Fixing the Jag
It's pretty clear that taxpayers are about to provide financial support to Jaguar Land Rover.
That seemed to me to be the subtext of the mildly opaque statements on this given to me today by Peter Mandelson, the business secretary, in an interview.
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The car manufacturers' problem is a looming crunch on debt that needs to be refinanced.
It has told Mandelson that it can't secure the finance from the private sector in the normal way. So it's asked the government - or us as taxpayers - to fill the gap.
My strong sense is that Mandelson has no doubt that Jaguar Land Rover - which employs 15,000 here - should be saved.
A good chunk of its business - though not all of it - was viable before the economy started to contract fast and car sales dropped like a stone.
And Jaguar Land Rover is responsible for a disproportionate amount of precious UK-based research and development in the automotive sector.
The main outstanding question over whether it should be propped up by us is whether its owner, Tata of India, really does lack the ability to obtain the finance elsewhere.
Tata is a huge group, with a dizzying mixture of interests all over the world. It is under financial pressure, but it remains a formidable business force.
It would plainly be wrong for taxpayers to lend to Jaguar Land Rover or to underwrite lending to the group if there were other sources of finance available, but these were somehow seen by Tata as too pricey.
British taxpayers must be the lenders of last resort - not a cheap source of funds in a world where the cost of capital has risen.
It's all very well for Peter Mandelson to insist that he would only save businesses that are of strategic importance to our economy and would be sound in a world where credit was flowing freely.
Jaguar Land Rover would tick those boxes.
But he also needs to be mindful - in advertising to the world that he dare not let too much of our relatively small manufacturing sector disappear in a recession that seems particularly horrible - that he doesn't become the lender of first resort to canny mutinationals.
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Tata can sponsor Ferrari in Formula 1 but cannot stump up for two of its own subsidiaries?
And they get rewarded for this by getting a government hand out?
Something is very very wrong with this.
One step futher towards bankruptcy.
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Correct me if I am wrong but wasn't government policy to remove Gas guzzlers from Britains roads by imposing massive tax disincentives to owning one. This collapse of Jaguar should surely be a good thing from that point of view?
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Why Jaguar Land Rover and not Vauxhall, Honda and Nissan?
Is this the return of the British Motor Corporation?
Why was Rover allowed to die, then?
Do we need the gas guzzling vehicles produced by these factories?
Are export markets prepared to buy these products?
These are all valid questions that Lord Mandelson has to answer and justify.
Let us see a structured argument supported by verifiable facts and figures.
Beofre taxpayer money is invested the taxpayer must be allowed to see the business plan.
What do we get for our taxpayer pounds?
A set of wild assertions by a politician famous for spin does not constitute a commercial argument.
Or is it really to protect jobs in Labour Midland marginals? Back to the Seventies?
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Yet another demonstration for mixed messages from the Government.
In one hand they are trying to discourage us from buying environmentally unfriendly 4x4s and gas-guzzlers, whilst in the other they are using our money to prop up one of the very companies that builds them.
What hope have we got?
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Yes of course a declining business (currently owned by a foreign multinational) which has been struggling for years ticks all the boxes.
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The Japanese banking crisis of the 1990's is well documented. Google it and you will find many interesting articles.
The following is a very brief summary of the first part of the thesis written by one of the top bankers who worked on the crisis daily for 7 years.
The build up to the financial crisis (and note that they recognised it as a “financial crisis” not a childishly worded substitute “credit crunch”).
1) When the first institutions started to fail the government decided that they would not let depositors lose money as this would risk runs on banks.
2) Shareholder capital was used in the bail outs and all management of the institutions was removed
3) Press and public complained that failed companies should be left to rot in their own mess.
4) By 1995 all support systems had failed, and the government resorted to using taxpayer's money to bail out the failing institutions.
5) The government argued that by getting preference shares they would act as an investment for the taxpayer in the future.
6) Despite point 5 the final bill for the taxpayer was 17% of GDP by the time the crisis was over
7) 1997 the first bank failed due to over priced real estate.
8) Government injected cash into this bank but asset depreciation was larger amount than injected cash.
9) The bank was nationalised
10) Unforeseen contagion effects then rippled through the real economy.
11) Banks lost trust in each other and Japanese ‘Libor’ went up sharply
12) Bank of Japan started injecting cash into the system since inter-bank lending had all but dried up
13) Yamaichi bank (Japan’s 3rd largest) collapsed caused by revelation of its off-book liabilities.
14) The whole system fell apart.
That is a brief summary of the first pages of the report, but makes interesting reading. It does not take a yuppie with a blairite degree in bankin-n-finance to work out the similarities to the current problem in the UK and just where the future may lie. As many on this blog have said before, until the banks declare their off-book activity we haven't even started the banking crisis.
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If Tata can't refinance Jag - we'll have it back for a peppercorn by nationalising it. Mandy can then show us what a brilliant manager he is by making it viable in public ownership, then it can be sold into private ownership for a fat profit.
And pigs might fly.
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Why not just go all out and nationalise all that's left of British industry. A straw poll of my work colleagues indicates overwhelming support for this course of action.
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We seem to be in the era of "Corporate Blackmail".
Give us billions or we'll go broke and cause an unemployment disaster, of we'll ruin the economy.
It used to be the unions that blackmailed the country.
Now it's companies.
Poor old Woolworths didnt have enough clout to blackmail anyone.
Who's next?
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Car making by these two mainstream names is hardly cutting edge. I do not see they have anything very worthwhile to contribute to vehicle development - they are more like mini me versions of the US car industry. If Tata cannot fund them; then they should go and leave room for new and innovative automotive firms to arise in future.
Most of the jobs at their plants are not high skilled and no more worthy of being saved, probably less, than those found in dozens of specialist small enterprises. The real talent would soon find new jobs with emergent nations' car industries like the MG Rover staff who went to China.
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Wait a minute, isnt Jaguar now owned by TATA?
So what the hell are we the british taxpayer doing bailing out Another company.
I think I will register myself and then ask for help to pay my bills
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This comment was removed because the moderators found it broke the House Rules.
On another note I suppose Mandy will now get a free jag to drive around in
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The Govt should receive Shares in Jaguar Land Rover equal to the value of its investment.
Why treat them any different from the Banks?
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This comment was removed because the moderators found it broke the House Rules.
I agree. Tata sponser F1 but we sponser Jaguar/Land Rover? And what about all the small businesses going bust after paying their taxes diligently for many years. Who will help them. Their employees jobs are just as important as any others.
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Of course many business will suffer from any deflation, not just Housebuilders or car manufacturers.
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Stumping up taxpayers money for Jaguar is crazy. Has anyone done a study to find which companies would benefit most from taxpayers money? No. The only reason Jagure is chosen is that it makes the government look good.
If the world is in recession how long will it be before anyone is ever going to buy a Jag again? For goodness sake, if the government is going to throw around money, throw it in the directon of companies that have a market.
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The big problem is that for many years workers have received pay rises lower than the real rate of Inflation, and have had to borrow money to make up the difference.
Now this is all coming home to roost.
I'm waiting for my Gas Bills etc to start to Deflate.
Until then I will treat any talk of Deflation with great scepticism!
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Oh yes, and how about a nice big fat pay rise for the Public Sector?
Say about twenty percent....
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Jaguar Land Rover is an Indian company.
If it was so much in our national interest to keep as a business then it should never have been sold, or should have been nationalised before.
15,000 jobs is not that much of significance, or it wasn't that many when MG Rover needed assistance.
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Ferrari? What a loan form the UK taxpayer? Strange times indeed. What next, a ticking off for Rolex?
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Relieving John Presscott of his cabinet and er,... 'other' duties obviously was a big mistake.
Forinstance,since he got rid of his two government Jag's,.... the economy's completely tanked.
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Why bail out a manufacturer of cars that nobody wants to purchase now or in the future? Sad for the workforce, but the writing has been on the wall for some time, the era of large "Gas-Guzzlers" is firmly at an end.
Any Government bail out will prolong the inevitable. Let the fittest survive and the weakest fall.
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It seems The Jaguar couldnt suvive the law of the bungle in the jungle and will be joining the fat cats that s at on the taxipayerrs mat purring for some milk from the pollytitians tryingk to save inkland parkerrs from being blotted out by deflation
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Seeing as there are very few truly owned British companies left and these foreign owned companies provide the work for thousands of the British people it is the right thing to do.
As long as it is a genuine requirement and proved to be such.
The cost of unemployment in the long term if these jobs are not saved would be astronomical.
The jobs brought in by foreign investment in the 80's have to be protected for it is unlikely we will ever be able to attract such investment in the near future.
New jobs cannot be created at the flick of a switch.
This recession will end sometime so even if Britain does lag behind others we do need companies who are fit enough to step up a gear when it does.
Unlike the VAT fiasco it will be money well spent.
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What I cannot understand is why someone who is unelected by the people of this country is making so many decisions on our behalf.
Please do not try to tell me Mandelson is only there in an advisory role.
Is his appointment morally right when we know his background.
Who is in charge Mandelson or Brown.
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If they are introuble then let the Indian Government bail them out. They lorded it when they bought the Companies but now want British tax payers cash.
Why lend to an Company who took risks and obviously overpaid for a declining asset when honest working people are loosing their houses and genuine British businesses are closing each day with not one ounce of Government support
Typical Mendalson rubbish
Perhaps Tata own a yatch.
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But surely we all trust the judgement of Lord M ?
It seems he's in full "picking the winners" mode now. Up goes the famous cry: "The Man in Whitehall Knows Best !"
Seriously, I am pleased to see you enter a reservation, Robert. This way of conducting government is just a lobbyists' dream.
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The government must not under any circumstances bail out Jag/LR.
It is owned by Tata and they have enough to sponsor Ferrari in F1 so they can darn well support there own company.
This is as bad as NR sponsoring Newcastle FC.
This profligacy with taxpayers money has to stop!
Never in the history of the world has a government been so dumb
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Many of you are showing your plain ignorance by describing Jags and Land Rovers as "Gas Guzzling" - the vast majority of sales of JLR sales are diesels. Compare the fuel consumption and CO2 figures for a XF diesel:
http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Jaguar-XF-2.7D-V6-Luxury/53043/
Or a Land Rover Freelander Diesel:
http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Land-Rover-Freelander-2.2-TD4-S/49650/
with
A Ford Mondeo hatchback:
http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Jaguar-XF-2.7D-V6-Luxury/53043/
Yes if you look at the supercharged V8 RangeRover it has pretty appalling fuel consumption and Co2 but in reality hardly anyone buys these models. I think that BMW said recently that over 75% of it's larger cars were small-engined diesels last year.
Figures were produced last year also that showed a mich bigger differance would be made to the UKs CO2 emissions by reducing Feista sized card consumption by 5% than by banning all large cars.
Finally (I've nearly finished!) this is the sort of high-ticket, value added product that we should be building in the UK.
However I'm a little suspect about the money requirements for Tata though as it about to sponsor the Ferrari F1 team - stange I thought that they had no cash!
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Tata have owned Corus and Jag_LR for eighteen months and run out of cash already.
Great management!
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I can't understand how a multi country conglomerate should only ask us for a hand out
Unless of course that conglomerate grew on the back of cheap credit.
If Tata are over extended, then sell some assets or retrench. I'm sure someone else might step in to pick up a gem like Jaguar/Land Rover if the Government provided the same loan guarantees to them
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Why have the BBC removed from their website the news that TATA (Owners of Jag/LR) are sponsoring Ferrari in F1?
Was it under orders from Mandy?
Is it because of the outrage that will ensue when Mandy bails out Jag/LR effectively paying for Ferrari to compete against the British based McLaren team and Britains own Lewis Hamilton?
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Have I got this right.
This is the same as getting a loan from yourself to make your own car and then getting a loan from a bank you own and lent money to so that you can buy the car from yourself.
Is this the same as
'Look into my eyes, not around my eyes, but into my eyes, 1, 2, 3 your under'
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Apologies, here's the figures for a Mondeo:
http://www.autocar.co.uk/SpecsPrices/SpecsAndPricesEdition/Ford-Mondeo-2.0-Edge/51637/
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The way to save Jaguar and Land Rover is for people to buy one, if no one is buying them, whats the point of saving it??
If its too expensive to buy and run them then let the market takes its course.
We saved the bankers, we cant save their cars too.
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The Govt should insist on high Interest preference Shares (just as they did with the Banks).
Sauce for the goose sauce for the gander.
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This is all absurd!
I'm angry, I'm seething, I'm ..... too mad to say much else.
When are the bail outs going to stop.
Tata knew the risks, they knew what the loan arrangements were in advance. If they paid a billion for a marque that's their problem, well done Ford.
The quicker the Govt stop propping things up and let the weaker businesses fail the better position we will be in to get over it.
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Jaguar-LR is probably a marginal business and unlikely to be profitable for some time. Tata borrowed heavily to buy it from Ford and is now over-extended. Call Tata's bluff. If Jaguar-LR really is viable someone else will walk in and buy it.
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BBC dont support the Labour party
I dont think they do
All of us here agree
Some might say otherwise
Each of us should make up our own mind
Dont you think
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Is it me or does Mandy look like he forgot to apply the make up
very unflattering camera angle showing his "sheen"
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Jaguar LandRover is an important employer, and provider of business to suppliers, but that hardly makes it "strategic" - it makes cars, not fighter-jets! It makes sense to help the firm, but only on commercial terms; as with the support provided to the banks, any loan should carry equity rights plus hefty interest.
If the taxpayer helps Jaguar, he is necessarily helping Tata and, indirectly, India. Nothing necessarily wrong with that, since India is a friend and trading partner; but we should attach a condition. I do not usually use capital letters in these posts but, just this once, here is the quid pro quo that we should require from India in return for this help:
REMOVE YOUR HEFTY TARIFFS ON IMPORTED MANUFACTURED GOODS from the UK!
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I am sure that all 25,000 woolworths staff will be so pleased that the taxes they have paid and will continue to pay right up until the final day of work will go to help bail out anIndian owned car company while they are thrown on the scrap heap once again beggar the good old british people help the foreign owned businesses you couldnt make this government up can you see foreign owned companies helping british ones before there own I cant
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Reaching or at peak oil and our brainless gormless politicians are bailing out a foriegn company that produces gas guzzlers using our money???
HAVE I MISSED SOMETHING HERE ???
FRAUD!
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It's difficult to detect any consistent economic strategy from the government. Plainly it can't keep saying yes to everybody.
But the political strategy is transparently obvious. Do whatever it takes to get re-elected. If that means bankrupting the country, so be it. If it produces a republic as a by-product of public dissatisfaction, so much the better. Mandelson is of course a former communist.
It is a completely amoral position to adopt and he cannot complain if he himself is subject to amorality in return.
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Is this piece just a tester for public opinion on behalf of government?
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There's a strand on this subject within the Daily Politics Blog.
If we put taxpayers money into the motor industry, surely we should own at least part of it - just as we now have a stake in some of the banks...
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31 scouseflyer
Well getting a big handout in one hand balances a fun expenditure on the other. Why dont we just have the Mandelson F1 team. The honda team of 600 people are available, unless that is who Tata want to use. I do not like the smell of Tata. They tried to float (recently) a 10% paycut as a solution at Corus when they reportedly had a 40% fall in the order book. So 10% would reduce the layout liability if a large cut in the workforce had to happen but would be most unlikely to save the opertain unaltered.
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Before the era of cheap money from the East,;when a company wanted finance they went to the shareholders and offered them shares at a discount, a rights issue.
Thus the company borrowed long when they needed long money.
Then cheap and plentifull money arrived and large profits could be made by using this rather than shareholder funds.
The problem was that this was short money and it was being used for long investment.
In the end of course the short money dried up and the finance directors screamed at everyone that they were going to go bust unless someone, HMG for example,would let them have some cash.
The money would be available from shareholders or investors on the right terms. Terms which may of course be unpalatable to the current owners, but better than going bust.
If TATA do not wish to share part of their equity let them put up the money themselves. If they do not wish to put up the money let them sell the business for £1.
If no one wants it for £1 then it is not viable and HMG should not support it.
The last thing that should happen is that the taxpayer should be forced to support something that he would not invest in voluntarily with his own money.
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This is a tricky decision for the government, yes Ratan Tata should be stumping up here as well and the government should seek to take a stake in the company to ensure the money is well spent. The motor industry is strategically crucial to the economy. People in the media have been comparing this to when British Leyland was nationalized in 1975 and saying that the government shouldn't act. Well BL was a classic example of how NOT to do a bailout.
BL had 3 divisions, the volume car business Austin-Morris, which was responsible for such automotive horrors as the Allegro, Marina and Maxi and for the crippling losses and which needed massive investment for new factories and models, the specialist car business, Jaguar, Rover and Triumph which had a good but aging product range and needed investment to replace it's current models and the truck and bus division, ditto. Had BL gone under over a million people would have lost their jobs and not even Thatcher could have permitted that! Once nationalized the government had 2 options, run down or sell off Austin-Morris and concentrate on the upmarket cars and the trucks or provide huge investment to enable the entire company to develop new products. In the end the government did neither, BL was drip fed investment which meant that it couldn't replace it's poor model range. The Austin Maestro should have been released in 1977/78 wasn't released until 1983, by which time what would have been a groundbreaking car was hopelessly outdated. The government at the time nationalized BL purely to keep people in work and didn't address the company's underlying problems. It was only when Sir Michael Edwardes was appointed Chairman in 1978 that there was any attempt to run BL on a commercial basis, but by then BL's image and sales had shrunk too low to try and be a big player in the volume car business and the future was just a sad and inevitable decline into extinction.
I hope today's government doesn't repeat the mistakes of 30 years ago! We've precious little car industry left and we must hang on to it!
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Get shut of this corrupt Government. They let Woolies go and other Busnesses, but to deprive them of their big cars. Oh we'll help them out, we can't do without our 2 JAGS.
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If you look at the recently-published figures for new car sales, you will see that Jag LR is by no means alone in seeing volumes crash. One problem with helping Jaguar is that other firms are quite entitled, morally, to ask for equivalent help, and some are bigger (and would therefore need more funding) than Jaguar. Are we going to bail out the entire auto industry (starting with Vauxhall and Ford)? As others have said, nothing has been done to help 30,000 Woolworths employees. Admittedly, auto firms are different because of their dependent suppliers, but it remains difficult to justify treating them preferentially.
Therefore, it is essential that taxpayers get equity in return for help. Essentially, if we save it we should own it!
