The car that saved JLR Company - Coursework Example

Case study Analysis: The car that saved JLR Contents Introduction and Company Background 3 Analysis 3 Power and politics 3 Strategic Human resource Management 6 Culture in Organisation 9 Conclusion 11 Reference List 12 Appendix 14 Introduction and Company Background JLR is a private limited company and a subsidiary of Tata Motors. Principal activities include design, manufacturing as well as development and sales of Jaguar, Range Rover and Land Rover brands. The company employs around 26,000 workers and employees and is headquartered in Whitely, United Kingdom (Jaguar Land Rover, 2014b). Ralf Speth is the current CEO of JLR. The company has been investing heavily on research and development with the objective of delivering advanced and driver friendly automobiles (Jaguar Land Rover, 2014a). Jaguar Land Rover (JLR) falls in the automobile sector. At present, the automobile sector is characterized by intense competition, economic downturn, negative customer segments and factory unions. The automobile market is filled with brands of all sizes and customer base is vast ranging from middle income to luxury segments. Although overall automobile industry is undergoing a downturn since economic depression in 2008, car brands such as, JLR, have been able to maintain steady profits (Reed, 2012). Running above capacity and over-production is a rarity in the automobile business, especially in developed countries such as, Britain, where manufacturing costs are high. However, JLR has been able to maintain positive sentiments among factory workers and unions. Few of the closest competitors of JLR include Audi and BMW, both with higher production capacity than JLR. The objective of the current paper is to analyze the car brand from three chosen perspectives. The chosen perspectives are power and politics, strategic human resource management and organizational culture. These perspectives have been identified in the study and their influence on success or failure of the car brand has been discussed. Analysis Power and politics The concept of power encompasses processes, dispositions and mechanisms trying to ensure that individuals fully act and comply with rules in an organization. The most important perspective of exercising power is to avoid uncertainty in organizations. Even so, organizations are considered as political structures providing opportunities for individuals such as, career development and platforms for expressing individual motives and interests. These career development paths, especially at high professional and managerial levels, rely upon power accumulation (Morgan, 2006). Few influential power sources in an organization include expertise, information, prestige and stature, credibility, money control and uncertainty, access to top-level managers and control of money, sanctions, and rewards. Similarly, politics is the process of mobilizing power. Politics occur when organizational members behave in an authoritative and illegitimate manner (Fleming and Spicer, 2007). According to Hardy and Leiba-o’ Sullivan (1998), power in the current business environment is more related to that embedded within systems and relationships. This embodiment of politics and power has been applied in the management of JLR. The acquisition of Jaguar and Land Rover by Tata took almost a year, after it was approved by unions and management of Ford, who was JLR’s previous owner. Tata put its stake in the ailing company, while every other automobile manufacturer retreated, thereby increasing faith among JLR’s unions and management as well as shifting power from unions to the owner. Similarly, this power was used by Tata while compromising on salary and working hours at the manufacturing facilities, in return of huge production investment and continuity of manufacturing plants. Often, manoeuvring and political behaviour within a firm is caused due to uncertainty such as, inadequately defined decisions, change, internal competition and unclear objectives (Clegg, Kornberger and Pitsis, 2005). JLR faced similar uncertainties while it was being acquired by Tata. However, in order to establish harmony among leaders and union members, upper management decided to give power to the unions, instead of managers. Employees and unions working with JLR were left to decide the brand, which will be finalized as the acquiring company. Hence, by establishing a smooth political climate and transforming negative politics into positive one, Tata has successfully acquired JLR. The Emic model of power and diversity explains importance and influence of intersectaionality. JLR’s management and union members were concerned because of the huge difference between Ford and Tata’s work culture, diversity