For me, the sale of Jaguar Land Rover by Ford will always be linked with the first inkling of the financial crisis. As rumours began in 2007 that the American carmaker was to sell the JLR marque, one of its prized assets, a contact mentioned that it would struggle to find a buyer because of the “credit crunch”. It was the first time I had heard the term.
Some months later, when India’s Tata industrial group was first touted as a possible buyer, I remember sitting in a meeting at the IMechE headquarters and hearing a range of views on the potential sale. Some engineers thought that the acquisition would be good for JLR; many did not. An Indian gentleman said that there was no reason why the British carmaker should not flourish under Indian ownership – it already had a foreign parent. To conclude otherwise said more about the attitudes of the British than Tata’s suitability to run the company, he said.
A few years on from Tata’s acquisition of Jaguar Land Rover, which finally took place in a £1.15 billion deal in March 2008, and the Indian gentleman has been vindicated. As part of a wider renaissance of the UK automotive sector, the company has done remarkably well, investing in plant and bringing in thousands of new faces to a degree thought unimaginable when the automotive sector took one of the worst hits of the recession in 2008-09.
In 2011 Jaguar Land Rover hired an additional 1,500 staff at its Halewood plant, and signed more than £2 billion of supply contracts with UK-based companies to enable production of its new Range Rover Evoque model. In September of that year, the company confirmed that it would be investing £355 million in the construction of a plant at the i54 business park near Wolverhampton to make petrol and diesel engines. Jaguar Land Rover also announced that it would be creating 1,000 jobs at its Solihull plant.
Further good news followed. In March 2012, JLR announced the creation of 1,000 jobs at Halewood, thanks to the success of the Evoque. And JLR and the Chinese carmaker Chery agreed to invest more than $2.5 billion in a new joint venture, which will include the manufacture in China of Jaguar and Land Rover vehicles and engines, the establishment of a research facility, and the creation of a new marque.
Just over a year ago, JLR announced an additional 1,700 jobs and £1.5 billion investment at Solihull. The money will be spent on designing systems to allow the chassis of future models to be made from aluminium. The first of these models will be a new mid-sized sports saloon car to be introduced in 2015.
The company has also announced plans to establish a new research and development centre. The National Automotive Innovation Campus (NAIC) will be based at the University of Warwick. Jaguar Land Rover will invest £50 million in the facility, with additional funding from Tata Motors and the university.
The NAIC will provide new research capabilities, combining the expertise nationally and internationally from industry, universities, and supply-chain companies. It is intended to provide a platform for greater involvement in EU-wide research.
Construction of the centre has begun and is scheduled to be completed in October 2016. It will enable academic and industry teams to work together in state-of-the-art buildings, with tailored equipment to create and integrate breakthrough technologies. It will address the shortage of skilled R&D staff in the automotive supply chain, creating a pipeline of people into companies.
Some £100 million will be invested in the NAIC capital building and research activities as part of a 15-year commitment between Jaguar Land Rover, the Tata Motors European Technical Centre, Warwick Manufacturing Group and the University of Warwick as well as a network of suppliers. Fifteen million pounds of the capital cost is to be provided by the government’s Higher Education Funding Council.
In January, it was reported that Jaguar Land Rover sold a record of more than 450,000 vehicles in 2013. Demand for its luxury vehicles had increased in all major markets including China, North America and Europe.
Dr David Landsman is the former diplomat who is executive director of Tata Ltd, the subsidiary that looks after the 19 Tata companies across the UK, including Jaguar Land Rover, but also Tata Steel, TCS, Tata Global Beverages – which includes Tetley Tea – Tata Chemicals, and Taj Hotels. Sitting in his office at the company’s HQ in London’s Victoria, he readily admits to a lack of knowledge about engineering. “I was the guy with a C in my physics A-level. Engineering is something I would have been lousy at,” he says.
“But I never bought into the ‘oily rag’ image. I have a lot of admiration for people who do something which I couldn’t possibly do – and I’m learning fast. I am an outsider, but I’m full of admiration for what the engineer can do.”
Jaguar Land Rover is succeeding under a relatively hands-off approach from Tata, says Landsman. “We are trusted to run the business. It is not the case that nobody picks up a piece of equipment in Halewood without getting an instruction from India. The management is empowered to manage, and engineers are empowered to design. I think it’s really important that we are operationally independent.”
Tata Steel consists of the remaining operations of Corus, formerly British Steel. The picture is not as rosy there as for JLR, Landsman admits. “It’s a very difficult sector,” he says. “There is overcapacity. Competitiveness is a challenge, not least in terms of energy prices, so there’s a lot to do. I think the answer is to focus on quality and innovation, whether it’s speciality steels for different sectors, or whether it’s low-carbon, and the things you can do around energy saving.”
Around 400 jobs were lost at the Tata steelmaking plant in Port Talbot earlier in the year. In 2012, 600 jobs went from Tata Steel sites in Wales. It still has more than 23,000 staff. Tata Steel announced last month that it is to sell its Long Products division, which employs 6,500 workers in the UK, to an industrial commodities group headquartered in Geneva.