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Every day this government does something stupid. Bail out Jaguar/Land Rover? Two once proud British companies traded first to the Germans then the Americans and now the Indians. Why did Tata buy a company it cannot afford, why was Tata allowed to buy it?
The British taxpayer has bailed out the banks to a total cost yet to be determined. Now it's being asked to bail out a private company.
Any money given to them will be out of this country as fast as an electronic transfer takes never to be seen again.
Any support given should be to Nationalize Jaguar/Land Rover as soon as possible. If they can't cope lets have the company back in British hands
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The government should seek preference shares in Jaguar Land Rover or guarantees from Tata. Maybe 50-50 against matched funding from Tata.
Of course Tata could just take the brand and move production to India at a fraction of UK labour costs!
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It would be outrageous to ask UK taxpayers worrying about their jobs and savings to bail out Indian billionaires who are only too ready to flaunt their wealth in good times. The lack of demand for these vehicles is a massive clue that we should not be subsidising their prodcuction?
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Tata to sponsor ferrari
Apparently they have cash
Tata own jag/LR
Apparently they have no cash
Seems pretty strange
Tata asking mandy for money
Of course they're vital
Recession looming
Your out of work
Gordon brown saves the day
Ordinary folk rejoice
No need to go to work
Everything will be paid by hmg
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#44
I thought I noticed a distinct change in the attitude of the BBC towards Labour a few weeks back. Forget the exact story but they arent really toeing party line anymore.
Also gearing up for an election perhaps?
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Tata must have lobbied very hard for this. Afterall, there are ££££££££ to be had cheaply. Like the investment banks who paid themselves bonuses not far from what they took from the tax payers. It is a good bet Tata has more than enough stashed away to keep Jag/Rover running.
To up the game Tata may make a few people redundant but Tata won't let Jag/Rover close. In the unlikely event of Jag/Rover going under without handouts, I am sure there are keen buyers for the business.
I hope Mandelson will use all his smartness and assertiveness to get the last penny worth of profit for us, the silent and hopeful tax payers. A target of at least £1bn guaranteed profit in 5 years and majority ownership would be OK.
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One reason Ford off-loaded Jaguar was because it was unmanageable and losing money at a vast rate.
I suspect Tata was only interested in buying the brand, not the assets, particularly the people.
If the taxpayer has to fund Tata to save jobs then it has to be prepared to fund forever with no return and it has to ensure that jobs and assets remain in this country.
Remember BMC, urrgghhhh, how much did we waste on that lost cause
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This looks like it would be a decision driven by sentiment rather than logic
Aside from providing the ministerial car pool, I don't understand how Jaguar-LR could be described as a strategically important business anymore, if it ever was. JLR have been losing money for years. Ford bought them and offloaded them to Tata. That was only 9 months ago? So Tata knew full-well that JLR was a money-losing but prestige brand and would need a lot of financial support.
I suspect the govt is testing reactions with this interview with Mr Peston. Tata had $64bn turnover and $6bn profits last year so should be able to afford to support JLR for a year or two....... if they've changed their minds or developed cold feet then they should sell the company for a $ to Porsche/VW or someone else.
Jag and LandRovers may or may not be gas-guzzlers but they definitely are expensive, heavy, luxury cars and sales will be very slow/low for the forseeable future.
Can't see many of those Woolies employees using their redundancy pay on a down payment for a Jag or a Land-Rover, can you?
Is the govt to bail out every single car company? Or let some go under? Vauxhall etc? And for how long? If you bail anyone out then you need equity in return. And what about all the construction companies that are about to go bust? Construction is of more strategic value so will they all be supported.
Soon the govt coughers will be well and truly dry. A dry cough will be all that will remain of this once great country. Hack hack hack.
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Peter Mandelson has twice resigned from office in very dubious circumstances.
He is man in which deceit follows him like a shadow He flirts with it like a two bit hooker.
The fact that has been made a 'Lord' illustrates just how sick the political system is.
I believe nothing Mandelson says, nothing at all.
The vanity and arrogance of our political masters are driving this country into the ground. I feel already it has gone too far.
No way should Jaguar get taxpayers money. Tata should pay.
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Robert - is it not good news that the government is supporting Jaguar and Range Rover. These are expensive yuppy cars, and it suggests that there will soon be a need for them again in the short term.
If such cars are deemed to be in such demand that their production needs to be subsidised then this speaks volumes for the economic recovery that we can expect in the next 6 months.
It seems to me that this is the turning point.
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At the end of this article I noticed that the words "canny mutinationals" are used. The question is was this a deliberate typo because lets face it there are some dogs out there and I suspect Tata might just be in a long line of opportunists. Is it any surprise that all of a sudden companies that were seen as sound now find themselves short of a little cash when the government has wafted the dinner bowl of bail outs under thier noses.
It's a bit of a dogs dinner alright and no money should be offered unless a company provides full audited accounts, access to order books banking etc. Especially with mutinationals who can move profits and monies from subsiduarys with a lot more the ease than it took lassie to get home.
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Governments budgets cannot be compared with Company or household budgets.
Companies can close or downsize and shed labour to increase efficiency or survive. Governments do not have this option, the shed labour still need to live and until they can again support themselves the state has too step in. I would like too know from the bloggers on here what if any is the alternative to saving jobs. The economy will inevitably pick up again, the state can then reduce its support.
This is surely the civilised option.
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How about they take the money that Tata wants, and put it up as a long term loan for the company that is prepared to take over the Jag-LR plants and workers and will produce a low emission, low consumption car instead of a gas-guzzler. The terms would have to be part ownership by the British government, to be paid off in due course, and that the new company must be 100% British.
Two birds with one stone, jobs saved and Tata thoroughly ticked off.
I'm not usually one for protectionism, but the current government's seeming lust for bleeding our money abroad is really starting to get on my nerves.
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Jaguar is one company that we really do not need. Its products are for the wealthy, and it behoved those who took it over recently to have ensured that they had funds enough for any eventuality. Wrong business decision, so ask the taxpayer for support? Not with my taxes!
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The Government is keen enough to steal from our pension funds in the shape of equity in banks - why not take an equity stake in Jag/LR in return for injecting some cash and guaranteeing loans.
After all Tata fleeced Ford when it acquired Jaguar/LR, and the value should have decreased since then given the drop in the market, so why shouldn't the government take advantage of the situation.
Should the Government put this to Tata, Tata will no doubt "find" the money elsewhere very quickly.
I'm afraid our British politicians will be out-matched very quickly by canny Indian business sense.
Even with money guaranteed by the Government it will be only a matter of time before the essence of the operation moves to India, where costs are cheaper and there are plenty of bright people who are more hard-working.
Should by some stretch of the imagination we gety an equity stake in the business we might be able to keep more jobs in Britain.
Far better for the government to immediately guarantee loans to the house-building/construction sectors, where 100000's of jobs will be saved, with no danger of them migrating overseas.
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#52 - Glanofan
I see that the BBC are reporting Corus staff have now accepted a 11.5% pay cut.
I wonder how those staff will feel if the govt does bail out Jag/LR and their staff don't have to take a pay cut of this scale
Also, I don't follow F1 racing but I suspect the Ferrari team must be thinking 'Do we really want this Tata mob sponsoring us? Everything they've touched recently seems to go mounds-up'
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As someone who had retired 3-years ago and has had to take some part-time employment to make ends meet, I find it unbelievable that my taxes are going to support overseas industry giants.
I can't believe Jaguar LR can ever be made viable. Ford only purchased it for the names, after all if you had a portfolio of Ford cars wouldn't you want some 'old historic' names that smelt of old money even if they have no place in the world except for, people that can't or will not buy German or are farmers and the military that need utilitarian vehicals for their work.
Why wasn't Worcester pottery saved?
I'm hoping the government will provide assistance to my employer and provide a retrospective final salary pension. I can only live and work in the hope that I'm really dreaming and will wake up from this current night mare and find mt heatings bill are really at zero (taken care of by the government) and I have a nice new XF in the drive to replace my aging pedal cycle.
I feel really sorry for the REAL hard working families that will have to clear up the borrowing. I can only send my appologies as we as the 60+ generation have allowed this to happen.
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This says something rather profound (albeit not novel) about globalisation. Globalisation is meant to spread risk, but in the end, we see that it is better at spreading exposure. We can now catch a cold from anywhere. And everyone is sneezing.
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Enough is enough. Is this proposal in response to a request from John Prescott? After all, he has two Jags, hasn't he?
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A number of the above need to get some of their facts straight. The government needs to bail out these companies if no other source of revenue can be found because Britain has lost almost all of its volume car manufacturers.
British Leyland (not the British Motor Corporation) failed due to poor management, not as a total result of its nationalisation.
Austin-Rover failed due to the country not accepting that it could make a good car after British Leyland.
The Rover Group failed as it fell into the hands of two companies (BAe and BMW) who only made matters worse before it became MG Rover under the control of Phoenix which riddled the company in debt.
Aston Martin Lagonda did fail but was saved by Ford and is now doing well due to its independence, so is Noble, Caterham and Ariel. All of which are small companies but they show that Britain can make cars good enough for the world.
Jaguar Land Rover IS the last affordable British car company which makes cars in large volumes. The company is innovative and its XJ cannot be a 'gas-guzzler' as if you had seen a Top Gear report you will have seen its amazing performance in an economy run.
Finally, Land Rover is cutting emissions from its cars. TATA also owns the old badges such as Rover, so maybe economical small cars would return if the money was available with the Rover name.
Lastly, Honda and Nissan (which only makes dull cars) aren't British, they have workers here but its not the job of the government to keep foreign plants going. Vauxhall however, couldn't be saved by government funding anyway as its a victim of rebadging, and has been for the last 30 years under the total control of the lost cause which is General Motors.
Rant Over
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Tata only paid Ford £1.5bn a few months ago and the net asset value must now be well below £1bn in today’s market.
An injection of £1bn by the taxpayer into Jaguar Land Rover would therefore require full nationalisation. The government would then be faced with providing the necessary investment capital on top, without which the company does not have a viable future.
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I do feel sorry for the individuals whose jobs are under threat.
However we need to look at the bigger picture.
Our needs and aspirations are rapidly changing. Thrift is the new mantra, forced upon us individually and collectively and visible thrift may well become a manifestation of that.
In the post-consumption age, there will be even less of a place for 'luxury' vehicles than there currently is. They may well become demonised and spat upon in the same way as Chelea tractors presently are.
Studies have shown how few owners/drivers actually use a fraction of the gadgets and toys (never mind mechanical and electrical power)that are routinely built into all our vehicles. We have been seduced into believing that we 'need' them and that successive generations of 'new' models need even more embelishments.
Perhaps in the new age, buyers will be attracted to models that boast about their reduced sophistication and easier repair and maintenance (some cars allegedly need much of the front end dismantled to change a lightbulb).
This is a longwinded way of saying that JLR should be left to market forces. If someone sees a future for the business it will be bought at the current market valuation. If not, it will end up like Woolies.
No public sector intervention should be contemplated, at any price.
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Given Mandelson's checkered history in deals of this nature, is someone shadowing him so that we can the taxpayer can be assured of the highest standards of integrity are upheld? He's not visiting an Indian Yacht anytime soon is he?
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Rather than give Tata a loan why not just buy Jag's and Range Rovers as company cars for senior civil servants. This will tide Jaguar over until the market recovers and be a useful stimulus for the economy as well as suitably rewarding our undervalued public sector workers. The program could be broadened to buy Aston Martin's and Rollers for key contributors in the treasury and FSA.
I was going to suggest buying Jags and dropping them from helicopters but that probably wouldn't work.
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The IT industry has been hammered by work going off-shore, primarily to india and tata are one of the bigger outsourcing groups. And I've worked on govt contracts where the bulk of the work has been outsourced to india, that is my taxes are being used by my govt to send my work to india.
Now the producer of gas-guzzling monstrosities, owned by an indian company wants to use my taxes (from the job I had to get at a reduced rate because my job had moved to india) to keep their profits up.
Now I'm getting a little confused about exactly whose interests my govt's serving here.
perhaps indian billionaires enjoy boat trips.
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On the basis that even a stopped clock is right twice a day, Mandelson said something true early in that video: the problem is "a sharp drop in demand".
And, IMO, that's the root of it: if they could sell their cars, they'd get the private financing they want.
But they can't.
So, if there's little demand for their cars right now, what's the taxpayers' money going to do?
Are we going to give them money to produce cars at pre-crunch levels... and then just leave the cars to rust?
Or is this some sort of Keynsian notion that, if you pay a man to build a car and then pay another man to dismantle it for scrap, this "stimulates" the economy?
Finally, if their Indian owners don't want to keep Jaguar going - and no-one else wants to buy it - they can sell the business to the UK Govt for a quid.
(or get bailed out by the Indian government)
The idea that the UK should give them any money just seems daft.
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Where are the grownups?
For God's sake - when are we going to call time on all this nonsense? Minister's actions are plainly mad - driven purely by the desire to keep their jobs.
Giving money to Jaguar? They're owned by a foreign company. The proper course is for the company to be bankrupted and sold for its actual value (ie the price anyone is prepared to pay for it).
If that means selling bits off piecemeal and jobs going - tough. That's how the system works. And that's what should happen to any business that can't make a profit. It really is the only way to draw a line under a bad situation and move on.
Businesses that don't make a profit aren't businesses at all.
Take a lesson from the Chinese - when Rover started going down the tubes they just bought the bits that were worth anything. Very sensible of them.
You can't preserve a company's value or add to it with subsidy. Value comes from profit. if people aren't buying what business makes - for whatever reason - then bankruptcy is nature's way of moving on.
By continuing to pour OUR money into black holes the Government is not grasping the nettle. What are these Ministers thinking of?
The situation will resolve itself anyway - through unstoppable market forces. All the Government can do to help is to work WITH the grain of such forces not against them.
I wish we had a Government that would do the right thing regardless of the short term hardship it will inevitably produce - not piss about as this one is.
No wonder Churchill is remembered with respect. Blood, sweat and tears, chaps but that's what we have to do.
Would some grownup kindly send the kids to bed and sort the mess out.
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I expect that nice Mr Mandelson has a Land Rover or two at home. I'd hate for him to have trouble finding spare parts.
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The last time Mandy had this job he was faced with the closure of Rover. Not much was done then was it?
That aside, as a last resort yes but provided it's in return for shares as per the bank deal. There is no point in lending money out that may not be paid back. But buying back some of our country whilst it's cheap is not such a bad idea (as long as government doesn't start to think they're capable of running any business bigger than a sweet shop).
By the way isn't this the very same government that has declared war on this type of car & has done all in their power to close them down? What's changed?
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There's an American phrase which describes where the government is going with this "news" story.
That phrase is "let's run it up the flagpole and see if anyone salutes".
As with the PBR, the news is allowed to get into the public domain in order to test public reaction. If this blog is any guide, the public reaction will be negative, for three main reasons:
1. Why rescue Jaguar whilst not rescuing other equally/more important employers?
2. Why rescue a company which produces thirsty vehicles which customers do not want to buy?
3. Why use UK taxpayers' money to bail out a foreign company?
If my reading of the public response is right, helping Jaguar could be very unpopular.
It seems to me that the only way this is workable, politically, would be if a large equity stake was received by HMG in return for help to the company. 'Helping' Jaguar would be a vote-loser; taking it over might play much better with the electorate.
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This government is showing itself to be as rotten and corrupt as any in history.
Tata can't find money?
The government readily giving cash to banks and big business, yet is looking to sell at least some of one of it's prize assets in Royal Mail.
These people are taking the rise, and we should wake up to their scams and shenanigans.
Look at PM- resigned twice in disgarce already.
On your bike, matey-boy, and don't come round here no more.
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"Curiouser and curiouser" A possible "bail-out"
by us of an Indian owned car maker so they can carry on making cars that no-one is going to buy?
Slithy toves must be gyring and gimbling
like crazy .
Can't quite get my head round this latest item from the mad-house.
Will just have to keep taking my daily fix of
Preston - until Truth, or Robert, makes all things plain.
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Can't Mandy just call Tata's bluff? Let Jag go under and then nationalise or recapitalise it!
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Tata's long term business plan has always revolved around moving the manufacture of some or all Land Rovers to India.
There is huge demand there for them, but the import duties on new models makes them prohibitive for most people. There is also a rising urban middle class market for cheaper Indian made Jaguars, both in India itself and throughout the rest of Asia, especially China.
Not giving them this billion quid provides them with the excuse to shut up shop in the UK. They have enough unsold cars to meet the reduced western demand until they can commence manufacturing in India.
This will happen in the next 5 years anyway, so we are only postponing the job losses to a time when the UK will still be in recession and they will hurt just as much.
If there is tax payers money available to bail out manufacturing companies, can it please be reserved for British owned companies. I'm sure Tata can find the cash they need, but if they can't surely the Indian tax payer should be helping them ?
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Whilst on this site, I just downloaded Robert's article on the New Capitalism, which made fascinating reading. But the most extraordinary thing about the current crisis isn't the scale of the problem, or the unpredictability of the future - it's the fact that nobody seems to have noticed what's been going on.
I'm just a jobbing scriptwriter, freelance for most of the last decade, and I KNOW that if anyone had asked me, any time in the last fifteen years, whether we were all borrowing too much, I would have replied 'you bet'. I only had to look at my doormat in the mid-90s, which was regularly covered with unsolicited offers to extend my credit. to know that the banks were following a fundamentally immoral - even criminal - business model. Here's another extraordinary thing: we have yet to punish them. If we simply insisted they paid back their bonuses and left their jobs, it wouldn't be enough. A hideously arrogant minority of greed has brought the world to its knees, and yet we still treat them as weirdly gifted individuals who are quite capable of trading their way out of the problem given enough (additional) financial support.
If I hear one more scion of the financial services industry bleating that they needed the bonuses to recruit the right talent, I will throw a brick through my TV set. If there was any evidence of talent, they would have applied it. As it is, the only morally logical solution is to name the people who screwed up on the job - and send them to jail.
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I'd love to know what Tatas real motives are. The Taj Hotel that was the scene of the recent tragedy was built with a sign hanging from it stating 'No Dogs or Englishmen' in retaliation to anti Indian signs at British Hotels. Now they're buying up symbols of Britain in Tetley Tea, British Steel (Corus) and Jaguar LandRover. They've promised both Corus and Jaguar LandRover huge investment just a few months ago but are now going to the government for handouts for both businesses...
Tata have cut production at Corus and JLR citing the global credit crunch but haven't touched Tata Steel India or Tata Motors. I also haven't heard of them going to the Indian government for handouts yet either...
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Dont forget these guys also own Corus and have asked for a handout to support that.