and management. Figure 1: The Emic model of power and diversity (Source: Tatli and Özbilgin, 2012) Here, major power holders were the parties involved in acquisition, which are Tata group and Ford group. While major resources and competencies of Tata included capital, human resource competencies, design and technological competencies, infrastructure, brand value and market reach, Ford’s competencies encompassed its two high valued brands and potential luxury market segment. Simultaneously, various common attributes were found among the two companies. Both companies had a dedicated group of employees and unions who were willing to compromise on working hours and pay for better manufacturing and production outcome. Also, Jaguar is able to cope up with close competitors such as, BMW and Audi, by increasing its capacity and production volume (Reed, 2012). In order to ensure employee sentiments and enhance their motivation level, JLR has been recruiting actively. Even though the company has lowered its entry package, it is still decent and competitive in the automobile industry. Every new job opportunity at JLR creates four new jobs at the supplier level. As a result, automobile industry is heavily backed by the government giving authority and power. These institutional privileges have helped JLR in setting up its market in United Kingdom without any hassle. The acquisition of JLR helped in enhancing overall design and technological aspects of the manufacturing and production processes, enhancing quality and services of newly manufactured vehicles. This also improved overall quality of cars manufactured by other car brands across the globe (Reed, 2012). Though Tata is recognized as a collaborative and people oriented organization, it is not shielded from power and politic. Nevertheless, the upper management made sure that power was utilized in a positive manner. Embodiment of politics and power can occur only when an organization welcomes diversity, in terms of experience, technical competencies, educational background and gender equality (Knights and Tullberg, 2012). Strategic Human resource Management The model of human resource management assumes that human resource provides competitive advantage. It also believes that employee commitment is more influential in providing organizational competitiveness compared to employee compliance (Clegg, Kornberger and Pitsis, 2005). Strategic human resource management is a process where HR decisions influence organizational strategy. Here involvement of top management and integration of HR policies with the business strategy is necessary (Linstead, Fulop and Lilley, 2004). So, strategic HRM needs both vertical and horizontal integration. For example, acquisition of JLR by Tata was a strategic business decision involving human resource intersection. Consequently, Tata group operated though a streamlined and smooth acquisition process, taking consent from management and unions of the acquired company (Reed, 2012). Vertical integration ensured alignment of business with HR policies. For enhancing the vertical integration process, Tata is attempting to build several new manufacturing facilities. For instance, the company opened a new JLR assembly plant in Saudi Arabia with the objective of faster assembly as well as delivery to the Asian peninsula (Schwartz and Davis,1981). Alignment of strategic HRM with corporate and business strategy Corporate strategy Business Policies HR policies (Source: Author’s Creation) Even so, vertical integration alone cannot secure successful business integration. A thorough horizontal integration is also necessary for successful business transformation. Alignment of HR Policies Resourcing Reward Training Performance Employee Communication Learning and Management Relations and Development Involvement In order to achieve competitive advantage, JLR increased capacity and production by adding almost 4500 jobs in the factory (Zaleznik, 1970; Reed, 2012). Even though the factory has night shifts, JLR makes sure that workers are not drained and exhausted and the strategic HR policies ensure that every worker can avail sufficient leaves and holidays. Horizontal policies of JLR are integrated in the employee and worker’s reward system (Alvesson, 2011). The international HRM policies of JLR also include a geocentric approach, where business decisions are taken by individuals other than host or parent country. The CEO, Ralf Speth, is a German and is in full charge of the decision making process at JLR (Reed, 2012). Hence, by establishing decentralization in the decision making process, JLR has successfully established best practices. For instance, the company’s employee power was used for just-in-time strategy. Every time a car