Investment Bank loan to help fund investments in greener vehicles (such as the LRX, which combines lightweight materials and a hybrid engine). The EIB loan has already been forthcoming from Europe.
When is the wrong vehicle the right vehicle?
-Patrick Hennessey is the author of “The Junior Officers’ Reading Club: Killing Time and Fighting Wars.” The opinions expressed are his own.-
In the same week in which Major Sean Birchall became the 169th British service person to die in Afghanistan since the start of operations in 2001 (and perhaps more significantly, as is often unmentioned, the 164th serviceperson to die since the British moved into Helmand Province only three years ago), four families announced that they were planning to sue the Ministry of Defence over the deaths of loved ones in the lightly armoured “Snatch” Land Rover in Iraq and Afghanistan.
Major Birchall was on patrol in the Jackal, a vehicle with less protection than the Snatch but much more mobility and firepower. The 10th person to die in the vehicle it seems that similar concerns are being raised over the suitability of the Jackal as have been being voiced for some time now over the Snatch.
As someone who spent months on patrol in Iraq in the Snatch and even longer driving both on and off road around Afghanistan in the even more vulnerable WMIK (the topless Land Rover largely unchanged since the Long Range Desert Group charged around North Africa in it in the Second World War and the vehicle the Jackal was brought in to replace) the public concern over military vehicles is at once understandable, praiseworthy and a little disconcerting.
Understandable because grief is a terrible thing and grieving families will always want to try and understand why they have lost husbands, sons and brothers and praiseworthy because it is only right that societies should try and ensure that the men and women sent to fight on their behalf are equipped as well as can be, but disconcerting because the argument always seems to lose sight of certain considerations; the devil, as always, is in the detail.
Consider, for a moment, a Snatch Land Rover driving down the Strand. A few people will no doubt stop and look, some will point and a few will know what it is and wonder why it is there, but it will likely go mostly unremarked, dwarfed by the buses and (no doubt) mostly stationary in traffic.
If the exercise were repeated with a Mastiff, one of the better protected vehicles in Afghanistan, or one of the Warriors which have done such sterling work in Iraq, or even the British Army’s most heavily protected vehicle, the Challenger 2 Main Battle Tank, then traffic would grind to a standstill as people dropped their shopping and either ran or stared.
With reference to Mr North’s comments about a better comparison being between the Snatch and RG-32, I would point out that the British Army has Snatch vehicles and Mastiffs – but not the RG-32. It does have the Panther – being phased in after a lengthy and expensive upgrade to fix some major problems. That might have been a better comparison – but the Panther would not have been around in Hennessy’s time.
As far as the notion that no-one in the Army understands that “Protection and operational efficiency, therefore, are not mutually exclusive – “, I would say that this is a very clearly understood issue which has taken up a lot of thought over the last few decades. However, Mr North should be aware that vehicle designers are no longer under the direct control of the military customer and more and more equipment is effectively bought off the shelf and then modified as required.
Furthermore, increasingly onerous demands are being placed upon vehicles in terms of operational performance levels and these make it harder to create a well protected vehicle that also makes for a good “hearts and minds” street patrol unit.
I speak from some experience as I am the designer of the the Cougar, the base vehicle for the Mastiff, a vehicle which Mr North has praised n a number of occasions.
What a shame on the government! we have a small chance to retain a manufacturing/engineering division in the UK and we get no support from our own government whereas the banks got all the support they wanted £60bn of it plus a treat at wimbledon on our expense. Its a pitty at the mentality of some poeple, namely Peter mandelson, his department and the government!! Its not nice playing the threatening game by shutting down plants to get the government moving but if Sweden, US and Germany supported their car businesses then i can’t see why the UK goverment cannot support the manufacturers. Its a disgrace, shame on you Mandelson!