Why should the Uk taxpayer support overseas multinationals who set their own overambitious corporate growth targets on the back of cheap money and high gearing.
Hedge funds and private equity are just the same, high on greed and bankrrupt of any morals.
Not that the managers of these businesses will lose their jobs, shares or the millions they have already milker or as they like to call it "added value" - just the good old UK taxpayer will be paying for the next 20 years.
Thanks a million !
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The interesting thing about this resurrection of Leyland is the voting demographics of Jaguars employees.
Only companies in marginal seats need apply.
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This comment was removed because the moderators found it broke the House Rules.
It's a disgrace that Tata can put big money in to an F1 team and yet want the British tax payers to ensure they can get loans.
When will we ever learn in this country that we can't sell off everything to oversea's investors? The next itme to go will be the post office.
Everything we have sold over the years has ended up making massive profits for rich investors and yet each year they want more from smaller work forces. Take a note from the french; they own their major car companies, train companies etc and the french own half of our enery production at the same time we are seeing record price increases, they have seen very little.
Tell tat where to stick it and refuse them any money until they put the same amount in to jag as they have in to F1
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BMC was a different kettle of fish. Those were the halcyon days of "Red" Robbo at Birmingham always stirring the proverbial and inciting other plants to follow suit. My dad used to work at the Swindon plant, but I can never remember him striking.
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Re #87
"Look at PM - resigned twice in disgrace already".
For a second I thought you meant Gordon Brown!!
Trust the goverment to pick and choose which industries should be saved and which should crash and burn?
Less tea vicar!!
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You couldn't make it up. The capital markets says the company isn't worth the risk. It's parent company won't back it. So, as a British taxpayer I take the risk, ably (?) led by Lord Mandelson and that guy who saved the world. And, for taking the risk, the reward for me is?
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Here's an idea.
Could people stop mentioning the sponsorship of Ferrari like it's a valid point?
And if Tata are genuine about not being able to get the funds through the normal channels then they surely won't mind giving us serious equity in the company as a thank you.
When China was investing it's currency reserves throughout the world people weren't questioning their sanity and their willingness to become involved in foreign companies, they were in awe of their financial clout and their potential gain.
The situation is clearly not the same now, but if the company is as robust in the long term as JLR seems to be, if it keeps jobs and intellectual property in Britain, and, most importantly, if the terms of the deal are absolutely right then this might represent a good bit of business by HMG, irrespective of nationality.
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Let them die.
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Re #34 comment
The following link takes you to a BBC article still available about Tata sponsoring Ferrari
http://news.bbc.co.uk/sport1/hi/motorsport/formula_one/7788830.stm
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Peter Mandelson, Peter Mandelson, PETER MANDELSON!!!!!!
Thought it was either LORD or by his Government title but PETER!
Non-BBC bias, this speaks loads.
Xxxx
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Face it-Labour want to control everything.
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What a load of crooks - Tata, Mandelson and the rest of this shabby little government..
Expect an election sooner rather than later - I cannot see how Brown can keep trying to buy votes with the taxpayer's hard earned at the present rate until 2010!!
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99. moraymint:
"You couldn't make it up. The capital markets says the company isn't worth the risk. It's parent company won't back it. So, as a British taxpayer I take the risk, ably (?) led by Lord Mandelson and that guy who saved the world. And, for taking the risk, the reward for me is?"
Great post! Says it all, really. Actually, GB reminds me of the song "The Man Who SOLD The World".....
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During an episode of Top Gear recently, Jeremy Clarkson said that in 5 years time we would all be buying Chinese made cars.
What wasn't said though, was many of these would be badged as Jaguar and Land Rover.
Mr Tata is many things, but he is not stupid.
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Mandelson cannot be trusted.
EVER...
He was forced to resign from cabinet, kicking and screaming, not once but TWICE.
Who does this un-elected cabinet member know in Jaguar? What's in it for him?
NuLaburr stinks from the top down.
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Can't someone do to this mob what's just happening to the Belgian PM, ie the Law Lords saying Tata to Gordon for breaches of various Codes?
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Rant Over must have missed the fact that Aston Martin has laid off most of its workers as sales have plummeted; Noble is effectively bust; Ariel is completely insignificant; and Caterham, good though it is, amounts to no more than a curiosity. Jaguar hasn't made any money since its days under Geoffrey Robinson, Mandelson's mortgage buddy. It has been dreadfully managed, had an appalling reputation for quality and reliability, was late to market with a diesel, invested heavily in the ugly X Type which totally failed in its aspiration to win business from BMW's 3 Series and the current big saloon is a bland looking flop.
Get the message, Lord Mandelson - no taxpayer money for these no-hope businesses. You can't protect jobs when no one wants to pay for the product.
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#99 Good post
They might buy Jaguar cheaply and slim it down but keep it going but they should not lend Tata the money. Let Tata close it and then HMG buy it off the receivers. The plant & the people will still be there.
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Let's just look at the facts.
Jaguar was never a great company. It did make great cars, however, and created some some of the most desirable and exciting cars to drive (and own) over a period from the nineteen-thirties to the nineteen-sixties.
As a company, it has never been profitable enough to invest adequately in its future.
This has always been its downfall.
Its first "rescue" was back in the seventies.
For most of its existence, it has been more or less of a basket case.
Sad, but true.
Jaguar will never be a viable motor manufacturer because it lacks critical mass.
The idea of keeping it going with yet more funding from the taxpayer is quite ridiculous.
Mandelson knows this as well as anyone.
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Under EU competition rules if we give money to one car manufacturer don't we have to give it to them all?
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Unfortunately, this is not about whether Tata can raise the finance to sustain Jaguar mor more about whether they will do it. For them, it will be first and foremost a business decision: they will just decide whether it's in their own best interest to do it.
What we have to decide as British taxpayers is whether one of our few remaining scraps of real industry is worth preserving through the recession regardless of whether it's in Tata's interest to do so.
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My heads's in a spin over all this. Surely someone somewhere needs to wake up and start smelling the lack of coffee.
As an aside, I've got a rusty old Astra I'm happy to take for a spin around Silverstone for a couple of laps if Tata have got any of the UK overdraft left over.
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Has Tata asked the Banks for a loan by the way, or is Tata Industries simply considered a lending basket case?
But yes we could lend Tata the money to save wider fallout - only charge them 12% interest same as the Government imposed on the Banks.
But they would probably be out of business tomorow as 12% is probably greater than their IRR.
Hence.....they would need to find the finance elswhere.
So Mr Tata, give the Bank Manager a call or stick it on the Public Credit Card like Brown usually wants the People to do.
Then the People will pay it back for you from their pension funds and their inflation hit savings and their future income, just like they usually do under this madness of a Government.
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Remind me – I must have missed the bit when we voted for Mandleson as the controller of our tax money
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Stop! This is madness! Do not spend my money on bailing out TATA/J-LR. It makes no sense. If TATA cannot make it work it must go the wall. If not enough people want the product then companies will fail. Let them. That's the rule. Putting money in will not work in the long term. It will not magically make enough people want the stuff they don't want now. It cannot work.
I suspect that it may also be possible that some companies become tempted to go begging as an easier solution than actually sorting their businesses out in the required manner or taking the required amount of pain themselves. Call their bluff. Either they can sort themselves out or they cannot. If the latter, tough.
In the current case, we cannot be influenced by the fact that we may lose J-LR just because they are famous names. Plenty of those have gone. We cannot be influenced by the fact they we will lose more car manufacturing. If we're rubbish at it let someone else do it.
Will the Government please stop wasting money trying to buy the next election? There is none left. No, I suppose they won't. Neither will they show any real leadership or concern for the 'hard working family' by actually doing the things that will, in the longer term, help us get out of this hole - but would not reflect too well on them in the short term.
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Four things:
1) Good to see your back as the Labour parties favouite pet journalist.
2) Will the government be taking shares in TATA for supporting it through hard times or is it just bank shareholders that get robbed by this government?
3) Would the car factories be in Labour strongholds?
4) Gordon must feel this will gain him votes - hence the heavy spin without any figures to support the statement?
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Ratan Tata is reportedly a billionaire. Why does the UK tax payer need to bail him and his company out? Why is this company different to the hundreds of others which are going to the wall?
Tata managed to find the £1bn or so to buy Jaguar/Landrover this year - are we to believe he's got no money left?
Tata is taking the UK taxpayer for a ride and Mandelson is going to let him.
Also, wasn't Mr Tata on the "International Business Advisory Council" which Gordon Brown set up when he was Chancellor?
Nice and cosy...
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I just loved the bit when he said
"I and the government as a whole do not have an open cheque book"
Great to see his Lordship is considering investing his own money in Landroverjaguar. That really gives me confidence that the taxpayer's (not the governments) money will be well spent (I wish). Will he have to remortgage his Regents Park house to pay for it or borrow from Mr Robinson?
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TATA must surrender significant equity
fo significant STATE AID.
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We need politicians to acknowledge how big a mess we are in and how much worse it is going to get and to face up to the tough mesaures thaty are required now. My fear is that government is going to spend yest more billions of pounds of OUR money in a hopeless attempt to prop up the economy (or, taking another view, in a cynical attempt to win an election in spring next year). Worse than this is the fact that I expect that most of the population are willing to go along with this rather than face up to the truth. They will elect GB back into office and we will have to endure the shambles of another term of a hopelessly incompetent labour government before a government comes into power that will take the tough measures that are required.
As an aside, I have heard it on fairly good authoirty that AD failed his finance and accounting exams on his course at University twice before he finally passed it. Thank goodness we are in such capable hands.................
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We Don't Make Predictions
says Government Minister
Last night on the news channels, Tony McNulty Minister for Employment or whatever, was asked what he saw the unemployment figure rising to.
'I'm not going to sit here and make predictions' he indicated.
Funny that, but I thought that is what Governments did when they were trying to keep a handle on things.
Standard stuff like set a benchmark and monitor it and the change response or change direction when circumstances deviated from expectation. Plan for worst case etc, and make sure the money is there,
But no, not this Government
- 'we don't make predictions, we haven't a clue, we just chuck the People's money about like it isn't ours - who gives a toss anyway ? Certainly not government Ministers and the elected MP's'
The policy of Madness as enacted by the Brown collective.
Seems bonkers to me.
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MANDY must NOT get another set of KEYS.
THE TILL MUST STAY FIRMLY CLOSED.
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pot_kettle
The beeb moving pages about. It's great isn't it. What is particularly great is you noticed. The mainsteam media do in fact break most news, but it is overly edited and spun at such length to suit the gov agenda, which is why more of us now cross examine stories using other news articles.
Same company will have TV and WWW service, yet the output will vary.
BBC site:Cheap car firm to sponsor Ferrari
Page last updated at 20:21 GMT, Wednesday, 17 December 2008
So only last night then.
Tata, the Indian company which produces the world's cheapest car, will sponsor Ferrari from next season.
http://news.bbc.co.uk/sport1/hi/motorsport/formula_one/7788830.stm
Which company are the public likely to see a return from and when?
It's hard not to forsee that after a bail out of the failing company it needs to meet repayments on loans, keep in profit on it's buisness model AND provide a fair service to the customer. HMMM But it is in trouble already!?
Even if a miracle happened and everyone pretended they were asleep and the current fraud, rape and pilage of the worlds wealth was not taking place...Exactly which part of the proceeds will anyone (excluding those directly involved of course) benefit from?
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In my view TATA paid 5 times too much for
Landrover/Jaguar 200 million was the real
value.
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Is Tata a funder of the Labour party?
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AAAAAAAAAAAAAARGHHH.
I think that sums up my feelings pretty well. TATA will sponsor Ferrari in F1, and this imbecilic government will give them a billion pounds. Of OUR money - not theirs.
Oh... I wish I was less angry and therefore more capable of intelligent expression.
What this outrage of a government has done to my country in the last 11 years should be a capital offense.
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Does anyone know of any group or party of any clout that is organizing serious protests against this government's flagrant and continual theft of taxpayers’ money and future prosperity to continually bail out privately run businesses?
I’m speaking as someone who once served this country in its most recent oil war, and would never have dreamt that my loyalties could be so dramatically turned around, and in such a short space of time. But the actions of our so called elite are becoming ever more repugnant that I feel compelled to go against them.
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Hey there TATA
I will buy it for 120 millon sterling if you want out.
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Surely we must let all the car manufacturers come to us for loans, as when the global economy picks up, we can corner the market. Its an old trick. Buy in a depression and sell in the boom.
The UK should not miss this opportunity to get in and big it up - as a young person said to me.
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Hang on a mo, the old gas board and electricity board will be comiong cap in hand next.
I say that because we as taxpayers funded that, paid for it and the government sold it on our behalf so that we could pay extra for the gas and electricity we use and now, of course, we don't even own it as a country.
Strategic management at its best there, much the same for any other industry we no longer own, car making appears to be in the same league in this.
Please don't subsidise such industry on my behalf, the market will sort it, don't panic, there is no need, we will always have economic activity, we just need more home grown, home owned activity.
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#9 who next?
Royal mail of course
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"Oh this is really inconvenient. You know that atificial house boom I created along with unsustainable economic growth based on those silly low interest rates and easy credit and all that borrowing and spending of money that we never had...and that rather clever creation of hundreds of thousands of non-jobs along the way...well, it's all gone a bit wrong. What shall we do?"
"We could come clean and do the right thing for the long term health of the country. Get interest rates up, encourage viable manufacturing, cut spending and all that stuff. It would be a painful though. Might look a bit bad on us too and we do have ourselves to think about".
"I know, we'll do the wrong thing by the country and the right thing by us and our mates. Interest rates down, more credit, more borrowing and more spending. Wholly unsustainable of course and it won't work. But at least we'll be able to say that we tried. Yes, it failed, but that wasn't our fault. It was all down to global factors. We did our best but we couldn't quite save the world or our economy in the end".
"It's all we've got. Let's give it a try.... and for goodness sake keep a straight face and look concerned while we peddle this tosh"
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Isn't it scary that a non-elected government is spending your money without any control or debate?
It seems they are taking decisions without any thinking about the future long-term implications. Scary!
I doubt Tata is keen to see its investment vanish so quickly. They will act.
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This finacial world has gone absolutly mad, Ferrari making plenty of money,
http://www.autoweek.com/article/20081027/FREE/810279985
But they hold there hand out for some free cash and Tata hand it over, Tata have more money available than some countrys have but they hold there hands out for a top up and sure enough money magician Mandy can't wait to give some more away.
What I want to know is how the hell do I get into the queue, I can dream up some worthy cause on the way into Mandys cabin.
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post 124
Re Tony McNulty
What an arrogant man full of conceit happy
to see the victims, the unemployed get only
60.50 per week while he LORDS it up.
THIS IS NEW LABOUR.
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Stillic
"Or is it really to protect jobs in Labour Midland marginals? Back to the Seventies?"
Your job is safe then - thank goodness
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Labour Government and DeLorean. Does it ring a bell? Back to the good old 70's.
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It is now obvious that the Gov doesn't know what is going on but is desparate that things don't appaer to get worse. Sounds as if Tata is wise to this and sees the good old Enlish taxpayer as a convenient source of credit. I suspect that there isn't the bottle in HMG to call that bluff...
By the way - Isn't the amzing rate cut in the US news? I was suprised that it didn't top the BBC News last night in fact its almost as though there is some agreement to not mention it (leave alone make some meaningful comments about it). It seems that predictions are that the BoE will cut rates to 1% in jan and would really like to cut them to below 0% (politically unacceptable) to put pressure on any savers to Spend - spend - Spend.
Where is it all going to end up?
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Of course Jaguar must be saved but HMG must exact a huge price for our support. If TATA cannot get bank finance then we are putting up equity- so sounds as if we should get a controlling interest plus a big chunk of TATA. These overstretched businesses have to follow the same rules as SME's- if you run out of cash and need support- you lose a lot more than the value of the support.
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I think we should save Jaguar Land Rover - because they actually make something - as do all the firms that supply them.
Not only that but they make something we sell abroad - helping towards our economy.
The French govt own Renault which owns Nissan - what is wrong with supporting your own industry?
As for the banks the create NOTHING - they shuffle paper around and even then manage to lose it all - useless idiots. Banking does not create wealth it simply re-distributes it - normally from the poor to the rich!
The banks should NEVER have been bailed out the way they were - they should have been allowed to fail and picked up for £0 - as per Northen Rock. The £bn's pumped in could then have been used by a government controlled bank to support borrowers - both business and individuals.
Now all the taxpayers money has been loaned to the banks - all they do now is increase the price of interest to businesses and start raking in vast profits again. More fool the British taxpayer.
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Good riddance to Land Rover say I ... and good riddance (one day) to the road-blocking, countryside-churning, gas-guzzling, CO2-spewing, pedestrian-killing abominations that bear the Land Rover badge.
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#131
You may need to up your offer...
When, like everything else, the 'fiscal stimulus' has been cocked-up, hyper-inflation will have kicked in.
We'll all be on £120m a week!
(Unless we're all unemployed, of course.)
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What a pity it is that we did not let Northern Rock go to the wall and every other rotten business that has followed on from there. A few bankruptcies are needed - the bigger, the better. Nothing else will stop the rot.
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Funny how Vauxhall and Tata have the Government's ear but they have turned a 'deaf ear' to the plight of the Ford Southampton Transit plant which desperately needs support to re-tool for long-term survival.
Surprising given that Soton consists of two increasingly marginal constituencies and Govt policy is all about saving their own necks.
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The idea that UK economy only needs the service industries and the City is now fully discredited.
We should be supporting the remains of UK high value manufacturing.
Companies which hit hard times and have to be bailed out can growtand thrive again, for example Rolls-Royce (the aero-engine makers) is now a world class company but was bailed long ago by the government.
So Jaguar-Land Rover should be supported if necessary. But is there clear evidence that TATA can't raise money? And for many people supporting a foreign owned company will stick in many people throats!
Any cash given equity and some guarantee of long term commitment to UK.
With hindsight the decision to casually toss aside MG-Rover for the sake for £500m was wrong. Yes, some staff found work in China but many are now in low value jobs.
British based (and ideally owned) companies with competitive products need to be supported (with informed buying decisions)and championed by all if we are to have a export lead recovery which is a key way forward the the current situation which also demonstrates that credit financed, consumption based growth is hollow.
So let's not be taken for a ride by TATA, but give Jaguar a chance to live and grow again.
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Too many labour voters in the midlands to let it fail?
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More tax payers money going out to undeserving institutions from a Government with a Prime Minister that hasn't been elected by the people of this country ... can we have a general election now, please?