leaves paint factory, a broadcast signal is forwarded and employees start collecting parts from proper channels and in right sequence. This just-in-time inventory process is now followed and implemented by many competitors in the automobile industry (Tata, 2013). Nonetheless, a major issue while implementing best practices is evaluating the best fit between the organisation’s core values and feasibility of strategies and policies established. For instance, although JLR has been successfully operating in Asia and UK, high tariffs and import taxes in China are taking away huge chunks of its profits. In a remedial measure, JLR has approached another horizontal integration by establishing assembly plants in China itself. This issue of best fit has been termed as Black Box. According to Boxall and Purcell (1993), effectiveness and efficiency of HR strategy depends on quality of integration between the broader environment and specific organisational contexts. The same theory was applied by JLR, which integrated its HR policies to the competitive strategy adopted. This was evident from over-production, continuous work at factories and night shifts that are rare and uncommon in current day manufacturing sites (Griffin, 2013). Figure 2: Black Box and Role of Manager (Source: Want, 2003) According to the above black box, role of manager is absolutely necessary. Line managers form a bridge between employees and HR managers and are involved in front line management. Few of the employees at JLR, such as, Steve Cooper, are almost 53 years and have been involved in formal and informal coaching of the new trainees (Reed, 2012). Culture in Organisation Culture has been defined as the patterns of expectations and beliefs shared by members of a particular organisation or community (Schwarz and Davis, 1981). Culture is of continuous relevance because of globalisation, employee value alignments and cultural manipulations during mergers and acquisitions. According to Fincham and Rhodes (2005), culture is holistic and an organisation’s essence or reality. Schein’s Three Levels of Culture is an apt example of culture and its influence on an organisation’s strategy. Basic assumptions are generally pre-conscious, invisible and taken for granted. Ideologies and values in individuals provide greater awareness level. Creations and artefacts include technology, art and language, which are visible; but not deciphered often (Schein, 1985). Figure 3: The Schein’s model of culture (Source: Sackman and Stiftung, 2003; Velayutham and Perera, 1996) Jaguar adopted the Schein’s model of culture by establishing official cultures. This included recruiting people fitting with the culture and removing those who are not. JLR also introduced extensive training and development facilities for the new recruits, even during times of recessions. The objective was to establish non-monetary motivation factors among employees and subsequently, increase production (Tata, 2013; Velayutham and Perera, 1996). For instance, the induction process at JLR manufacturing facilities are conducted by senior managers and employees who are best acquainted with the work environment, culture and values of the organisation. The acquisition of JLR by Tata has been deemed as culturally successful. Tata followed a diverse integrated cultural approach, which implies that the objective was to respect the current culture as opposed to imposing a different or foreign culture (Reed, 2012). The existing structure of management was also kept intact and no Indian managers were introduced. Apart from that, Tata group has been constantly working with JLR managers and challenging them with new job responsibilities (Kwintessential, 2013). Hence, a collaborative culture was established ensuring alignment of existing practices and policies as well as organisational goals. JLR has effectively developed a cultural or symbolic management control. Regular communication with workers and employees helps to keep employee representatives and managers updated regarding business and corporate changes. Constant feedback is another strategy through which JLR has been able to enhance relationship with the employees (Reed, 2012). This in turn helps the company to understand various rituals and myths influencing workers and employees. In order to induce further diversity within the organisation, JLR started to recruit more women in its manufacturing sites. This particular move helped in enhancing overall value of the brand (Tata, 2013). The manner in which individuals behave and react towards different cultures is influenced by their cultural view. This view can be essential as well as non-essential. JLR has adhered to the essential view of culture by defining clear roles and responsibilities