The planned sale covers several sites including Tata Steel’s Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington, Cumbria and a rail consultancy in York, as well as other operations in France and Germany.
Landsman says: “We have made considerable investments in steel, showing our commitment to the UK at what has been a difficult time for the industry. Results have been improving. In the last quarter, profitability has improved. We are showing we can make investments pay.
“I think there is a future. But it’s not a sector where you can afford to take a break and relax. You’ve got to do a lot of work – and we are putting a lot of work into it.”
As for every other engineering business, skills are an issue for Tata. Landsman says that the problem is Europe-wide. “In terms of supply, we need to do a lot more. We are not doing enough at both graduate and apprenticeship level. We need to make sure young people at primary and secondary level are taking Stem subjects.”
Landsman spent 25 years as a diplomat in various countries around the world. His last position was as British ambassador to Greece. Before that he worked in the Balkans and Hungary, and served as ambassador to Albania. Of his move into business, he says: “I think what appealed to me was the huge range of things Tata does. It is playing an important role in the rebalancing of the British economy and representing Britain overseas. You see it as part of the renaissance of manufacturing, which is an important area for the future of our country.”
The engineering sector is served by a good research base, including high-quality universities and extensive R&D programmes, he says. Tata benefits from its close association with Warwick Manufacturing Group and the University of Warwick. The company has its European R&D centre in the town.
Landsman also thinks the government is supporting engineering effectively. “There is the sense that the next government will not rip up this government’s policies,” he says. Indeed, Labour has confirmed that it will persevere with the Aerospace Growth Partnership, Aerospace Technology Institute and other key planks of government manufacturing strategy should it win the general election next year. Landsman points out that the Catapult centres – widely viewed as a successful attempt to emulate Germany’s Fraunhofer institutes – were originally a Labour initiative.
Of coalition strategy, he says: “It is not laissez-faire and doing nothing – nor is it picking winners. The evidence in the automotive sector and in aerospace is that it’s working.” He emphasises the point: “It’s a case of industry having the skills to play the game, and government being able to support it. There has to be a focus on exploiting innovation, and making sure we don’t just have brilliant ideas in the laboratory, but take them forward into commercialisation.”
The internationalism of the company will always include Britain as a key territory. “The UK is a major geography, major market, and major base for the group,” he says. Part of the appeal is that brands such as JLR have a global kudos that lends well to the export market, Landsman points out.
He adds: “Customers see high quality, they see a strong British brand. Tata has been very keen to nurture these strong British brands, which have a great engineering tradition, with good designs, and modern vehicles that employ strong technology in a format that people want today. As a business, JLR has never achieved the global scale it has now.”
Future plans are ambitious. Tata should position itself in the top 25 brands in the world by 2025, according to Landsman. It will also “touch the lives of 25% of the world’s population” by that point, he claims, either through customers, location, or community programmes.
Landsman says that this growth will take into account different conditions in the countries where Tata has its businesses. “We do recognise there are geographical differences, and it’s important to let managers manage in a way that suits the location. The group has a strong set of values, which go back to its formation in the 19th century.
“But JLR also has strong values, and it wasn’t difficult to harmonise them.” It remains to be seen how the British marque, now regarded as the leading light of a resurgent automotive sector, performs in the coming years. But, for now, the naysayers have been proved wrong.
Offshore work in the pipeline
Tata Steel signed a global framework agreement in the summer with Subsea 7, a contractor providing engineering, construction and subsea services to the offshore industry, which will formalise a 25-year working relationship between the two global giants. This long-standing partnership, which has seen four multi-million pound North Sea contracts signed in the last 12 months alone, is cemented by the agreement.
Consisting of four separate projects, the latest contracts are worth in the region of £10 million and will see Tata Steel supply in excess of 55km of pipe weighing more than 9,000 tonnes.
As a supplier of products and services to the oil and gas industry, Tata Steel will supply around 28km of carrier pipe, more than 27km of sleeve pipe, girth welding and triple jointing and the application of glass flake epoxy pipe coating. Welding and coating will take place at the company’s offshore processing centre in Hartlepool.
Did you know…
- 250 million servings of the Tata tea brands are consumed every day around the world
- Tata Communications delivers 20% of the internet’s traffic
- The Shard contains nearly 1,000 tonnes of steel produced by Tata Steel
- Tata was responsible for bringing the first luxury hotel chain to India
- Tata has had a presence in the UK for more than 100 years
- It offers more than 125,000 training courses and qualifications for its employees
- Tata Communications supplies technology to Formula One racing
Overview of Tata in Europe
Number of companies, 19 – including:
- Tata Limited
- Tata Steel
- Tata Consultancy Services
- Diligenta
- Jaguar Land Rover
- Tata Global Beverages
- Tata Motors
- Tata Communications
- Taj Group
- Tata Chemicals
- Tata Capital
- Tata Technologies
- Tata Interactive Systems
- Tata Elxsi
- TKM Global Logistics
As well as engineering, areas of business include IT, materials, chemicals and consumer products.