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#132 peterbaldwin
"Surely we must let all the car manufacturers come to us for loans, as when the global economy picks up, we can corner the market. Its an old trick. Buy in a depression and sell in the boom."
- Agreed, but should we not wait until we have stopped going down?
I wish I could be optimistic.
In the case of JLR it would be a dangerous precedent to give any cash. Land Rover is an international icon of the British. It will be a shame.
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Excellent blog Robert. Putting taxpayers' money into propping up failing businesses is dubious at the best of times, but when they are owned by foreign multinationals it's very hard indeed to justify.
Why should the British taxpayer support an Indian company?
There are some good questions for Mandelson to answer here. Shame he's unlikely to answer any of them.
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I am not sure about Jaguar, which has been variously British, American and now Indian. I dont see many Jaguars on the road in UK now so perhaps it might be a bit like Woolworths - a great company in historic terms but not a company that can live with BMW or Mercedes. Sadly that would mean more job losses - if I had a choice I would rather see the Board of Lloyds TSB on the dole where they belong for destroying our best British bank. There would be no pay-offs there when the day of reckoning comes, as it surely will for people who have thrown caution to the wind and done the bidding of the Government at the expense of shareholders.
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Unbelievable; Is this maybe yet another result of the incessant talking down of the UK economy over recent months that the outside world has no confidence in us. Are, but, they know we won't want to let 15,000 workforce be made redundant so their taking advantage of our governments weakness.
Furthermore if Land Rover Jaguar is of such strategic importance, why did the government let it be sold outside the Uk in the first place? Of course Mandleson was away at that time!! SO, if Tata is such a wealthy company what's their problem? seems to me that we are the soft touch again.
Of course nobody wants to see all those guys unemployed, but as the Uk economy is so entrenched and pivotal around home ownership, the best way to get everything going again would surely be to suspend the Stamp Duty land tax for six months and force the damn banks to start lending our money!
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The majority of you people make me so 'proud' to be British. You're happy to see the government bail out failing banks in the UK but not the manufacturing industry and motor manufacturers such as Jaguar Land Rover because they're foreign owned. Forgive me if I'm wrong but aren't a number of our government supported banks owned by foreign companies? Alliance and Leicester by Santander for example. Do I hear you call for Spain to bail out Alliance and Leicester directly? Hypocritical double standards. I guess it's the way of the world... "I'm alright Jack. As long as I've got my money safe, everyone else can swing." A once great manufacturing nation that played a major part in the Industrial Revolution is well on its way to be an island of call centres. Manufacturing still provides major income for this country through export. No industry means no innovation and a brain drain of scientific and engineering talent abroad. We're already incapable as a nation of building power stations. What would you like to be incapable of doing next? If you let the whole industry fall, what's going to get you out of the next crisis? Oh yes, being a financial centre... Because that worked so 'well'.
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hold on Mandy, before you offer one penny do some due diligence and i think you will find that LRJ are not even worth one billion!
I have a better idea, lend me the money, i will build a car factory and employ lots of people and together we will make a fortune....my name? ...er Delorean!
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#129 IS it an outrage and what a joy more people are seeing through it all.
Therefore maroon3 #130 has a valid point. Anyone against? I must stress however that
it has to be peaceful and thought out. There are groups making stands, but you want to
try finding them and then there's conflict of interest etc. Take Sunday's solidarity protest
at Dalston Kingsland for example. Articles report several arrests and the protestors were
penned in for the duration, unable to do a lot. The residents were annoyed because the road
was blocked. No coverage. Massive fail if ever i saw one.
#131 Save your money AC. There are numerous sites worldwide with a huge number of new, unsold cars.
#133 Imagine. Although it is hard to see that happening with the bad press surrounding them right now. Prices should have fallen dramatically.
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"... I and the government don't have an open cheque book ...". Says it all really. A government politician referring to the cheque book as his/the government's.
The point being that all money earned by you and me starts by being the property of the government which then decides what to do with it including, if you're lucky, giving some of it back to you if you fill in reams of Tax Credit pages to recover the cash that, er, you earned/owned in the first place.
Just what planet do these people live on? In a decade or more in office, Gordon Brown has crafted a Kafkaesque culture within government, reminscent of how Eastern bloc countries were once ruled by vile dictators.
He's done this by stealth, inch-by-inch over time and we've barely noticed. C'mon British people, wake up! It's about time we kicked and screamed against this nightmare of economic and adminstrative incompetence, underpinned by a breathtaking contempt for us decent, ordinary, hard-working, law-abiding citizens.
We're being taken for (another) ride here guys.
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I still cannot fathom how we let our manufacturing base sink to such a level.
In only two or three generations we have gone from a world class engineering nation to the stage that we are being blackmailed by foreign companies in order to save our jobs at their plants.
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Save the banks...save the Car Industry...save the pensioners...save the necks of HMGovt.
Together with their co-elites in the USA, the Team Braun Liebling Adler und Dimm have been so inept in understanding how and what they have controlled of UK plc. They have destroyed TRUST between the main economic Players.
HOPE for next year 2009 has been extinguished on the Altar of Political Manipulation and Executive Ineptitude.
How dare someone as inexperienced and lacking in business acumen such as Frauelein Eagle (Oxford and Liverpool) hold on to the post she has at the Treasury ! HOW...HOW...HOW ???: please will you start to ask the raw and difficult questions you should be asking of our Governing Elites Mr Peston and in so doing pay proper homage to your father.
God save the Queen. God save England.
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Why the hell should the tax payers be tapped into yet again! Most of us peasants can't afford Tatajags or Landtatas....so why Mandy boy should we subidise the few than can?
Nulab let Rover collapse...so why not Tatamobiles?????
Nulab is getting beyond a joke; this country will be paying for their incompetence, fraud, lies & illegal war for decades! Wait for the eye-watering tax hikes to start kicking in! That excludes the hikes in poll tax that will no doubt come - to pay for final salary benefits for the public sector, the billions lost in Iceland, the constatnt stream of bail-outs! My kids will be paying the bill - they're both still in school!
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Is Ratan Tata the very very rich Indian owner of Jaguar and Land Rover (among other things ) a very very good friend of the dodgy lord .
Has he got a large yacht?
Are we going to finance all his other businesses in case the whole lot goes under.
Poor Woolies workers , they did not have a friend in high places , so they never had a chance!!!
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Wonder if Bristol Cars, the last independent British car manufacturer, producing 100 odd cars a year, will get given a hand out if or when they run into trouble. No I don't think so either...
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Strange how they will consider helping Tata but not the Royal Mail.
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Nope, it's a luxury brand.
This is the problem with the UK car industry, it's all sports cars and off roaders.
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#144. What car do you drive? Do you have a dishwasher? Do you fly? Is the PC you're blogging your comments on wind powered? Do you really think 4x4's are so much worse for the environment than the majority of medium range family cars? Check out the manufacturing, running costs and final disposal of so called 'environmentally friendly' cars such as the PRIUS and think again.
And as for Crosserandcrosser... Do you have no grasp of what's going on? The reason we are in this mess is because banks wouldn't and still wont lend to each other or anyone else - including companies like JLR. Let only the strong survive? If that's your rule then I hope when the next crisis hits they follow it. Fingers crossed all your money is under your mattress when it happens or are you going to say the same when all your cash disappears?
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The thing missing from Government relief for both domestic borrowers and insolvent businesses is 'targeting'.
In the face of this appalling crisis, with every day that passes, New Labour looks older and older.
We must not discern difference, we must not means-test,we must not look to the future, we must get re-elected.
Why rescue a badly-run car company when bullish new businesses are beign starved by banking dinosaurs? Why give me free prescriptions and a fuel allowance just because I'm sixty.
Most of this is common sense. But it is uncommonly absent among the New Labour elite.
www.notbornyesterday.org
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Jaguar was largely dependent on re-mortgages, as are many other companies.
They are all on a cliff-edge, as re-mortgages make little sense now.
Will bailing out Jaguar really work? or is it a road to nowhere?
The "re-mortgage fancy motor" was a feature of the last 10 years.
Thanks to the successful blackmailing of the nation by the banks, most of the "high-end" product manufacturers look dodgy.
Other firms have seen what the banks did, and are thinking "we'll have some of that".
If Tesco goes under...panic.
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Labour will rely on people like Tata to fund the next election so they (Tata) will get the funding for sure. The cold business facts are they (Tata) paid too much for too little labour are about to bail out a company that makes the vehicles that Labour crave to eradicate (4x4's) The State funding something they want us to avoid purchasing (only Brown could call this a solution) however like all that Brown touches this is a floored policy as by hitting 4x4 vehicles with green taxes Labour have made good innovative people redundant killed a company that brought sound well designed vehicles to market providing much needed export revenue to the UK. Without sales over the last 12 months as people shied away from the products hit with disproportional tax LandRover are now starved of the cash to invest in the technical solutions that are possible to make the LandRover range of products and vehicles the leaders in the next generation products.
All of which proves that Brown is a busted flush, this along with Mandelson involvement means a cost to the Tax payer for sure or another resignation. Only an idiot would lend money to a company who products are legislated against by the government of the day to the point where they are made uncompetitive against other products in the sector that idiot is Brown he cannot sell (Gold) he cannot managed (Failed public sector reforms) he cannot negotiate (His show up and throw up strategy in Europe) he cannot lead the party (Prime Ministers Question Time he is as effective as Rown Atkinson as the vicar in Four weddings and a Funeral) Now he and the Prince of Darkness are plotting how the UK tax payer can fund the excess of the TATA board well done Gordon your capacity for incompetence grows ever stronger.
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Supporting Jaguar and LandRover to continue to produce the same cars is just absurd. These cars will never again sell well enough to be profitable and the cars are anti-social due to their CO2 emissions.
AS soon as we start climbing out of this recession oil prices will sky rocket again and dump us straight back. The only reason oil prices are down is due to the few % point reduction in consumption due in turn to the recession.
Further more, from the end of 2009 world crude production will begin to decline for geological reasons. So energy prices will climb up again in 2010 regardless of the length of the recession.
We are now in a century of decline following on from a century of growth and it is far too late to do anything about it. Just take cover, get yourself a smallholding and hope that law and order will not breakdown completely
Click here for more info: http://www.transitionnc.org/?q=node/73
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No way should the British taxpayer subsidise an Indian company, especially one that feels it's worthwhile sponsoring the Ferrari grand prix team. It's really smart to keep Tata in cash so they can take the cash home to India at our expense. It's hard that all these people might lose their jobs, but if Tata could take the work to India anyway, they probably would.
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There are many small and viable businesses which, as a result of decisions taken recently by banks, find that their lines of credit for expansion/investment have noiw been withdrawn despite previously good credit ratings. Together, these companies probably employ many thousands of people, just as Tata does. Do we imagine for a moment that the government will take any direct action to assist them?
Not so long ago, Gordon Brown found himself a handy little mantra to trot out whenever he needed a wee soundbite..."British jobs for British workers." Now that he has an opportunity to demonstrate his commitment to that principle by proactively addressing the difficulties of small businesses, he has gone strangely silent. Man of honour? Someone in whom we can place our trust?
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Anyone who thinks this government is in anything but a blind panic now isn't paying attention.
It's gone beyond any rational judgement. I reckon if I invent an industry and stick my hand out for £10bn I've got a chance of catching some.
Anyone remember when Ponzi Brown used to attack Tory proposals as "unfunded" LOLOLOLOLOL
See you all on the other side of Hell.......
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A number of items need to be understood:
1. We british should support our industry. It generates jobs and finances with integrity..unlike banking sectors!
2. What Jag and Landrover are asking for is credit help...NOT a cash gift. We should match whatever Tata put in and have confidence that it will be paid back to us. We bailed the banks out to do this and the banks are not doing what they should do.
3. Other governments have supported their auto industry (e.g. sweden >3bn!! to Saab/Volvo), France are helping theirs, Germany helping theirs. Have you argued that they shouldn't do that? They understand the significance of the auto industry in the economy.
4. JLR cars are not gas guzzlers. The Lexus I test drove recently had a worse fuel economy than any car I've driven. (The hybrid wasn't much use on the motorway, and it was just extra weight being carried)
5. Ive read articles about JagLandrover and they are an efficient operation with class leading products. If you've bought a BMW, Merc, Lexus, Audi in the last few years....maybe you should look in the mirror and question that decision until you come round to the fact we have better and more reliable products in the UK.
6. Tata's sponsorship of Ferrari would make no inroads to the credit help that Jag Landrover should be given.
7. The government shouldn't consider Jag LR as special. The difference between JLR and the other companies is that the others might well send our credit help overseas, whereas Jag LR money would be used here in the UK where it should be.
8.What's Mandelson playing about at? He should have sorted this help out before now. (More Labour party dithering)
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I am all in favour of using taxpayer's cash to support businesses that have a real chance of succeeding in the new market paridigm.
So Land Rover - possibly - but Jaguar is an emphatic No....
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This comment was removed because the moderators found it broke the House Rules.
Madness cubed. A firm we don't own, with access to ready finance of its own, and we - me - the British taxpayer is going to throw money at it? Why? What for?
Is Mandy *bribing* Tata to keep the plants open to keep Labour marginal seats onside?
This has got to stop - the country is bust, and we're being played for fools by government and businesses alike.
Election now. Let's put an end to this.
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The automotive industry use to be and still is a corner stone of manufacturing in the UK. But like other parts of British industry in the UK is almost dead. In terms of producing a bulk standard car. Financial support is fine, but for how long, what will the money do; provide the employees a longer "Christmas break" as the basics are that if no one buys a car, then there would be over production and not enough money for cash flow. Will we get very cheap jags in the future, just to sell.
This maybe the period of radical employment change in the world. We had the dot.com boom where IT/Computers were the new industry - bust. In the far east, cheap labour and production costs, made the likes of China a major industrial power.
The UK became a "service" industry to finance etc - bust.
Buying from Poundland for example, does not help the UK economy, as most of the goods are made in the far east!
A radical look to the future as to where employment will be needs to be looked at. In the 1930's it was the case of building dams in the USA to keep people working through the depression. And then of course World War II came along....
For the UK to recover, there needs to be a radical thinking and financial support to what will keep people employed in the future.
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Please lets get some perspective When and if in the next 3-5 years we can negotiate our way through the looming global fiscal black hole the last thing we'll need as we face the next challange which is global warming and diminishing oil reserves is a taxpayer funded clutch of morally bankrupt planet destructers.
The golden days won,t be back anytime soon so why not employ Jaguars considerable expertise to develop alternative technologies instead of throwing yet more taxpayers money ino the pit.
Or is this useless goverment nostalgic for another Leyland?
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Every extra billion that is spent in this way pushes government finances nearer to tipping point - which is actually positive, in a weird sort of way, because it hastens the (surely inevitable) day when an IMF rescue becomes unavoidable.
The IMF would impose very strict conditions - including double-digit, across-the-board cuts in public spending, plus higher taxes - and would drip-feed financing conditionally upon obedience to the terms of the rescue. We could yet be saved from ourselves.......
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Oh come on Mr Mandleson You are being suckered yet again by the tail wagging the dog.
£1.7bn paid for LRJag and now 6 months down the line and shrewed Tata want a bit of what everyone else is getting, another state welfare handout.
I am sorry but Tata knew of the worlds looming economical downturn when they aquired LRJag Like ull us mere mortalls, you have to live and die by your own actions.
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This is an absolute joke. I work hard and I care about my wife and kids travelling in a car. I can't buy a Range Rover because I am pilloried by the "Green" community for driving a gas guzzler and the Govt. tax me beyond belief to make it unattractive for doing so.
YET - Land Rover are in trouble, so, I can't buy one, oh no, but I can pay for a bail out so overseas sales dont suffer and people don't lose their jobs?
Here is a maxim for thought - how many talentless, egotistical public sector admin pillocks are we expected to support these days? Sit on your a**e and look forward to your pension, explain to your kids what a great job you have done and watch a minority of society pay your salary while you do nothing of any worthwhile note.
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The car industry has long term problems and short term problems and one of the difficulties is that government intervention which is aimed at overcoming short term problems, caused by the credit crunch, end updistorting the market which otherwise would hopefully sort out the long term problems about investment for the future.
Lending money to some, but presumably not all, UK based car businesses will be seen as unfair and distoring the market - after all if Jaguar-Land Rover get money, then why not Toyota or Morgan, the later after all, is a competetor for Jaguar-Land Rover.
The government has to date done mainly the right thing, by seeking to free up credit markets by direct intervention in the banks, loosing monetary policy and given the economy a large fiscal stimulus. A better solution may be having some specific government-backed car loans facility to replace the freeze in funding car loans by the banks, allowing individuals and business to borrow from the fund to purchase new cars.
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There is a world of difference between ensuring Jaguar/Land Rover survives current trading difficulties and baling out its current owners. If, as seems likely, the Tata Group has bought an asset it cannot afford (and if it cannot refinance the debt it took on to buy Jaguar it cannot afford it) then it should lose it. The problem is one of inaapropriate capital structure at the ownership level and a failure to set aside sufficient reserves to see out an inevitable downturn, not a fundamental flaw in the company itself.
The model has already been set for the banks: very expensive loans and, in some cases, 60% of the equity share capital in the hands of the taxpayers. Why should Tata expect a handout from the British taxpayers? It wouldn't get one from the Indian taxpayers.
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RE #177
"Election now. Lets put an end to this."
Put an end to what - Labour government?
That'll solve a lot, the Tories have all the answers...
Get a Magic 8-ball in charge of things and lets give it a shake to decide on JLR's fate...
"Maybe"
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I am now starting to get seriously scared. The government seems to be giving money away like it is free.
What is the rational behind giving money away just to keep people in jobs ? Starters these companies ( jaguar, land rover etc ) are not british companies therefor the government should not be bailing them out with tax payers funds.
A bad process is being put in place with the bail outs. Now every company going which employs more than 1000 people will want to be bailed out.
The sooner we have a british OBAMA the better. All these old clicks in the Labour and Torie parties are destroying the country.
I left the uk several months ago having having finished university and coming out with Huge debts since the government decided that students were not entitled to student grants even thus our parents had paid into the system and the same politicians had benefited from these same grants.
How on earth can you justify bailing banks and every company now putting its hands out. It will take 30-50 yrs for my generation to pay this huge debts off. The politicians are ok with their six figure salaries and tax payer funded shopping lists.
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I think this shows just how out of control the goverment is. All they have done thus far is ill conceived and is blatently politically motivated and not in the interest of the country.
If the country is not bankrupt in a year or so it will be a miracle.