for employees and workers. Non-essential view defines the complex and changing nature of culture and relationships. JLR’s organisational culture is inwardly focussed. Managers and company representatives work closely with the JLR’s partners, colleagues, suppliers and customers on a global basis and especially in emerging markets. By increasing bonuses, benefits and salaries, the company shares its success and profits. In addition, JLR heavily invested in hiring and recruitment processes especially during the recession, establishing a basic assumption among employees and potential candidates that the company is planning for long-term growth and development (Holliday, Martin and Kullman, 2004). Conclusion The above analysis revealed factors that helped in successful acquisition and subsequent growth and development of JLR. The three major factors, which were studied with respect to the case study, are power and politics, strategic human resource management and culture within the organisation. JLR promotes a positive culture that values respect, fairness and integrity within organisation. Positive use of power and politics channelled energy and interest of individuals towards organisational objective fulfilment. By encouraging workers and employees to put forward their ideas and interest, JLR was able to infuse a sense of commitment and in turn enhance overall organisational productivity. Strategic human resource management helped in integrating individual fulfilment and career aspirations with organisational goals, besides resolving conflicts in a positive manner. Reference List Alvesson, M., 2011. The Sage Handbook of Leadership. London: Sage. 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[online] Available at: https://kubon-sagner.e-bookshelf.de/products/reading-epub/page/14/product-id/92794/title/Success%2BFactor%253A%2BCorporate%2BCulture.html?firm=%22BERTELSMANN+STIFTUNG%22 [Accessed 8 May 2014]. Schein, E.H., 1985. Organisational Culture and Leadership. San Francisco: Jossey-Bass. Schwartz, H., and Davis, S., 1981. Matching corporate culture and business strategy. Organizational Dynamics, 10(3), pp. 30-48 Tata, 2013. Developing our people for growth is the key at JLR. [online] Available at: http://www.europe.tata.com/Section/Article/Developing-our-people-for-growth-is-the-key-at-JLR?sectid=eLiVfqUiZks%3D> [Accessed 8 May 2014]. Tatli, A. and Özbilgin, M. F., 2012. An Emic Approach to Intersectional Study of Diversity at Work: A Bourdieuan Framing. International Journal of Management Reviews, 14(2), pp. 180-200 Velayutham, S. and Perera, M.H.B., 1996. The influence of underlying metaphysical notions on our interpretation of accounting. Accounting, Auditing & Accountability Journal, 9(4), pp. 65 – 85. Want, J., 2003. When worlds collide: culture clash: Corporate culture. Journal of Business Strategy, 24(4), pp.14 – 21. Zaleznik, A., 1970. Power and Politics in Organizational Life. [online] Available at :< http://hbr.org/1970/05/power-and-politics-in-organizational-life/ar/1> [Accessed 8 May 2014]. Appendix The car that saved JLR By John Reed Jaguar Land Rover’s factory in Merseyside is open 24 hours a day and produces a car every 77 seconds, evidence that British carmakers are on a recession-defying roll ©Michael Bodiam Full throttle: Range Rover Evoque shells line up at the JLR plant in Halewood, Merseyside On the assembly line at Jaguar Land Rover’s cavernous factory in Halewood, Merseyside, a young green-uniformed worker takes a long, clear plastic strip to which the chrome letters “Range Rover” are affixed. He presses these on to the bonnet of an Evoque, Land Rover’s compact sport utility vehicle, then carefully pulls the strip away. Nearby, another worker is securing a rear-view mirror on to the inside of a windscreen. “All fiddly jobs,” Sarah Livingston says of her new job in a Scouse lilt. “I didn’t think I’d like it because it’s so manual, but I do enjoy it ... It’s always busy because the line’s always moving.” Livingston, who is 21 and left school at 15, joined the carmaker in July after seeing a newspaper advertisement. She is one of 1,000 new recruits JLR hired to keep up with demand for the Evoque, which it began building 24 hours a day at Halewood last month. In a regional unemployment “black spot” still recovering from the decline of the Liverpool shipyards and Lancashire coal mines, JLR had 30,000 applicants for the jobs. The Evoque is a downsized, tarted-up reimagining of the SUV for the 21st century, worlds away from the first boxy, agrarian Land Rovers made by Rover, as it was then, from 1948. JLR designed the car with the aim of attracting more female, foreign and other new buyers to the brand, who now account for 80 per cent of its customers. • • • • More IN FT