Friday, December 19, 2008

Jaguar Landrover, Tata and a possible “bail out”


As a committed believer in the importance of manufacturing in the UK, and someone who has been involved for many years in the supply of steel to the auto industry, I find myself in a quandary over this.

It is being widely reported that Tata (the owners of the car group), are in talks with the British Government over financial support for the ailing car maker. Now it comes as no surprise that the group is in difficulty, every car maker in the world is in trouble at the moment. In the US, General Motors, Ford and Chrysler have been in crisis talks with the Government and Honda, Nissan and Toyota are planning extended shut downs in the coming months. My problem with Jaguar Landover is twofold. Firstly they have struggled for years now to make a profit. It is only back in June 2007 that Ford gave up all hope of making a success of the brands they had struggled with for seven years, and now just over a year after acquiring the company, Tata is looking for Government help. Am I the only one who sees the irony in a company who has portrayed itself as a saviour of UK industry going “cap in hand” to the Government for money to save the businesses. Tata is the same company that have just announced a sponsorship deal with Ferrari F1 racing!

The impact upon the auto component manufacturers in the UK of a failure at Jaguar Landrover would be devastating, and my heart tells me they must not be allowed to fail. On the other hand I have doubts about the long term viability of the entire luxury car industry post recession.

British Industry needs support, and engineering particularly so. We have been quick to “bail out” the bankers but sadly remiss in the way we have treated our industries. The UK has a history of engineering and manufacturing excellence and deserves Government support that has been lacking for many years under Conservative and Labour Governments, but I think the choices of where the support is given need to be made very wisely, and I am not totally convinced that this is the best investment of tax payer’s money. Maybe the bankers who have just received a handout from us to rescue them from their own incompetence should start to do their job and support real businesses rather than investing in non existent hedgefunds.

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