And who elected Mandleson anyway. His financial past deallings have led to his resignation twice. Do I trust him? not a chance.
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Robert.........
The car companies have to go to the wall, The money the country does have left needs to be spent wisely, not foolishly.
Its time to re build Britain, not for us and not even for our children, but for there childrens, children. the country can not and should not let our politicans carry on in the way that they are.
There as never been a greater time in history when a Election was needed than now.
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I have just had the unfortunate experience of viewing my local news programme "Midlands (home of Jag/LR) Today". Fortunately I have not mastered the art of reaching into the television and shaking people about vigorously otherwise I would have.
A gentleman appeared on the programme under the misguided impression that it was OUR civic duty to put OUR hard earned tax into a foreign money pit.
Who in the name of all that is holy does this man think he is.
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182 badge18:
"...how many talentless, egotistical public sector admin pillocks are we expected to support these days? Sit on your a**e and look forward to your pension, explain to your kids what a great job you have done and watch a minority of society pay your salary while you do nothing of any worthwhile note".
Absolutely right - it is Labour's feckless public spending, carried out to create a client electorate, that has got us where we are today. We are paying a terrible price to keep ZaNu Labour and its client constituency in jobs.
Here's an idea, Lord M; save JLR but, for each car job saved, chop a bureaucratic post to save money. Not going for it, eh? Prefer bureaucracy to manufacturing? Now why am I not surprised?
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This comment was removed because the moderators found it broke the House Rules.
The second was to suggest I should be careful though and beware of anti-terrorist police coming in response to that suggestion.
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Here we go again a nationalised motor industry both in the UK and USA.
The disaster of the 1970’s again. Companies making cars that no one wants government money going in (ours, Tax Payers who are struggling)
The solution; let market forces begin should have done that with banks as well if they are badly managed, over paid and making a product or providing services no wants or understands (the bankers never understood what they were doing) they should go to the wall the jobs should be lost otherwise nothing will change.
You can see this in bonus being paid, no reduction in costs; business as usual boys let the mugs pay
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steadyship wrote:
"A number of items need to be understood:
1. We british should support our industry. It generates jobs and finances with integrity....."
Wrong, try working for them.
"4. JLR cars are not gas guzzlers...." True, but they do consume plenty of petrol and diesel, it might be useful if in fact they did consume gas.
"5. Ive read articles about JagLandrover and they are an efficient operation with class leading products. If you've bought a BMW, Merc, Lexus, Audi in the last few years....maybe you should look in the mirror and question that decision until you come round to the fact we have better and more reliable products in the UK. "
I am afraid the idea that Jags/Range Rovers are any more reliable than other vehicles is just plain wrong, we have handled lots of Jaguars/Range Rovers and have had far more silly problems with them such as boots filling with rain water, computers and gearboxes failing at low mileages than any Japanese vehicles we have handled. Have you driven a Freelander? Perhaps could now be renamed Freeloader.
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Ok so as it stands. The government are giving money we have yet to earn to the banks and car industry to prop them up until those that possess any wealth go out and buy in bulk all these homeless new cars. Or if your lucky you can get a loan for one. Providing of course you have collateral which brings us back to our original conundrum.
Surely less tax in the first place, so as not to restrain ourselves, our outputs; red tape and poverty relieved, would have been the best way to go about solving this. The easiest and cheapest in the long term? Who knows, but the most viable.
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Great cars, but are no longer required in these austere and environmentally aware times. Sorry, but its time to say goodbye, unless they can come up with 80 mpg models.
Also workers will need take the same pay as those in Japan. Its a world market now, and most British workers in all areas of employment have been underworked and overpaid for years.
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So now the British taxpaper is going to help out another gambler - a large Indian company that borrowed money to get its hands on Land Rover & Jaguar and now finds that wasn't such a good wheeze after all.
Why not?
Help yourself.....Mother's drunk......
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Robert Peston is, usual, 'spot on'. Any company (especially inward investors) can now go to the government and plead that without additional funds they will have to reconsider their continued involvement and, as I am sure Tata will have done, suggest that manufacturing could be carried out where wage costs are lower; Indian car workers being less well paid than their British counterparts. I think that the belief by some bloggers that we should call their bluff is correct. If they want to pull out then we simply nationalise. Let's face it we have been here before and, surely, have learnt how to do it properly by now? Indeed, nobody would have predicted the banks would end up in the position they are in. British jobs must be protected. These are truly scary times.
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land rover made a profit of 2 billion before ford took all the money and run land rover had good first half of the year and we should pickup again in march with strong interest from russia and middle east for new disco,halewood loses money on every freelander and is leased off ford so close it land rover has been in profit past few years jaguar has never made money all the time ford owned it
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It is just plain and simply wrong to take public money(taxes) and then use said money to bail out private companies. Whether job losses are on the horizon or not, Jaguar Land Rover is no longer a British company, and therefore should not be entitled to our taxes for a bail out. These are private on-going concerns for the head of Tata and not something the government should consider. One only has to ask when or where this will end, if private companies can seek and get public finances to get them out of trouble. Gas guzzler or not, that is for me a side issue, the real one for me is why that should be a consideration at all. If tata is involved in F1, which is an incredibly expensive sport to be involved in, then cost cutting and money saving schemes in their own fields would be more beneficial to the Tata grooup than looking handouts. We have a leader who seems to be more in tune with big buisness than with ordinary folk, surely a bad thing
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I've got a brill idea - I'm going to go and buy a declining business in India and then ask for a really big handout, nearly as much as I paid for the business, from the Indian Government. Oh that wont work, they are not that stupid.
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From today's Financial Times:
"Peter Mandelson, Britain’s business secretary, is contemplating a bail-out of Jaguar Land Rover. It is hard to imagine a less deserving candidate. The luxury carmaker fails the public interest test on two key grounds. First, its products are of questionable social utility. For the government to allocate scarce funds to propping up the production of the 4.2-litre V8 petrol-supercharged Jaguar is a nonsense. It has a top speed of more than 150mph, emits 299g of carbon dioxide per kilometre and costs about three times the average annual wage. True, the British car industry employs 190,000 people directly and supports several hundred thousand more once components and retailing are taken into account. But if Mr Mandelson wants the government to underwrite this £50bn industry, he should harness such public funds as are available to develop the green cars of the future, not pander to the special pleading of vested interests.
The second reason Mr Mandelson should refuse to bail out JLR is that Tata Motors, the Indian company that recently paid $2.3bn for it, can do so itself, if it wishes. Tata Motors, let it not be forgotten, is a subsidiary of Tata Group, one of the wealthiest companies on the subcontinent, with revenues of $62.5bn and profits of $5.4bn last year. The argument that thousands of jobs are at stake is weak: sectors employing many more, such as retail, receive no special treatment. If job protection starts to drive government policy, then the UK would bar Tata Consulting Services, a sister company, from offering the type of business process outsourcing services that have sucked backoffice jobs to India in their hundreds of thousands over the last decade. That would be nutty. Many manufacturers are now leaner precisely because they now manage their inventory, process warranty claims and order spare parts through TCS’s offshore centres. The simple truth is that Tata Motors overpaid for a trophy asset with poor prospects. It must sort it out itself."
I'm inclined to agree.
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The government should know by now that one thing business needs is stability - especially exchange rates. It is about time that the Sterling Euro rate was fixed so that the UK and its exporters can get moving.
How much help does Jaguar need at £1=1€ or £1=€0.90 or £1=€1.20 ?
Long term if we joined the Euro at say 90c I suspect that on recovery the UK would be a very attractive location for the factories we will need to rebuild our economy. Maybe subsdising Jaguar is a short term gain only item.
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Picking winners and government loans is not the right approach to supporting industry. Good companies want as little as possible to do with government.
What government does need to do is create an environment where success is possible. Critically:
1. Encourage British people to save by investing directly in shares in productive companies rather than houses and bank accounts. This would happen naturally if it wasn't for the huge government subsidies which favour property (no capital gains tax on sale) and bank accounts (govt. guarantee).
2. Use import tariffs to negate any advantage export focussed Asian countries get from unfair competition e.g. currency controls, shielding local markets, turning a blind eye to intellectual property theft etc.
With access to capital and a level playing field UK companies can do the rest by themselves.
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174 steadyship
Help industry. Ok then look to the French model which is not the Brown model. Renault, EDF etc. State owned. Limited numbers of key activities on the state book. Mandelson Superior Brown Fudge spread around here and there is neither one thing or the other. TaTa for now.
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Whilst accepting the significance of Jaguar and Landrover as an employer, as a purchaser of sub-contract UK manufactured parts and also to the viability of local ancillary businesses, one has to question the validity of propping up these industries, even given the unusually difficult trading conditions. If the parent company, TATA, is not prepared to dig deep to support its own interests, why then should the UK tax payer be expected to underwrite these teetering businesses?
Furthermore, there is another pertinent argument for allowing market forces to play their part with such enterprises. One result of the recent high fuel costs, which inevitably shall return, is that motor car users have been made acutely aware of both the cost and the environmental impact of these hideously overpowered and over sized vehicles. Perhaps, therefore, these quite unnecessary vehicles have run their course (other than for dinosaurs and egotists such as Jeremy Clarkson) and the market demand will never recover to that previously enjoyed. If that is so, using tax payers money to fund theses enterprises, either temporarily or long term, will simply be throwing good money after bad. That will result in default to UK tax payer and, of course, an exacerbated debt for which we all shall have to pay for the unforeseeable future.
I say NO. Let TATA fund its own businesses through bad times as well as good. That is the free market economy which, we have been told for such a long time, is in our best interest.
As for Peter Mandelson, he has shown his true colours often enough and I would not trust him out of my sight. I certainly would not trust him to make any sound business judgement, other than for self-interests. Quite why Gordon Brown deemed it essential to bring such a charlatan back into the Government is, to my mind, highly questionable and very suspicious indeed.
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If you have a bucket with a hole in do you keep putting water in to try to keep it full ? It seems that governments across the world who cling to the "popular" vote will pursue this strategy because they haven't got the intellect and courage to admit the bucket has a hole.
The only time it stops is when the water runs out - then they lose the election anyway but we're left in an impossible position.
For bucket read economy, for water read money. The economy has been built on a debt bubble (invisible money) and someone has reaslised the assets underpinning the debt aren't valuable enough.
The stock market has been the fuel used to grow the bubble, driving corporations to achieve bigger and bigger profits through reckless decisions on the premis that "your competitors are doing it so if you don't we'll buy shares in them". Any wonder why quoted banks invested as they did ? Any wonder that Companies are on the brink because they're riddled with debt? All so that the city slickers can take home there ridiculous bonus cheques for gambling with other people's money. Not seen a single sensible proposal on how to regulate them to prevent this from happening again.
Every month I read the news and every month we get in deeper - and the sad thing is this is nowhere near the end. Still a long way to go with jobs, credit cards, housing, pensions etc.
As a country we are nearly bankrupt through the folly of the last decade and the short sited holy bucket decisions of the last few months. Carry on making those decisions and we will go down the pan - only this time we have no manufacturing industry to allow us to grow back again quickly.
You either believe in a market economy or you don't - there's no half way house. Supporting industries will lead to international protectionism (and rightly so in my view - if the US protects its car industry to save jobs in its own back yard, why should people in other countries buy their cars) and that will set the world back decades.
Painful though it might be in the short term we can't supprt JLR or anyone else - let them go. Then fix the bucket.
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Well if the taxpayer puts any money in, I'd expect Jaguar to be nationalised, like RBS. Then we have the state involved in the production of elite gas guzzlers to save 15,000 jobs, while Woolworths was allowed to fail at a cost of 30,000 jobs.
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A new parliamentary committee bill has sparked a fight between deputies in South Korea's National Assembly.
The ruling party tried to bar opposition deputies from the chamber where they were introducing legislation which would have begun the process of ratifying a contentious free trade agreement with the United States.
The opposition deputies used chisels, crowbars and sledgehammers to try to break into the meeting room through a barricade of furniture.
Fire extinguishers were set off by security guards in a bid to keep them out.
http://news.bbc.co.uk/1/hi/world/south_asia/7789552.stm
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Deflation?
Who do we think we're kidding?
Certainly not ourselves.
The biggest threat to the British economy has always been inflation.
By 2011 it will be heading towards 15% - 20% and the government of the day will be panicking and slapping on punitive interest rates.
The plain truth is that we have to allow ourselves to feel some pain for the excesses of the past decade.
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My feeling is that if the Government didn't see fit to step in and save Rover, with its potential mass-market appeal and lower carbon emissions per vehicle, the it should stay away from the rich people's playthings. If they want to stay in business, let them produce cars appropriate to the times!
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Second thought after reading the blogs and news analysis.
It is a rotten idea, corruption ?
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So.... what we are saying is we should be providing taxpayer £s to subsidise a company that is making luxury cars that are expensive to run which people are not buying.....
A company that is now owned by a foreign parent company who promised investment and support to get the business expanding... but now seem to want the British government to fund them?
I think Tata beleive that if they stand aside, the government will have to step in to prevent one of the few big UK motoring names going down.
In my view, this is WRONG. We cannot as taxpayers just keep on bailing everything that falls on hard times. Tata need to stand by their words... take the good times with the bad and get on with it... if not it should be allowed to fail.
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I find this deeply outrageous on a number of counts.
First, whatever became of the concept of risk in business? Propping up businesses for which there is no consumer demand for the product/price mix has been proven to be a disastrous long term option.
Second, how much deeper are British taxpayers' pockets supposed to be? This country will be bankrupted for years the way this government's going.
Third, this is Tata choosing to plead poverty. They are a huge organisation playing poker with the UK gov. Call their bluff.
Fourth, I compete directly against Tata in another market (software). One of their claims is the huge financial stability they have against my (relatively smaller) company. If they beat my company into the ground can I expect a government bail-out?
This government needs to be grown up for once. However unpleasant it may be, some businesses do – and should – fail when they can't compete in a competitive landscape. The bail-outs are to avoid bad headlines so close to an election. Problem is we are all (well, 'all' always seems to exclude ex-politicians) going to pay the price for many years to come for this short term selfish political expediency.
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Brilliant post there 81, brilliant!!!
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To lovers of symmetry there is a one off chance of setting up a rather interesting new scheme.
Car makers the world over should be encouraged to build cars to be held in stock.
These new cars would be expected to be held in stock, unused, for many many years.
And the symmetry?
With oil.
The stockpiled cars would form a one off never to be repeated reservoir. A finite resource. It is most unlikely that the world will be able to repeat the current availability of low cost manufacturing supply chains for automobiles. So, build cars whilst we can. Build them cheaply – at taxpayers expense if necessary. Store them for future use.
Get them out of storage as and when required. The users will pay the going rate. Just like they do with oil at the present.
Two finite resources. Each one dependant upon the other.
And when the resources are gone? They are gone.
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Politicians are living in denial.
The world has changed.
The Old World:
- borrow, borrow, borrow
- gaz guzzler cars as status symbols; no regard for the environment
- mass consumption of enviro harmful products shipped from China
The Future
- live within your means
- reduce consumption of rubbish products we can live without
- switch to low enviro impact products
- basically, live a sustainable lifestyle
The government should support industries with a future, like internet infrastructure, hi-tech, enviro friendly technology etc and let old ones go to the wall.
Painful, but we don't have time to live through denial, realisation, change; just do it now. The majority of the country knows this is the way to go. Why can't our politicians see the light?!!
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They stood by and watched mg rover get raped by pheonix then let it get sold off to the chinese in bits, yet they are considering helping 2 car companies owned by a foreign company, i hope not.
The car industry died in this country decades ago thanks to the persistance of Livingstone and his ilk.
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If TATA the owners of Jaguar/Land Rover are unwilling or unable to finance their own business then our government should stand back and let the business go under. If the government didn't believe the business was important enough to our economy before the TATA aquisition then why is it necessary to do it now.
If the governments intention is to save as many of these jobs as possible, then they need to be more hard headed in their business dealings. They should let the business go under first in the expectation that they will be able to pick up at a fire sale price in the foreseeable future.
If they do decide to fund it or take it over then they need to be mindful of the fact that in future, the market/s for these cars will have shrunk considerably, to the point wher this might never become a viable project.
None the less and as an engineer myself, I would be in favour of trying to keep as much automotive engineering knowledge and expertise together as possible.
Assuming proper value analysis/value engineering review is carried out then it might be possible to come up with better value vehicles that would sell in sufficient volumes to make the business truely viable.
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Seems to me that very few on this blog have ever been involved in manufacturing. When a Jaguar or LandRover is sold it sustains many other jobs. First of all there is the dealership that sold the car, then it has to be serviced and spare parts made. Over the lifetime these costs could almost equal the original cost of the car. Running a car also of course involves the oil industry.
Woolworths sold mainly imported tat that will wind up in waste bins.
To be honest I loath LandRovers, together with all 4x4s but a Jag is something else. I wish I could afford to trade in my year old SAAB for a new one.
To be even more honest, my wife wont let me, that's what happens after 50 years of marriage.
A further point at 75 I still work but have now cut down to just 6 days a week. Retirement is for wimps.
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# practically all of the above...
I agree with all of the comments I've scanned across in relation to the bizarre idea that we should be saving Jag LR with public money.
With an expensive packet of measures, the government has once again managed to overspend, mainly by wasting 12 billion on a futile VAT cut, and so leave businesses vulnerable to the economic downturn unless even more money can be stumped up - none of this will be cheap and the remedy may be worse than illness, no-one really knows as no-one knows how long these conditions will prevail and which companies will recover from it.
Instead supporting our building industry by investing in public building programmes - social building for the present and the future needs of those falling on hard times - the government is planning to support a luxury car maker that also makes inappropriate cars for the oil starved furure - namely, off road vehicles.
There is this continuing blatant sucking up to the wealthy by Labour who seem to think that they are in some way the saviours of the planet, rather than it's destructors - as they have proved to be during this last year.
The government is storing up future problems associated with nationalised bodies and vast public loans - thay are thinking on their feet and making bad decisions as they go along. There does not seem to be an end to their involvement in propping up the economy, there seems to be no limit on their ability to spend on our behalf.
My worry is not on how deep a recession we will have but, but on how long it will take to pay off this mountainous debt we see accumulating in front of our eyes.
I don't expect a government to stand by and do nothing in these circumstances, but inept targeting of public resources is akin to throwing petrol on a fire.
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My daughter has just turned three. In a few years I'll take her to look at the cars in the scrapyard and say, my generation mortgaged your future for this, and more consumer tat besides.