MAGAZINE • The Inventory – Sanjeev Bhaskar • Louise Sacco • Oh, the injustice of it all… • How open should we be? The Evoque has hit a sweet spot on the automotive Venn diagram, where London’s yummy mummies meet China’s new rich; JLR has sold more than 93,000 of the SUVs – a generous number for any luxury model – since launching last year. The car’s status as a global hit is confirmed by the “build shippers”, bar-coded slips of paper taped to the metal carrier that pulls cars down the line. Each lists the destination: there are Evoques headed to China, the US, Italy, Australia and Hong Kong. The Halewood plant, Europe’s largest under one roof when it was built by JLR’s former owner, Ford Motor, in 1962, is making Evoques, along with Land Rover’s older Freelander, at the rate of one every 77 seconds. With last month’s move to 24-hour production, Halewood begins its working week at 5am on Mondays, and carries on until 12:30am on Saturdays. Over the past two years, the factory has trebled its staff to 4,500 to keep up with the insatiable global demand. Halewood has not worked night shifts since the 1990s, the heyday of Ford’s Escort, and even then it did not work around the clock. “At the moment, we are maxed out in terms of our capacity,” says Richard Else, the plant’s operations director, as he leads me around, taking care to avoid the small electric vehicles that zip across the floor ferrying parts. “Based on what we have on at the moment, we are above capacity.” • The body shop at Jaguars XJ Factory, Castle Bromwich Business Centre • A Jaguar XJ arrives into the final inspection line before the bodywork is painted • XJs are lined up for a bodywork inspection • Two workers inspect an XJ • Worker Anthony Lee inspects the bonnet of an XJ • A hinge to body air tool • The "Trim & Final" section of the factory at Castle Bromwich • XJ doors await assembly • Completed dashboards at the end of the build line await collection • The engine dress line • The Body & Side build section, with robot • The Seat Adjust station for Jaguar Land Rover at Johnsons Controls, Halewood, Liverpool • The rear seat back assembly line at Halewood • A finished Range Rover Evoque in the inspection area • The shell of a Range Rover Evoque in the skills training area for theTrim & Final section of the plant • 21-year-old Sarah Livingstone stands by a shell of a Range Rover Evoque in the skills training area • The body plant door storage area at Halewood In automotive terms, this is a small miracle. Most of Europe’s car plants right now are cutting shifts or working days because of a slowdown in demand. Three-shift, 24-hour production is a rarity in this part of the world, apart from at a few successful companies such as Germany’s premium car giant BMW or South Korea’s fast-growing Hyundai and Kia brands. Less fortunate producers, including PSA Peugeot Citroën, Ford and Fiat, are considering closing plants on the Continent. . . . But Britain’s carmakers are on a recession-defying, expansionary roll. The industry is benefiting from popular models such as the Evoque, the efficient factories that make them, and the reserves of British engineering, design and shop-floor talent that survived the industry’s long decline from its early-1970s peak. Elsewhere, Nissan – whose efficient Sunderland plant, now Britain’s largest, also works around the clock – is creating about 3,000 jobs, including at suppliers, to build two new models. BMW, Honda, Toyota and General Motors have all recently announced they are adding jobs, building new products or investing more in their UK operations. Over the past year and a half, carmakers have committed £5.5bn to projects in the UK, according to government figures. JLR itself is in the midst of a five-year, £7.5bn investment programme approved by its owner, Indian carmaker Tata Motors, in 2010. It has hired 8,000 people at its three UK plants over the past two years. It is investing £370m in its Solihull factory, which already works 24 hours, to make the all-new Range Rover, favoured by royals and – increasingly – the world’s new rich navigating the potholed roads of Moscow, Rio de Janiero and Mumbai. The car is the first to have been developed entirely under Tata’s ownership, along with the F-Type, the two-seat roadster unveiled by its sister brand Jaguar at the Paris auto show this week. ©Michael Bodiam Driving ahead: A Range Rover Evoque waits for an outer body inspection at Halewood Tata bought Jaguar and Land Rover just as the car industry was heading into a deep crisis in 2008, paying Ford $2.3bn when no other top-drawer carmaker wanted them. JLR was then part of Ford’s Premier Automotive Group, the US carmaker’s luxury brands division that also owned Aston Martin and Volvo. Ford was not a negligent