Saturday, April 11, 2009
JLR workers keep their fingers crossed
S Kalyana Ramanathan / London April 12, 2009
The Rs 2,500 crore infusion by the European Investment Bank may not be enough.
The mood inside the Tata-owned Jaguar Land Rover (JLR) continues to remain sombre despite the European Investment Bank (EIB) last week approving £340 million (Rs 2,500 crore) to support the company’s development of greener cars. This is understandable considering the company is constantly knocking at the doors of the UK government for money to run its business and not just for investing in cutting-edge technology.
Since the Tata Group took over the two iconic brands in March 2008 from Ford, it has reportedly pumped in several million pounds. But the company needs more. In short, the financial support from EIB will not help the car maker to manage its show and make sure 14,500 workers continue to remain employed.
Industry observers believe that saving JLR is crucial not just for these workers but also for the UK automotive industry as well as the UK government. David Bailey, Birmingham Business School professor and Chair of the Regional Studies Association, said: “JLR (at £400 million) invests half of all the R&D investments in the UK auto industry; now there is another £800 million it plans to invest in green technology. Apart from the 14,500 people in the company, 60,000 work for the suppliers. The company contributes £1.3 billion (to the government coffers) as value-added tax, national insurance and other taxes. It makes a lot of sense (to save the company).”
Despite the uncertainty that lingers, the 2,000 workers at Jaguar’s mother plant in Castle Bromwich can be seen going about their work at this 112-acre plant that dates back to World War II. This plant mass-produced the Spitfire and Avro Lancaster aircraft which contributed to the success of the allies.
Adrian Prentice, a veteran worker at Castle Bromwich, said he was glad that EIB has agreed to provide the money. For a man who has spent a little over three and a half decades in the company, the current gloomy situation does not bother him. He was confident JLR will soon see better days. “During my days here we must have collapsed some five or six times. But we have managed,” he said, waving at the all-aluminum Jaguar skeletons that are getting ready to be finished and shipped all over the world.
Bailey on the other hand said the situation is far from a mere blip in the otherwise smooth growth graph. “This is the worst I have seen in the auto industry, extremely serious.” But, unlike the troubled General Motors, he added, JLR was a well-managed company. Till the recession caught the world in its deadly grip, it did make an operating surplus. “Without the (UK) government’s help, JLR will not be able to access money and faces being damaged,” he said.
The situation in Birmingham did not completely reflect the economic situation in the UK or its auto industry. It is still a city getting ready for Easter Holidays. Business in fuel stations and department stores is normal. A manager at Tyburn House, one of the oldest liquor-cum-restaurants in region, said sales have slipped in the last few months. He thinks this may have something to do with temporary workers (called agency workers) in JLR losing their jobs in the recent months.
Meanwhile, workers in JLR like the rest of their counterparts across UK were seen putting their economic worries to a temporary rest and get ready to enjoy the long Easter holiday. After all it will be business as usual from Wednesday and there will be plenty of time to fret about the future.