She'll probably be more worried about runaway climate change, and will want to know why we didn't do more to stop it when we still had time...
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This sounds like a real kick in the teeth for the 30,000 soon-to-be-out-of-work Woolworth's employees.
As recently as 27th November, Gordon Brown pledged that the Government would do all it could to save Woolies, a company in debt to the tune of £400M, yet it went to the wall.
Now the Government is going to throw £1 Billion at Jaguar-LandRover to save a company that has Indian owners, and with it 15,000 jobs so that we can continue to have the opportunity to buy vehicles that we can't even afford to fill the fuel tanks of.
I feel sorry for the Woolies employees. I will never need to own a Jaguar, and probably will never be able to afford one, but I'm always partial to a little pick-n-mix !
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nything that lord peter is involved with should see me alright !
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No. 190 Friendlycard
Well below your usual high standard. New Labour have grossly mismanaged the economy but they are in no way comparable to Mugabe and his thugs. How many British people are seeking asylum in Zimbabwe?
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The whole of british industry is throttled by the effect of the antics of the banking sector.
In the same way the banks that caused this mess were bailed out there are many well run businesses in this country that need a credit facility to survive. I would rather trust a well run manufacturing industry with my money than a bank at the moment.
It's not about Jaguar it's about whether the UK values manufacturing industry as much as banks. Letting well run businesses go to the wall due to a short-term maelstrom is madness. The French and the German governments are already implementing agreed support packages for their industrials.
We have a broken economy, the Government has to fix it so that businesses can operate here or they will go elsewhere. The Jaguar/Tata debate is about a credit line for a business operating in the UK, all businesses need commercial credit facilities, the bailed out banks should be forced to provide it.
It's sad just how readily people run down UK products and manufacturing with outdated and ill informed opinions, we won't get out of this mess unless that changes.
The service economy is a myth we need to start earning our way in this world.
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A few things concern me here. One is the news that Tata are announcing a sponsorship deal in F1 on the day that they appear to be asking for a taxpayers subsidy.
Do we appear a soft touch to businesses that can not survive a down turn?
Secondly, Gordon Brown has pursued a policy of driving down the desirability of Land Rover product. Their "dirty" 4x4 range has been a target for heavy tax increases, publicity has been led by the Government highlighting the problems 4x4s bring to the environment. We therefore have a manufacturer incapable of selling a product that is desireable in today's market, and has residual values dropping at spectacular rates.
If Mr. Brown had had the foresight to tax manufacturers a Green Tax on the vehicles they produced, instead of taxing the owners, then LR may have looked at alternative vehicles to produce and develop, instead of staying in the trading area they had always sold in.
So are we now being asked to subsidise a company, owned by a foreign company, which is doomed to short term strife and losses due to its product being the wrong thing at the wrong time?
If we are to further spend our taxes on rescuing businesses, we should do it on those that have a future. Following the Rover/BMW debacle, this Government really should know better.
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t5trackrat,does Halewood worry you,do you think Lode Lane will close,nice land it sits on,worth a bit to the airport don't you think.
Think the Disco will be replaced by the 7 seat Freelander,Halewood to get the LRX?
Comments please
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am i the only person who thinks it is ironic that someone who has never run a business in his life is Secretary of State for Business...
He was born in 1953, and studied Philosophy, Politics and Economics at St Catherine’s College, Oxford.
After working as an economist at the Trades Union Congress he joined Lambeth council in south London, from 1979 to 1982, during its "loony left" days.
He became a current affairs TV producer with London weekend and was later appointed Labour Party Director for Campaigns and Communications in 1985.....
i rest my case!
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I think post 82 has hit on a very good point here, here's the part of the post I refer to.
..............
On the basis that even a stopped clock is right twice a day, Mandelson said something true early in that video: the problem is "a sharp drop in demand".
And, IMO, that's the root of it: if they could sell their cars, they'd get the private financing they want.
But they can't.
So, if there's little demand for their cars right now, what's the taxpayers' money going to do?
Are we going to give them money to produce cars at pre-crunch levels... and then just leave the cars to rust?
...............
The last paragraph is pivotal, isnt this the exact same thing that russia used to do with tractors?
My point is thus, this is NO difference between capitalism or communism per se,
The entire point of both ideologies is to fool the mass into thinking everything is A.OK as the elites live in the lap of luxury!
What does this mean economically?
INFLATION!
Watch the arts market, bet you see some staggering prices for 'art' soon!
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Some of the posters on here are a joke - they obviously have no idea how the economy functions.
Say for example the government does not decide to "bail out" Jaguar Land Rover. What does Tata do then? Well, if I were Mr Tata I would close down the JLR UK factories and engineering centres and move production to India.
Not only is the Indian labour a fraction of the cost of UK labour, but material costs will be cheaper out there and there would be huge local demand once the 100%+ import duties are removed.
Where would this leave the UK economy? Answer - screwed. JLR and it's supply chain support over 100,000 jobs. The loss of this many jobs would cause a ripple effect to other car-companies (most use the same suppliers)
If 850,000 car industry jobs in the UK are lost, think how much this would cost the economy. Less spending leads to more companies going bankrupt which leads to more people unemployed which leads to more government money being spent on unemployment benefits.
The cost of the above is likely to be significantly higher that the £1bn of short term access to credit that JLR require.
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I want Jaguar Land Rover to survive, apart from the fact that the XF is possibly the most beautiful car to be built since the E-Type, we desperately need to start building things that can be exported. That is of course if we wish to remain an independent market economy.
As a nation, we appear to be very mixed up when it comes to our identity. For years we have protested about the pint, the mile and the pound (both in measures and currency), but we then always appear to bottle out when the going gets tough or we have an expensive bill to pay.
But the credit crunch is finally putting everything in true context. A large vocal minority appear to be shaking their fists at government bailouts of large banks and institutions, taking the attitude that they should be let to go to the wall as that is what the capitalist mantra says. The fact is that the capitalist mantra caused this mess by outsourcing/downsizing/market manipulation/globalisation in the first place.
However, this does not mean "throwing good money after bad". In fact the problem is now is that we have a distinct lack of politicians that are up to the job of managing the country and economy. What is needed now more than ever is a managed approach, understanding that some companies need to be let to go to the wall, others need to be wound down, some need help changing their business model, while only a few actually need to be completely saved in their current form. Normally, the market would do this, but due to the amoral way the market has gone recently, few people trust it at the moment and are unlikely to trust it for a number of years to come.
As the banking system is a mess, you can't get a mortgage, or a loan to buy a new car (Jaguar perhaps?). If you are a business you can't get borrow money either. It does not matter whether you have a good business model or not, if you have to pay back a loan suddenly, or if the interest goes up too high, you either put prices up, use any cash reserves, or you wind up the business; it is a simple as that.
So this is why Tata are effectively after a loan from the government. The business is suffering at the moment as sales are down, but it is in much better shape than GM, Ford or Chrysler. They need the money to improve their vehicles to make them world beaters (they are almost there), especially by reducing fuel consumption and emissions. This is a long term commitment.
I see that some people in the post have argued that Tata are also sponsoring Ferrari so they have the money to support Jaguar Land Rover. However, may I like to point out that sponsoring is rather like advertising. Remember that Tata manufacture the Nano, so it is rather interesting that a cheap car manufacturer is to be associated with one of the world's most glamorous. When you consider that Tata have a joint venture with Fiat, whom have a long association with Ferrari; the sponsorship could be explained in a different light.
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#226 ingeniero
The service economy is a myth we need to start earning our way in this world.
Could not agree more. But nobody listens!
The Competition Act is ignored.
Not my MP. Written to, spoken to.
Not my Euro MPs. Written to.
Nor Kneelie Kroes. Written to.
Nor the then DTI. Written, spoken to.
The government sees universities as the future. They can get hand outs quite legally that do down industry.
The government and it's representatives do not give a damn about manufacturing.
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Anything Mandy is involved in has got to be suspect- he is not fit for any purpose! other than a sewer.
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#191 and #192
Nice to see BBC censorship is in full swing.
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I just cannot believe this story. How dumb are we taken to be by GB, Ally D, and now Mandy Boy as well?
"A good chunk of its business was viable before the economy started to contract fast and car sales dropped like a stone"
If it was viable, and if the consensus is that it will be viable when the upturn comes, then someone somewhere will find it an attractive investment opportunity. However, they may well want equity not debt, which is just tough for Tata if that's the case. They get diluted. It's going to happen a lot in the next 5 years as less debt is available, and we see a shift in the way companies are capitalised towards a higher proportion of equity in capital employed.
"Jaguar Land Rover is responsible for a disproportionate amount of precious UK-based research and development in the automotive sector"
So what? Does anyone want it? And if this is so vital to the UK, then why isn't Mandy Boy leading the charge to buy the Honda F1 team? Isn't that a UK-based cutting edge R and D player in the automotive sector? And if this cutting edge R and D is so valuable, it rather begs the question why Honds is closing theirs down and Mandy Boy thinks he ought to buy Jaguar's. If it really is valuable, let Tata sell the business if they can't finance it. Someone will buy it if there really is value there.
"It's all very well for Peter Mandelson to insist that he would only save businesses that are of strategic importance to our economy and would be sound in a world where credit was flowing freely.
Jaguar Land Rover would tick those boxes"
Erm, no it doesn't. Jaguar couldn't make money on a stand alone basis. Ford bought it and lost money. OK, so we know they're useless but the point is still valid as they managed to lose money during a boom in car sales. Now Tata can't make money. There's a pattern emerging here. Basically, there are better makers of high-end vehicles, eg BMW.
"But he also needs to be mindful that he doesn't become the lender of first resort to canny mutinationals"
He actually needs to be mindful of not being a lender of any sort to companies with no future. As I say above, if there is value in some or all of Jaguar, someone will want to buy it (rather than lend money to an opaque family-dominated structure such as the Tata Group). I suspect there are elements of value, but Jaguar cars aren't good enough to compete with other luxury brands, and gas guzzling Range Rovers are history.
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Ckudow has it right. If we do bail out Jaguar, then let us have the equity!
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226 ingeniero
You do not know if the banks decline to loan to JLR is based on a lack of credit in the system or whether the business is facing a sharp decline in orders and judged not worthy of a loan. JLR have been in decline for a long time. The development of small cars with much improved handling , road holding and power has narrowed the gap between cheap cars and expensive cars eg jags. Go to the outback in Australia where reliability is king and you find Toyota where in the past LR was common. Nope I am sorry but you are wrong. JLR may make good cars but they are not head and shoulders above other marques. Anyway the issue is how many firms do you think the taxpayer should help, let alone foreign multinational owned firms. Let alone a firm wanting to play F1 when Honda is dropping out and WRC has Subaru and others dropping out. Do you think TATA owned Corus, the steel maker should be turned down if TATA owned JLR is helped, let alone all the others due to queue. In the US it has been reported that 800 major corporations are lobbying for subsidy, aid, waiver of tax or pension contributions. With more due to join the list. The US is 4x the UK so that is 200 plus here, possibly a great deal more. Just how much taxpayer money is to be made available. How about small businesses, they add up to more than some large firms, are they okay for it or not. It is just more Brown madness.
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It's not the government's job to finance car companies or any other private businesses. Such action leads to further state debt, pouring good money after bad and propping-up failing or unnecessary businesses. Gordon Brown's prudence has gone out of the window. He seems to have become a born-again spendthrift, pushing the country towards ruination.
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This is rampant stupidity.If a company has been making cars that it cannot sell and storing them in fields what will they do when they get our money?Make more cars and store them in fields as well?Surely the way to go about it is to give the money to people who want loans to buy cars.They will then buy the cars and the company will start to earn again.Or is that too simplistic?
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So Pesto meets Mandy to discuss the script for another Bollywood movie. No doubt Mandy would have reminded that nice Mr Tata who is the head of the studio that if he is to get taxpayer funding for this epic he must not come across as if he is holding a gun to the head of the Government. This will require a spinning operation which emphasises the value of the movie to the Country by which we mean the UK not India. Threatening to walk away from the movie is not an option. Mandy will have to present a mirage. The movie will be a British production, with British actors and hard working British technical personnel. It will even be shot on location in the UK with a handful of Indian extras playing minor roles. Ownership of the movie must not be allowed to cloud the bigger picture of what is a priceless script. Which is? Well if one were to put it crudely the script goes as follows. The owners of an Indian multinational with a UK subsiduary think that they have got the UK government over a barrel. During a serious economic recession they tell the UK government that they can no longer afford to finance the subsiduary unless an unsecured loan is forthcoming. Are they bluffing? Would they really do a Bavarian and walk away? Who can tell it is a real cliffhanger? In the nick of time a slippery hero emerges doing the cha cha as he moves to reconcile the demands of the two sides. He will be called Mandy. Mandy is not very gifted at form filling but he will act as a bridge between East and West. He will gift the studio a taxpayer loan so that the movie can continue. In the small print he will make sure that Mr Tata does not have to pay a red cent and Jock Brown will be forever grateful. If the movie runs over budget Mr Tata will be allowed to return for more help and Mandy will do his bidding with Jock. The title of the movie will be the Brazilian Candidate. Provisonal release date is scheduled for May 2010.
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@226
I dont think anyone is running down british business. there just using there common sence. this country is going to be hit worse in this crises, some say twice a bad as the usa and there having it really bad. its a perfect time to change into a more environmentally friendly country. with environmentally friendly cars, can we change? YES WE CAN. And in someways we have no choice if once again we want to be a leading country. It will be very hard over the next decade but well worth it in the end.
ROBERT great report on the BBC tonight
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#81.
It reminded me of the news and second-hand story I heard last year about the Indian outsourcing company HCL who obtained a US$350 million-US$500 million IT contract with DSG (Dixons etc). The UK staff was told by DSG and HCL it was a co-sourcing deal. An year into the deal, most UK staff were made reduntant and their jobs taken by Indian nationals brought into the UK to work in UK.
All legal but a betrayal. It must have left some very nasty taste ... There is of course the issue of lost treausyr tax revenue, social costs etc etc
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# 34. Pot_Kettle
"Britains own Lewis Hamilton"
Don't you mean Switzerland's Lewis Hamilton?
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Thanks 202, for the clip from the FT:
"The simple truth is that Tata Motors overpaid for a trophy asset with poor prospects. It must sort it out itself."
Absolutely right!
Tata has the means, and if he can't see the merit in funding through present difficulties, it is either because he is a very shrewd businessman who believes he can blackmail UK government into extending cheap credit or, and I suspect this is more likely, because the penny has finally dropped that the future of automobility is in radically different, much more energy-efficient vehicles than any Jaguar / Land Rover builds.
There may be some public interest in retaining some Land Rover assets (e.g. for military etc purposes), but in that case, HMG should simply nationalise the failed company.
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I am incensed that my paid taxes could be used to bail out a company that supplies cars to the rich who are highly unlikely to be affected by the economic downturn, and, the company is not even a British company any longer. How dare the company ask the British Government for funds. Why can't the Indian government bank-roll them.
Woolworths were allowed to go down the pan; a store that supplied the ordinary man/woman in the street with much of what they needed in one store and 30,000 out of work.
It begs the question who is turning the screws (or dangling a bunch of car keys in front of his face) on Peter Mandelson.
Let the company sink or swim.
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#231
Tata could close down the UK production if it fits their businness model anyway. The way I see it - off roaders are dinosaurs.
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Mandelson is not an elected member of Government.
This government discourages (by Direct taxation), large uneconomical cars.
Why jaguar & not (say) Woolies?
This government has none of OUR money left to spend.
Of course it shouldn't bail out Jaguar (with our money), it's not even a British owned company.
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@231
Sorry Sir........
But i think the jokes on you, if you have just seen Roberts report on the BBC he just said the banks are going to be lending at a 3rd of what they where in 2007. thats means far less demand the jobs have to go sadly. and we have to re build. there just is,nt the money there now.
People may think so but take a look at it this way. there,s 100 billion circulating around the uk enconomy. but with each week the bank release 1.3 billion less. 12 months from now you only have around 33 billion circulating the economy. Far less money lots less jobs, and no one to buy the jag.
CLOSE THEM NOW AND RE BUILD THE UK
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#231
no poster on here is a joke sorry, thats part of the problem we are facing, those that think they know better discount the majority, and their livelihoods not to say their opinions.
The fact of the matter is that those who think they know better have no idea of how the economy works, and that's why we are in the mess we are in now.
We cannot continue supporting everything that says it needs supporting, that is truely the major contribution of this fluke of economic activity, the market.
We are British and have faced harder times than this, we will survive it, we will always be British, no market, foreign industrialist or downturn will change that fact.
Average wage?, now that is a skewed distribution, the vast majority of people in this country live on far less than that.
Time for a new start......
Lets talk it up, realise the challenge and face it, take it on and beat it!
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It's started... the 'blackmail' of governments by global corporations. This is pure extortion: "give us £1bn otherwise we will make 15,000 unemployed - and so close to an election, too"
If the government give in to this it's all over....
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As an employee you have no ownership claims to a british company simply because you are british. Neither is there any guarantee that a permanent position is permanent.
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It's becoming pretty clear that our government wil sell their souls and squander our residual wealth in response to any unemployment blackmail.
Why not let Tata sell these car plants to the highest bidder, i.e for whatever they are really worth now.
How can these failed and unwanted Jaguar and Landrover outfits represent key British automotive engineering assets to be preserved at any cost? The Japanese subsidiaries are light-years ahead.
How does Mandelson suddenly have the power to splash our money around as he pleases ?
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As with the US car companies, people are arguing out that these companies were doing OK before an unexpected downturn, and therefore deserve to be rescued. This is absurd. Downturns are part of business. Companies aren't really profitable if they're only viable in the good times and can't survive periodic downturns. Bailing them out only discourages other companies from planning sensibly and insuring against downturns, exacerbating them when they come along. Yes this downturn was in mny ways the financial industry's fault, but downturns are always someone's fault and everyone knows that regular ones are inevitable, it doesn't mean they somehow don't count or properly run companies shouldn't be able to survive them.
For the nationalist-manufacturists: making "real" things isn't automatically good for the economy, especially if they're bad products that cost more than you can sell them for. As for this being Britain's last car company - who cares? If it's that important to you, buy some more British cars, build a better car, whatever. Don't ask me to pay more taxes to prop up crap companies for the sake of symbolism and jingoism.
I sympathise with people pointing out that it's not fair for banks to be bailed out while other sectors suffer. It's a fair point and banks should either have been allowed to fail, or if they really were "too big to fail" should never have got to that point. People should have been clearly told that their money was only inusred about to 50k and that there is risk attached to all kinds of investments. Nevertheless that's not a good reason to throw good money after bad. If we follow that logic to the end, we'd have to bail out every failing company there is.