owner – ploughing some $10bn into the two brands – but failed to get the vehicles or fundamentals quite right. Land Rover struggled with quality problems; Jaguar had few diesel models. By 2007, the US carmaker, heading for a record financial loss, decided to sell its overseas brands to focus on its faltering US business. Its bankers tried to interest established carmakers such as BMW in buying JLR, but none bid. In the four years since, it has defied sceptics. “Tata came in at an opportune moment and got JLR at a good price,” says David Bailey, a professor of business and economics at Coventry University. “They were in the right place at the right time, but equally they were willing to take a punt at a time when no one else would have.” As corporate turnround stories go, this a very post-colonial one, with a script that could have been written by Danny Boyle: an ageing dowager of an SUV brand (Land Rover) and an older gentleman who makes executive limousines (Jaguar), wards of a penurious American uncle (Ford), are given a new lease on life by an Indian benefactor (Tata) who revives them with a £7.5bn investment. JLR and its carmaking peers are now a splash of colour and life on a sombre British industrial landscape. Amid anxiety over an economy too skewed toward services such as banking and real estate, Britain’s carmakers are adding good-quality manufacturing and engineering jobs that multiply into many more down the line. The industry, a symbol of decline in recent years, is on track to break its previous production record of 1.92m cars by 2015. Little wonder that car plants have become a favoured evening-news backdrop for coalition politicians. ©Michael Bodiam Sam Garritty works on the leather seats at Johnson Controls, a JLR supplier JLR’s better state of health also creates new jobs at supplier companies that serve it. Hard by the Halewood plant is Johnson Controls, a US auto supply company that makes seats for Freelanders and Evoques. The plant, which employs 373 people, builds each seat on a just-in-time basis to keep inventory down. Every time a car leaves JLR’s paint plant, the factory receives a broadcast signal and its staff collect parts in proper sequence from a “supermarket area”. “Because of the success of the Evoque, we have been working a lot of overtime,” says Andy Wallis, the plant’s manager. The factory, mirroring Halewood, has recruited 90 people, and moved to three shifts. Johnson Controls has its own network of plants, getting foam from Wednesbury, near Birmingham, and metals from Birmingham and Coventry. “It’s positive news because it’s more jobs,” Alan Johnson, a senior shop steward, says of the move to night work. “On a personal level it changes things – but you only do one night in three.” In the car industry, a rule of thumb is that for every job created at an automobile plant, at least four more are added at suppliers. This multiplier effect is the reason why politicians fight fiercely to protect car jobs. When GM was considering closing its nearby Merseyside plant earlier this year, business secretary Vince Cable flew to New York to plead its case with management. In the end, GM spared the factory after workers agreed to shoulder sacrifices on pay and hours – the kind of compromises that have kept JLR in business too. DHL, which handles logistics for the three plants, is also profiting from JLR’s expansion and has added close to 5,000 jobs, 1,300 of them in Halewood. (Elsewhere in the UK, DHL is adding jobs for work at Bentley, another UK carmaker reporting record sales.) “The brands are bulletproof, and they are adding new products; the Range Rover will be fantastic as well,” says Stewart Robertson, a DHL executive. “They are on this journey; who knows where it will end?” . . . Ratan Tata, the Indian group’s soft-spoken, cerebral chairman is a petrolhead, with a small collection of cars that includes a Ferrari and a Range Rover. Some of his relatives had owned classic Jaguars in the 1960s. “Ratan was fascinated by the brands themselves,” says an executive who has worked with Mr Tata. The Indian group was no newcomer to the UK: Tata already owned two venerable British businesses, Tetley Tea and Corus steel. During due diligence, Mr Tata and Ravi Kant, now Tata Motors’ vice-chairman, were given a look into Ford’s product pipeline and liked what they saw, including early work on the Evoque. ©Michael Bodiam The XJ door line at Halewood JLR’s workers were nervous about the prospect of a new owner and Ford asked Tata to present to the unions, alongside the other two bidders – Mahindra & Mahindra, another Indian carmaker, and One Equity Partners, a private equity group fronted by Jac Nasser, a former Ford CEO. “Tata you could tell was buying the business for the long term,” says Kenny Smith, Unite’s plant convener at Halewood. Workers endorsed the bid, and Ford closed the deal with the group in June 2008. Almost as soon as the ink was dry, demand for SUVs evaporated because of higher petrol prices and the fallout from the US subprime crisis. On the weekend Lehman Brothers collapsed that September, JLR had US customers cancelling orders; within weeks, some of its overseas markets were down by half. By early 2009, JLR had let 3,500 workers go on a voluntary basis, and the company’s production was at a crawl. At Halewood, workers were engaging in busy work, such as maintaining robots and repainting stripes on the factory floor. A low point came that October, when JLR said it would have to close one of its two west Midlands plants. Solihull and Castle Bromwich are just eight miles apart, but then operated separate overheads, and workers did not move between them. Tata was hinting that it might move more of its production to low-cost India. ©Michael Bodiam Building rear axles at JLR’s plant in Castle Bromwich, west Midlands JLR – and Halewood particularly – had a tradition of union militancy that stretched back to the many wildcat strikes that plagued Ford. The unions were initially defiant, vetoing the conditions management was seeking to keep the plants open: a closing of the final pension scheme and a cut in starting pay. The impasse lasted for several months before a compromise emerged, when JLR dangled an ambitious product plan before the unions. This would allow the carmaker to grow into its outsize UK manufacturing footprint: £7.5bn invested in new cars, engines and variants over five years. In exchange, unions agreed to let workers move between the two west Midlands plants. They also signed off on a novel pay structure under which new hires join as temporary workers for a year at 80 per cent of normal pay, then as staff at 90 per cent pay after a year. “There were some very brave, far-sighted leaders at the plant level who were able to say, ‘Confrontation hasn’t worked in the past – let’s try a new approach,’” says Des Thurlby, JLR’s head of human resources. The compromise allowed JLR to factor lower manufacturing costs into its business plan and also rejuvenated the company’s workforce. Today, half of the workers at Halewood are aged 25 or under. Steve Cooper, 53, who is old enough to have helped build Escorts, works alongside newcomers such as Patrick MacMullan, 24, who joined in January last year, initially as a temporary worker. “I’ll be honest with you – I didn’t want them coming on at a lower wage,” says Cooper. “But we accepted it, to give the likes of Patrick a chance.” MacMullan, who graduated from a four-year apprenticeship straight into the recession, is grateful to have a job. “I’m 24, and I’m making a very reasonable living,” he says. New workers starting at JLR make about £26,000 – a good entry-level salary in the car industry – even at the initial lower rate. Management at JLR, as at other carmakers, likes to have temporary staff as a buffer to smooth out volatility in demand. Halewood now has a “Celtic, Liverpool-like community” spirit, says Thurlby. “With our success comes enormous buzz and pride.” But narratives in the business world are rarely one-way – least of all in the competitive car industry, which is subject to external shocks and the changing whims of consumer taste. JLR could still be tripped up by a number of future threats, ranging from a consumer backlash against SUVs to the economic slowdown in India. Tata warned investors of some of these in the “risk factors” of a New York regulatory filing released with its second-quarter earnings. ©Michael Bodiam Ralf Speth, CEO of Jaguar Land Rover Ralf Speth, the German CEO, invites me into his office at JLR’s engineering centre near Coventry. The facility is expanding and recently built a three-level office block to work on engine development, due to serve a brand-new engine plant JLR is building near Wolverhampton. Speth points out the glass office opposite his own, where JLR’s Indian owners sit when they visit the UK. By Speth’s account, Mr Tata can rattle off details of a car’s engine, displacement or torque running back to the 1950s. “He is a library in cars in general, but also in technical solutions,” he says. While Mr Tata takes an active interest in Jaguar’s cars, he leaves running the business to Speth, who works with Kant. The Indians can afford to leave JLR to its own devices: the business now generates £1.5bn cash a year, the same amount Tata paid to buy it. JLR has repaid the £1bn plus Tata lent it to survive the crisis, and now finances itself. JLR is having a good year, with record sales and good reviews for the new Range Rover and Jaguar F-Type. However, it