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If the Government subsidises Jaguar/Landrover, the taxpayer enriches Tata and Tata Shareholders. This would, in no way guarantee the future of these car companies in the UK. Sensibly, therefore, the Government would have to purchase these businesses prior to further financial support being made available.
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The government needs to be very careful with this one -
If financial assistance is provided whilst the parent (global conglomerate Tata) stands back and does nothing, then numerous other viable businesses going bankrupt in 2009 will ask serious questions. Not to mention the collapse of Woolworths with 30,000 job losses - what will they think about a Jaguar Land Rover bail-out when they were left to hit the rubbish heap?
Finally, continuing government intervention in the form of financial assistance will distort global markets in each and every sector it occurs in - there will be no level playing fields left for international competitors to ply their trades and sell their goods.
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Why, why, why are we always so generous?
If Jaguar really is viable then let us buy part of the company at a viable price and when the market recovers we can enjoy a profit from our investment. If that is the case.
If we were slightly more shrewd investors whenever the private sector collapses we would buy shares at bargain prices. Restructure companies to sack failed and overpriced managers (without golden goodbyes).
Then work with the workers to create viable companies that give something back.
Instead we just give hand outs to corporations, who exist to make a profit and therefore don't give back to us in the good times.
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Well as I said previously in a post - which ones are going to the wall - only those who don't scream the loudest I suppose.
Dislike the Mandelson spin though, its quite eerie the way he talks very quietly and precisely about what 'he' is going to do.
Should we be saving a company owned by another country, seems slightly odd to me.
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why is it that there is no money for such important institutions - hospitals, schools, post offices, etc closing. within 18 months of the hospital i worked in being threatened with closure it is now possible to find massive amounts of money to bail out banks, car makers, etc. these companies did not do any great work for the tax payer when the going was good so why are we being asked to help them out now.
we all realise why this needs to be done but surely some sort of payback should be written into the deal when things pick up. how about paying up in ambulances, police cars, sponsorship.
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Why should the Government bail out companies that are in trouble. If they do in and the company does not succeed then not only does the taxpayer miss out, but we only leave a greater burden for our children when they start paying taxes.
We need to let companies deal with this financial crisis else they will not grow. A successful and cautious company will ride this storm.
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Jaguar, Landrover, another runway at Heathrow: this is just sooo 20th century..
Government support is fine for innovative, emerging industries, but this is like supporting the construction of steam locomotives on the eve of the Beeching report.
Why not invest in truly 21st century industries, like tidal stream power?
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If we're going to prop up private industry because it would be viable in normal times then surely we should do it to all those small businesses that are hit because of changing market conditions (eg retailers, who aren't woolworths)
By all means set up an emergency capital resource - but don't start picking and choosing who to support based on how many people would lose their jobs in one fell swoop
the banks were one thing, they couldn't be allowed to fall
but Brown will get away with this, as he seems to walk off every single issue that should destroy him
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231,
SO we are a joke are we?
Tell me what these Indian Jaguars will run on? Cow dung? The oils running out man, wake up!!!
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261, has got it, the polits are too busy gorging on the trough to notice what's going on around them.
The Irony is, money or not, their children will pay the ultimate price - Death!
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Robert, was there not an inquiry into the bail out of MG Rover by this government and the apparent loss of funds to pay the owners (Phoenix) large dividends?
Was there ever a report published?
Perhaps there are lessons to be learned here with respect to bailing out Jaguar/Land rover?
Your mukkas coments would make interesting reading (but I won't hold my breath that we will ever find out the truth of what happened).
If the American government bail out their car workers then perhaps we should bail out ours, after all we've copied every other policy initiative that the Americans have taken.
Footnote for posterity...nothing has worked so far and the black hole is still sucking in material!
Sleep well all.
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I'm sorry but the govt won't bail out Woolworths but will bail out a rich Indian car manufacturer who are happy to sponsor F1 and not sort out the finances. My husband works for Woolworths, guess who we wont be voting for next election..I take it the govt can afford to loose 30,000 votes just to save a car firm that makes toys for rich men.
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Lovely post, RP. Concise and incisive. A prime example of the questions we should all be asking right now.
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there are tons of different kinds of cars to learn about and collect.
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I'm sorry if someone else has posted this already but....
The previously accepted rules of capitilism are dead. Now we are not clearly in a state without Capitilism but we nearly are. We, the tax payer, have always been the motivator behind all business, just now it seems its becoming self evident. Its all very Das Capital... this does not make me a Marxist it just makes me someone who has read it.....
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Bad idea..... bad, bad idea.
But you would have to say.... smart Tata, and being a business solely interested in serving its shareholders, surely you would also have to say it's an understandable, predictable request.
They can see great merit in being the first to approach the government (it won't have its ducks in a row yet, have quite worked out its line on this one, so might be panicked into it), and they realise the sentimental pull that those two marques will have on the focus groups that Gordon (and Mandy) are probably always thinking about (.....J and LR going bust...!!! Oh my g....)
There might just be a glimmer of a case if it was a standalone business, but Tata is gigantic..... enormous....... just read Post 81 to clock one small link here.
Come on government, don't be taken for a mug by allcomers!
A political get out here would be for the government to offer such an expensive package (i.e..... including a slice of some sort of equity) that Tata 'appreciate' the offer, but suddenly find an alternative source of funds elsewhere.
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Just one more related point here....
According to the Beeb website Bush is now saying that he will not allow a 'disorderly collapse of the US car industry'.
In as much as this seems to keep open the option of an orderly collapse, this sounds like good news for the US, and gives one some hope.
I hope GB and Mandy are keeping an eye open on what they are doing over there, and this makes them step back a bit from the sentimental easy option, which will only, in the end, dig themselves into a very big hole.
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Theres a big difference between losing Jag and losing Woolies.
When/if Woolies dies, the number of people losing jobs will be a few thousand. Also 95% of Woolies staff is sales assistants - IE strictly minimum wage, zero prospects, zero chance of affording a mortgage.
Jag/LR, like all major carmakers, subcontract virtually everything -- design and manufacturing. Thier own factories only deal with specification and final assembly. If they were to vanish, the number of jobs at risk would run into hundreds of thousands, since anywhere that designs or produces even minor parts for Jag would lose the trade, and in the current economic climate with companies running right on the line between solvency and insolvency, a slight loss of trade could be fatal.
Thats why the USA are bailing out thier major carmakers - the number of people risking losing thier jobs if someone like Ford goes under would run at figures over a MILLION.
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Lunacy to bail out any business that cannot sell its product. What are they going to do with the money? Build stock? Or (more likely) send employees home on full pay until they are needed.
The main reason why the idiots are considering it, (other than possible Murky Mandy connections somewhere) is the strength of the trades unions in car plants.
A condition of any deal should be for the employees to take a 50% pay cut, doing away with the minimum wage, and the cars to be sold at cost. Same deal to be offered to other car manufacturers to ensure fair competition. That way, the businesses would stay in business, more old inefficient cars would be scrapped, people would keep their jobs, and we, the taxpayers, would get back some of our "investment" in cheaper cars.
But I bet none of that will happen!
The lunatics have taken over the asylum.
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re: 272
car makers do not help really help society, although they need parts and labour they are expensive to maintain and need repairs.
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#80 tom_edinburgh
"I was going to suggest buying Jags and dropping them from helicopters "
Excellent idea.
Drop Mandy and the rest of the govt out of the helicopter at the same time.
At least that would give the rest of us something to laugh about.
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#263 JavaMan1984
"Tell me what these Indian Jaguars will run on? Cow dung? ..."
Good point.
Judging by the smell starting to ouze out of Westminster, that's exactly what this govt is running on.
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129 and others:
Labour may well be a lousy government but does not bare sole responsibility for the mess we`re in. That distinction belongs surely to those who brought us deregulated laissèz faire economics, trickle down theory and wealth inequality in favour of the rich.
The resulting fall in real incomes for the majority obliged people to borrow more and more to finance their lifestyles, using their properties as colateral. With unregulated bankers and financiers all too ready to profit from the madness, it all went swimmingly until a fall in house prices ended the party.
Where did it all start ?. Many would say with Margaret Thatcher, the forebearer of todays`Conservative Party. It only needed New labour and the great british public to buy into the model to keep it rolling. Don`t blame NL, blame yourselves.
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So Tata brought the company cheaper because of its losses, and now are you saying that we the english people are to help bail them out? No way! The indian company has already located some of Jaguar to India, so they can pay
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Why not buy Jaguar/Landrover and screw Tata....... A National BRAND is not a bad thing
and may help the home grown motoring
industry.
Not a new idea, but one that would work well
not only in the short term but in the long
term when markets get back to norm.
Nationalisation is only a term, it is not as bad
as some right wing vocalising politicians would
make it out to be.
Ignore any politics.
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The government needs to be more canny.
If Tata wont supply the cash needed to it's own business(and it does have the means), let the companies go into administration.
Then if no private equity comes in to buy them, then the government should snap it up for a pound and nationalise until someone comes along to take the company back private. I think it could do this leagally now because the European state aid rules have been suspended, it couldn't do this with Rover at the time.
Tata are just playing poker to see if they can get some cheap finance, they wont want to loose the billion or so they paid for these companies.
As regards the other car companies like Honda, Nissan, Toyota etc. if these companies make decisions based on business sense rather that protectionist practices, then the last factories they should be looking to close are those in the UK. The sterling devaluation has made the UK one if not the best place to make this type of product, again force their hands let them make the wrong decisions if that is their will, the government cannot be blackmailed into charity.
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Lots of the comments above are irrelevant - whether Tata has Indian or British shareholders is nothing to do with whether it should get state support. And whether or not its products damage the environment is about carbon taxation, not financial rescue.
There are seven criteria to determine whether public assistance of this kind to a private company is a good idea. They are listed here:
http://www.knowingandmaking.com/2008/12/who-and-how-to-rescue.html
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So the government allows all our industry to be sold off to companies in other countries. Then when the going gets tough they have us over a barrel for help or they take away the jobs in our country first. Pay up, or we go. What a bad situation to be in, and one which the government should have seen coming.
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maybe i am a pessimist, but it appears to me that Tata have us over a barrel. If we say " stuff you matey, go under ", they will happily let the company fail as it is, leave 000's of UK men and women out of work, and simply move production over to India, where they can build a jag or landrover for a tenth of the cost of building one in blighty, sell their now cheap "luxury" cars to the ever expanding middle classes in india, china and korea, and make a shed load of money at our expense (loss of jobs), or we try to ensure UK jobs and do indeed lend them the money they want in exchange for a guarentee of keeping plants open in the UK for 5-10 years, taking the majority of the risk if the recession does last a considerable time and their sales dont improve. Personally I say bite the bullet, dont bail them out and use the money that would have been lent to them trying to enduce UK entreprenuers to create jobs and wealth for the UK, ensuring any money handed out stays on UK shores, and most importantly in the UK economy. If only the soloution were that simple?..Im sure this labour government will find ways of wasting millions of pounds on a quango and produce little or no findings as to how to sort out the mess gordon and his cronies created. So Gordon, can you ' save the cheerleader, save the world ' ?????????
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"A good chunk of its business - though not all of it - was viable before the economy started to contract fast and car sales dropped like a stone."
This is Teflon Mandy at his best !! Spin doctoring of the first water !!
"was viable before the economy started to contract fast and car sales dropped like a stone."
Well, so was Bear Sterns before the crunch crushed it !! So was Lehmans before the toxic assets poisoned it !! Square mile upon square mile of unsold Chelsea tractors and gas guzzlers does not point to a viable business !!
If Teflon Mandy wants to "bailout" this company, the simplest solution is to buy back the Land Rover part of it from Tata !! The part that makes the agricultural and military vehicles !! Alternatively, let the company go to the wall and pick up those assets at fire sale prices !!
Then Tata will have enough money to finance the Chelsea tractor and gas guzzler part as they please !! Tata also has *a lot* of cash that they earmarked for spending on the production of their wonder car, the Nano, which is now no longer to be produced !! That cash will be more than sufficient to keep Jag going for a year !!
The Tata Group, taken as a whole probably has more *hard cash* than the entire UK government !! They look to me to be taking the UK government for the bunch of suckers that they are by spinning some sob story about terrible mass unemployment if the money was not forthcoming !!
Where I come from this is known as blackmail !!
The two best car makers in Britain today are Nissan and Honda !! Will Teflon Mandy be just as quick to hand over the cash to them, too ?
And just for an encore, Teflon Mandy was personally involved with the Hinduja brothers over their immigration keffufle and the Millennium Dome !! Will this be more NuLabour cronyism at work ??
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225. StreetcornerJeremiah:
"No. 190 Friendlycard
Well below your usual high standard. New Labour have grossly mismanaged the economy but they are in no way comparable to Mugabe and his thugs. How many British people are seeking asylum in Zimbabwe?"
Fair points, and I'll try to answer, if I may. You are quite right that the UK does not have problems remotely equivalent to those of Zimbabwe, and that UK citizens are not fleeing to Harare (though, in fairness, as EU citizens they have nearer and better options). I cannot claim to have invented the "ZaNu Labour" tag, but it has some merits if we consider Zimbabwe philosophically.
The Yorkshireman* runs a government dominated by messianic ideology and naked self-interest. He is surrounded by a coterie of self-servers and incompetents. He is totally convinced that he is right and that all critics are wrong and deluded.
His economy has performed far worse than any other country in Zimbabwe's peer-group. He has turned his police from "the long arm of the law" into "the mailed fist of the state".
Rather than cut spending, he has borrowed to the hilt and then started printing money. The value of his currency has slumped. He has blamed all of his country's woes on foreigners. He is in denial over how bad things are.
It seems to me that there are some parallels here with Our Own Dear Leader....
* "Mugabe" backwards: E-ba-gum
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If you have some spare cash floating about I have a cracking business idea.
Buy a large plot of land. Preferably several acres on the coast.
With very little effort on your part turn it into a large carpark.
Approach J/L and offer them competitive rates to store their unwanted merchandise for an unlimited period.
After corrosion has set in with the aid of the salt air and they are no longer in any condition to sell they can be turned into cubes of metal, shipped off to India where the aforementioned cubes can be transformed into shiny new steel in one of TaTa's steel plants.
Ship the steel back to UK and make more unwanted merchandise in J/Ls (TaTa's) car plant.
Store the unwanted merchandise on the same plot of land.
Why didn't I think of that whilst I still had a job in the construction industry.
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Does TATA give money to the Labour Party?
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#283 "simply move production over to India, where they can build a jag or landrover for a tenth of the cost of building one in blighty, sell their now cheap "luxury" cars to the ever expanding middle classes in india, china and korea, and make a shed load of money at our expense"
Isn't this a rather simplistic view without any factual backing ??
Firstly, unless Tata insist on closing down its factories and moving them lock, stock and barrel to India, they will *still* be saddled with the UK debts and loads of unsold vehicles !! All this is not so simplistically shifted to India with a wave of a magic wand, Harry Potter notwithstanding !!
Secondly, the really profitable part of the business is the agricultural and military vehicle section that makes the Land Rovers, much of that is sold in the UK, especially to HM Armed Forces !! If the company moves everything to India, then the UK *MUST* buy equivalent EU produced vehicles - mainly Mercedes Panzerwagons !! Tata's Indian produced Land Rovers will be classified as "foreign imports" and subject to all sorts on tariffs and taxes, making them uncompetitive !!
Thirdly, the Indian car market, especially the gas guzzler market is *NOT* enamoured with the Jaguars in their present incarnations. They prefer Mercedes and Lexus. Even Honda's SUVs have made inroads there !!
Fourthly, Indian made cars cannot sell in China and Korea !! They simply do not have the cachet of Japanese or European made ones !! And locally made ones are far cheaper than imported Indian made ones !!
Fifthly, Thailand, Malaysia, Indonesia and the Philippines have their own vehicle industries which they defend with ferocious tariffs and trade barriers. These are 4 of the 6 South East Asian nations with sufficient numbers of the middle classes to afford such vehicles. The other 2, Singapore and Brunei, are too tiny to have their own vehicle industries. Their preferences for upper mid-range vehicles are Mercedes and BMW and Lexus with the odd Honda and Nissan thrown in, *NOT* Jaguar !!
Sixthly, the Indian home market is already awash with locally produced cars from the European and Japanese car makers !! Throwing Jaguar into that mix in an economic downturn is a suicidal move.
Finally, India is the rip off capital for bootleg Land Rover spare parts !! There isn't any part they cannot reproduce !! How will Tata manage the pirate Land Rovers parts *AND* whole vehicles ??
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Breaking news...relief for Woolworth's...a man in the pub's dog told me that Tata have put in a £1bn bid for Woolies, knowing full well that they dont have enough custom to keep going as a thriving business, and intend to ask Mandy and Gordon for a "loan" thus ensuring british jobs for british workers...All hail mandy and Gordon for saving british jobs!!
Now what a tempting proposition that would be, blackmail our govt for our own money to keep us in employment, how can they refuse??...I wonder if I can re-mortgage and raise enough cash to by out Woolies???.....Anyone spare me a tenner??
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#281
Your points 1,2 and 3 are addressed by just simply taking over the viable Land Rover part and letting the rest go to the wall !!
Point 4 needs to be view in comparison with the Rover/Nanjing Auto case !! It should also be compared to the Lehmans case since both employ large numbers of people in a small location (City of London, in this case) !!
Point 5 is about the R&D that applies equally to military as well as civilian vehicles. The MoD can easily absorb that part simply by sacking half their unproductive chairborne warriors !!
Point 6 ignored the possibility that Tata deliberately starved this part of their empire of funds in order to draw on the UK bailout funds !!
Since Tata is a large multinational company, if that empire cannot get any more credit, it will have worldwide implications.
Point 7, what is Jaguar's (without the land/Range Rover part) market share in (1) UK, (2) EU and (3) worldwide ?? I would hazard a guess that it is extremely close to zero !! The Range Rover part is slightly better but still no where near where it is sufficiently viable to warrant a bailout !! The Land Rover part is the most viable and *MUST* be bought out by MoD so it can keep on supplying our hard-pressed troops in Iraq and Afghanistan and elsewhere !!
Just my tup'orth !!
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No way should the British taxpayer be
subsiding Tata owned Jaguar. Tata acquired Jaguar at a bargain price reflecting
the challenges faced. Jaguar would be losing money regardless of the current
economic situation. Tata should be asking Indian tax payers for subsidies if
anyone. I have a business in India which is currently facing challenges; does
anyone think the Indian government will bail out foreign owned business; dream
on. This government have no mandate to invest our money into Jaguar. An election
is urgently required.