has formidable competitors. In a business where the biggest producers have the greatest competitive advantage, JLR sells about 400,000 vehicles a year – a fraction of the 1.7m sold by BMW, the industry’s largest premium producer, or the 1.3m sold by Volkswagen’s Audi. Jaguar on its own sells fewer than 100,000. “VW has a higher profit than we have turnover,” Speth acknowledges. “They have really deep pockets.” However, he adds: “For a company of our size we have a solid situation … we are proportionally overinvesting.” JLR has also been a latecomer to overseas manufacturing in the emerging countries that now provide most of the car industry’s biggest growth. China is one of Land Rover’s biggest markets, but it pays steep tariffs to get its cars in. The company is remedying this: it is close to finalising a plan to build its first factory there. JLR is also considering assembling Freelanders from kits in Brazil, as it does in India. This, in turn, is making unions anxious, potentially causing threats to JLR’s competitiveness. Tony Woodley, Unite’s executive officer says he is “delighted” that JLR is adding thousands of jobs in a recession. However, he adds: “We want plant and job security for Britain.” As this story went to press, the union was pushing management to guarantee the safety of its UK plants into the 2020s, and to end the two-tier wage structure that prevails on the factory floor. ©Michael Bodiam Alysson Cresshell in the paint select area, Halewood Speth declines to comment on the talks, but offers this assurance: “We will be investing heavily in infrastructure and people in the near future; it’s quite clear that we will continue,” he says. “We have a clear commitment to the UK we want to keep.” Back at Halewood, workers assume the expansion will continue. Most think the future will be bright. On the line, word is that the factory might be making a soft-top version of the Evoque. “We know this car is hot at the moment [but] if there are any more cars in the model mix, we want them here,” says Smith, the union convener. “We want this place really buzzing.” John Reed is the FT’s motor industry correspondent ....................................................................... From Mumbai to Merseyside Ravi Kant remembers only too well the risks his company took by picking up JLR in 2008, writes James Crabtree. “There were many naysayers,” recalls Tata Motor’s vice-chairman, who leads the parent company in Mumbai and is a longtime lieutenant of the conglomerate’s outgoing head, Ratan Tata. “There were many who said that Tata Motors would not be capable of handling such premium brands, and that it would sink Tata Motors along with it.” These doubters have changed their tune, as a gambit that at first threw the $83bn conglomerate into crisis has since appeared inspired. Nonetheless, all is far from clear on JLR’s road ahead. The first problem lies at the heart of Tata Motors. The company is a curious two-headed beast, awkwardly combining a prestigious European brand with a mass-market Indian car and truck-maker. The mixture makes little strategic sense, with the ailing domestic division providing a dismal contrast to JLR’s international success. “Tata Motors has lost its way,” says one industrialist close to Mr Tata. “Ratan has been trying to resurrect the whole thing, but unless you have people within the organisation who can do this, it is difficult.” The two divisions are run separately, but some feel the struggles of the Indian arm will provide a distraction at board level. Both halves of the business also need major investments, as Tata tries to turn round its fortunes in India, and JLR attempts to repeat Land Rover’s performance with its Jaguar brand. But while the conglomerate has deeper pockets than most Indian businesses, they have their limits too – raising rumours they will float their British prized asset. It is at the top, however, that JLR’s future is least clear. In December, Tata begins arguably its most significant ever change of leadership, as Mr Tata hands over the keys to 44-year-old Cyrus Mistry, previously a director of the Tata, the first time in more than a century that the group will not be headed by a Tata family member. Mr Tata’s deep knowledge of cars is often cited as crucial in the company’s growth. But while early profiles of his successor mentioned his love for cars, the incoming head remains something of an unknown quantity. Tata-watchers speak warmly of Mistry’s abilities, but many also seem to take solace in the fact that Mr Tata may not drive off into the sunset just yet. “His views have been very productive and important,” Kant says, “We would very much like him to continue to be associated.” James Crabtree is the FT’s Mumbai correspondent Read More