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Seems to me that BMW were given Rover, which included Landrover and Jaguar, for pennies and then, after taking all the Landrover technology and building their Chelsea tractor, sold both to Ford.
This is asset stripping and so BMW should be charged with the present defecit and also for all the money that sucessive British governments put into BMC & Rover group over the years.
Seems to me that the best move that this incompetant government can do is to put a charge, about 100%, on each BMW vehicle imported into Britain whether by BMW or privately and put that toward supporting our car industy.
My feeling is that like all the other businesses sold to the foreigners they were bought just to either asset strip, Steel and Cars for example, or to rip us off, the utilities like Water, Gas and electricity. Tuime to re nationalise these and at no compensation to the foreigners.
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If HMG decides that it really must make loans to companies producing goods that are not selling, simply to add to huge stocks that have not sold, then will Britain really be a capitalist country? It could hardly be labelled communist, because the production will be unplanned. Perhaps we could pay Social Security benifits in kind - big motor cars that no one wants nor can afford to run?
Joking apart, we are between the devil and the deep, have built our economy on a fragile base, using smoke and mirrors. Now the gale has hit us, we can see clearly what a mess we're in. There are no easy answers, only great pain.
One soultion for J-LR is to separate the Divisions, take-over LR for the amount advanced, and say TATA to Jaguar.
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Lord Mandelson need a strategy, and aim or objective, not just a succession of panic measures.
Let us suppose that car industry matters, but does it matter more or less than being able to feed ourselves, or the railways.
Investing in the future needs to be rational.
My views is that gas guzzlers should not be supported at all. Tata should be told that unless they change to making lighter, more fuel efficient vehicles there will be no support and the support package should be open to all car manufacturers in the UK on the same terms.
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There has to be some Darwinian natural selection here as there always has been. Car manufacturers come and go and the strong survive. In the current climate car sales are down by record numbers. Why prop up a luxury car maker so it can fill it's tarmac with unsold vehicles?
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Robert, I quite agree. I happen to live right in front of the Land Rover factory and whilst I appreciate that jobs are fragile and the economy even more so, I see no reason for the Taxpayer to prop up private enterprise. It is morally wrong, let alone a cheap source of finance. If JLR cannot survive then so be it, the Gov't should let it be.
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It's funny how Mandelson is such an ardent advocate of free-market privatisation and yet also seems to be keen on tax-payer nationalisation when they look like losing a few quid. Maybe he just likes saying yes to rich people...
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We're completely stuffed, aren't we?
Dodgy businessmen come sidling up to government ministers dragging behind them some hapless, struggling worker in overalls.
"Give us lots and lots of money or this one gets it...."
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15,000 jobs at JLR and a possible total of 100,000 after the fallout.
Those of you who believe that a foreign owned company who plainly have the assets available should be bailed out with our money simply to save jobs should look long and hard at other industries.
HMG has set high targets for social housing and wants to continue with public works.
Who the hell is going to build all of this and where are they going to get the materials to do so. The job losses in the construction industry and the satellite businesses that have already occurred are mind boggling.
I for one would much rather have 1 billion pounds spent to put roofs over heads than a status symbol that I can ill afford let alone keep on the road.
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I'm not happy that we ' the tax payer' should fork out more money for ailing businesess who don't seem to have realised that it's their over production that is lying around in the fields where they hid all the in unsold cars.
It also puzzles me every time I walk past a car show room, how can they have so much money tied up in stock on their forecourts?
It seems that whole of the car industry is running on totally unsustainable business principles!! And this government is following the same cread.
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Supporting Jaguar and LandRover to continue to produce the same cars is just absurd. These cars will never again sell well enough to be profitable and the cars are anti-social due to their CO2 emissions.
AS soon as we start climbing out of this recession oil prices will sky rocket again and dump us straight back. The only reason oil prices are down is due to the few % point reduction in consumption due in turn to the recession.
Further more, from the end of 2009 world crude production will begin to decline for geological reasons. So energy prices will climb up again in 2010 regardless of the length of the recession.
We are now in a century of decline following on from a century of growth and it is far too late to do anything about it. Just take cover, get yourself a smallholding and hope that law and order will not breakdown completely
Click here for more info: http://www.transitionnc.org/?q=node/73
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Could I make a simple suggestion?
The government should grant a loan to Tata, but this should be secured against their main Indian assets.
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By the way, I find the name of this Indian company a bit ominous.
Is it "Tata" as in "say goodbye to all that money"?
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It is astonishing how much nonsense is being talked about Jaguar Land Rover. The issue here is that Tata borrowed a large amount of money to buy JLR and now need to refinance it - but their original plans to refinance were wrecked by the credit crunch.
This is not about the performance of JLR as a company. JLR made £327 million operating profit in 2007 and £310 million operating profit in the first half of 2008. This is actually about the credit crunch, which the policies of Mandelson and his chums in the government have done so much to make worse.
IF THE GOVERNMENT WASN'T BORROWING £100 BILLION THIS YEAR COMPANIES LIKE JLR WOULD BE MUCH BETTER ABLE TO RAISE THEIR MONEY FROM THE PRIVATE SECTOR.
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The government cheque book is not open cos there's no money! Anyone know exactly what our national debt is? Trillions I expect-and precisely who has lent us the money?
The country is so close to bankruptcy, how on earth can we bail out anything?!
UK plc has NO money. The directors are lending money we don't have.
Small UK businesses need help FIRST-and if Jag's problem is the same as VW, GM and the rest, their sales rely on CREDIT finance. This is what caused all this unmitigated mess in the first place.
Finance is going through a very painful metamorphosis to become a new, sensible beast.
And our government wants to perpetuate the old spend money you don't have.
When will they get it into their stupid heads?
We have no money-the US has massive gold reserves to prop up their economy. We don't.
Anyone-personal or business relying on credit to fund themselves absolutely have to re-work the financial models. THIS INCLUDES GB and friends.
They obviously have no idea what they're doing. They have ruined this country
This government is out of options. They
They've got to go.
Let Jag go bust and I'll buy it for 1 Euro-since sterling will soon be worthless on the money markets.
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One of the fallacies underlying this situation is the concept of ownership. Tata, being solvent, appear to have bought the brands, with the hope of being able to ditch the business itself at the earliest feasible opportunity, and in this respect it's barely better than a bootlegger.
Back when I trod the earth in a physical form, property was in the gift of the King. If our 'enery decided that manor was to be given to that favourite, tough on the current owner, he had to move out as he clearly couldn't defend his rights.
Nowaways, of course, we've moved on a bit, but it does raise one possible thought in the direction of social economics. The shareholders, putting the money up, have a say in the busienss. But money is only one of the 7Ms acronym, (Men, Money, Machines, Materials, Methods, Motivation, Marketing) of what goes to make a business. Most of the rest are brought in by the management and staff, yet they have no final say on their own investment of their lives, an investment much more important than someone playing with something they can't take with them when they pass away, as all will.
Perhaps it's time to simply thank Tata for their participation, assign receivers, and pass the business intact into the hands of Alexander.
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To correct a couple of errors I've seen quoted as fact on here:
1. BMW never owned Jaguar it was bought out from private ownership by Ford in the early 90s. Ford bough LR from BMW in 2000(?) and merged the two into Premier Automotive group.
2. As stated earlier - JLR wa doing quite well as part of Ford but was sold off due to the state of Ford or Amercia's finance's to raise some cash. Same thing happened to Aston Martin.
3. Soem people have been slagging of Tata as asset strippers but they seem to be running another British brand - Tetley tea just fine.
I personally wonder what would happen if Tata's bluff was called though as I'm not sure that they really need the money - it may be what Robert suggests - HMG is cheaper than the banks for finance?
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# 306 rahere
Sounds good to me. But who's Alexander?
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The government says the company need a loan because they are not selling enough cars.
Well if they are not selling enough cars how will they ever pay back the loan?
Jaguar and Land Rover manufacture niche products that have only sold in the volumes they have because of cheap credit.
I think it is outrageous to even consider the use of tax payers' money to finance the production of luxury products that most people know they can never afford.
What is the point of making cars for which there is no market?
If these companies were unable to protect themselves against a fall in demand after selling hundreds of thousands of vehicles over the past few years they were doomed to failure anyway.
What next, will they bail out Aston Martin?
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Your piece last night that said that individual debts were 3 times GDP was a bit of a shock. I can't help but think that sterling is right on the edge of a precipice at the moment.
We really need to get away from this banking fetish that this country has developed and get back to real wealth creation which comes from production.
I also think that there's an argument to nationalise banks: given that all modern currencies value is a function of the success perceived prosperity of a nation I don't see why the nation itself shouldn't take over all responsibility and cut out the middle men: that way, if the banks profit excessively then the public purse does at the same time.
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'A good chunk of its business - though not all of it - was viable before the economy started to contract fast and car sales dropped like a stone'
An awful lot of companies were viable within the system that we pushed until it 'broke' - the question is can it be viable in the new world?
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I fail to see why I should BAIL OUT an INDIAN CAR MAKER...if the indian owners are so strapped then let them go to the INDIAN government for cash...alternatively the guy who owns TATA and JAG/LR could always sell a house or two or maybe a Yacht!
If you run your business badly, you go under...!
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Captain Brown updated the situation on the Titanic:
"The go kart concession has requested assistance to prevent flooding of his workshop area. As this is located in the bilges we would not normally try to save it however our former deputy chief Steward has a personal interest in karting (he has 2 apparently) so on this occasion we are considering the request.
He points out that if we don't help he will open the water tight doors to several adjoining work areas causing significant further damage.
Due to a prior commitment in Modena the owner is apparently unable to help himself.
Unfortunately due to lack of interest and other commitments we have no resources available however the purser is looking at solutions.
Toilet paper is to be rationed as the Purser has found an alternate use for it. In case of urgent need the shopping vouchers previously issued should be used as these no longer have any value.
Initial feedback on the newly designed quilted 4 ply shopping vouchers has been positive.
Relations with the SS Berlin have been improved following last weeks attempted ramming of the captains launch. This was an apparent misunderstanding and Captain Merkel has apologised.
The shopping deck remains at risk and the Silkvalue store is to be abandoned shortly.
Our thanks to the Passengers Action Commitee for reorganising the seating in the beach volleyball arena. "
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# 310 PeakOilPaul
Yup, you and I subscribe to the same future view.
It's amazing how few folk have fully latched on to fact that we've now all but reached the end of mankind's era of cheap energy.
Like the credit crunch ("Where the hell did that come from ....?"), in the next few years (yes, that soon) we'll observe our glorious political leaders re-living the current chaos and panic (and some) as energy costs move up exponentially (they're already flapping about it and shouting impotently at energy suppliers to cut their prices; no chance). The energy crunch one will make the credit crunch look like a cakewalk. Google The Olduvai Theory to get a taster.
The idea that the Americans and now Lord Mandelson of Foy and Hartlepool (on our behalf) are contemplating throwing $billions at car companies (er, they use oil, remember) is little short of madness.
Moreover, since the last 100 years of economic growth has, by and large, been achieved on the back of cheap energy, now about to end, one wonders if the $billions about to be lobbed at the motor car will ever be recovered. I very much doubt it.
What IQ does one need to be a Lord?
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NOW I know why we need an extra runways at Heath Row and Stanstead and Luton and Manchester and wherever !
It is to park:
All the cars we will be building that no one can afford.
All the cars that will not run on fresh air because the oil has run out.
All the cars that we can put chickens in that have come home to roost.
All the cars that can be used as accommodation for the homeless.
Etc Etc
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At 272: That's an argument for never, ever allowing a car manufacturer, or indeed any manufacturer with a large external supply chain, to go bust. Which in the long run means ever- expanding subsidies to produce increasingly uncompetitive products, and moral hazard for other companies that realise they can do what they want because they'll always be rescued when things go bad. The fact is that car manufacturers have died before without armageddon ensuing.
And all of this assumes that Tata really would allow the firms to go to the wall, that they wouldn't remerge in any form at all and that all of their suppliers would fail to pick up work elsewhere and go bust. All taken together, that seems a bit unlikely.
The argument that this is all because of the credit crunch seems a bit iffy to me. Financing may be harder and more expensive to get at the moment but the idea that a firm as big as Tata and in apparently healthy overall shape can't raise any commercial financing on any terms and, having made large profits last year, can't afford to use any of its own resources to replace the financing that's dried up in bad times seems pretty unlikely.
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Having been dazzled by 'Financial Sales Wizards' in recent decades it is perhaps time to acknowledge that in business 'nothing happens until someone sells something and gets paid'. Innovative financial packages can be used to move rubbish for short periods, particularly into the top end of the used retail market where the customer neither understands or sometimes cares provided he thinks he can meet the monthly payments.
Unlike Toyota, most vehicle manufacturers count their profit at the end of the build track - it's called mass production. The vehicles then become the responsibility of Sales and are owned by their Wholesale Finance Arm. It is only when the Customer pays for the vehicle at the dealers premises that Sales take their profit or loss. A large percentage of dealer outlets are either owned by the Brand Owner or heavily controlled/ subsidised in this way. So if Government is further involved, they are involved all the way from design, manufacture/ assembly and distribution.
The best action the Government could take would be to insist on a 'Fire Sale' to clear the stock supported by loans to keep the Companies solvent whilst the sale takes place. In this way professional Retail Financing could be assured to facilitate the sale of the vast stocks which have arisen through building for stock rather than orders in the first place.
By the way, this solution applies to all unsold supply chain stocks including houses. Until prices are seen and believed to have bottomed out, nothing will move.
So, lets all have a Happy Holiday, salute 'The Professional Salesman' and get ready to stop the talking and do something constructive. Start the inevitable 2009 Fire Sales.
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Congratulations to all those who have once again singled out Jaguar & Land Rover in what is most certainly an industry wide problem. The statement below comes from the 'Society of Motor Manufacturers and Traders Limited' (SMMT) and it clearly states that it is an industry related problem.
"The UK motor industry is facing unprecedented challenges and urgent action is now required. The sector has seen falls in demand, extended plant closures and the first signs of redundancies in the supply chain,” said Paul Everitt, SMMT chief executive. “Without swift action and the ability to access credit and finance, significant damage will be done to the nation’s industrial capability – leaving the UK poorly equipped to take advantage of any global growth when it returns."
Again, the comments below were also made by the SMMT about the request for Government support.
Possible government support for the UK motor industry was debated in Westminster Hall this afternoon (17 December 2008) following a proposal by Sandra Gidley MP.
On behalf of the industry, the Society of Motor Manufacturers and Traders (SMMT) has called for government to support the UK automotive sector from dealers to vehicle manufacturers, through to the supply chain. The package includes allowing manufacturers’ finance companies access to the Bank of England’s special liquidity arrangements, loan facilities, a review of motoring taxation and support for training, research and development.
Business minister Ian Pearson MP responded to the debate recognising government's ongoing dialogue with the industry but saying state aid must only be an exceptional measure in exceptional circumstances.
Following the debate, SMMT chief executive Paul Everitt said: 'The motor industry is facing unprecedented market conditions which are having a direct impact on UK jobs and manufacturing. Normally strong companies are facing a bleak future purely as a result of the global banking crisis. It is now vital for UK government to follow the lead of other EU countries and act immediately to demonstrate its commitment to the motor industry and manufacturing as a whole.'
Following an industry meeting with Lord Mandelson on 27 November, SMMT is awaiting an official government response to the proposed measures.
For a more informed view of this issue I suggest you have a look at this website instead of reacting to all the media hype.
http://www.smmt.co.uk/
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This business argument seems to be entirely predicated on the prestige of the Jaguar and Land Rover badge names.
How many times have Aston Martin gone bust in the past, and had the pieces bought up by entrepreneurs?
Sad to say, but JLR is not a British firm, and produces a commodity product ( motor cars)which is supplied by others. More job losses will be sad, but I'm afraid they are in the same bracket as Woollies....'uk plc' will continue to function without them.
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313. At 10:10am on 19 Dec 2008, Whistling_Neil wrote:
"Captain Brown updated the situation on the Titanic:"
Surreal !!
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I don't think the government should bail out Jaguar. I can't believe they are even considering it. I'm fed up hearing about government bailing out big business using our cash. It's about time big business adhered to their own free market values and took the downturn on the nose like the rest of us.
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moraymint308
ITS ME
I'm up for paying TATA 125 million to solve their problem,and take it off their hands.
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I am constantly amazed at the length - or rather lack of length - of people's memories.
Let's start with the collapse of Rolls Royce a couple of recessions ago. The demise of this iconic British brand was deemed unacceptable; it was nationalised, propped up, financed and supported by the taxpayer until it turned round and is now one of the great engineering/manufacturing companies that makes this country the 6th largest manufacturer in the world. After a period under Government control, it went back into the private sector and has prospered ever since.
Which companies and businesses will be deemed too important or politically expedient to be allowed to fail this time round?
Not Woolworths, that we already know. Who decided that 27,000 retail workers were less important than 15,000 makers of luxury cars - why the Prince of Darkness, of course - interesting decision!!
But the point here is a serious one.
Who is deciding which companies are strategcally too sensitive to go to the wall as this downturn bites deeper?
I sense that there is no strategy and that is a problem. It seems that random selection is being used to decide who lives and who dies. Government will save the banking sector no matter what the cost, but until there is a coherent stragtegy for the rest of the economy, uncertainty will remain and more businesses will collapse.
We need a plicy that directs both fiscal and monetary policy towards preserving employment - keeping people in their existing jobs - rather than paying them benefit to find new ones from an ever diminshing pool.
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‘It's all very well for Peter Mandelson to insist that he would only save businesses that are of strategic importance to our economy and would be sound in a world where credit was flowing freely. ‘
Question should be - It is all very well trusting a man that been forced to resign twice due to dodgy dealings, and browns trusted this man with decisions that will have profound effect on our countries future.
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Fantastic. Just one problem. Even after the rescue, NO ONE WANTS THE CARS!!!
A bit like building houses no one wants to buy,
forcing banks to lend when they don't want to to borrowers who don't want to borrow,
forcing first time buyers to buy when they don't want to,
forcing shoppers to shop on more borrowings when they don't want to
Love 315's comments. With a few modifications, cars can be used as social housing. Since we are intent on making cars and not social housing.
We are pushing on a piece of string. Bailing out 'perfectly good and viable' companies as many ppl put it is simply not possible. The govt. is replacing the banking system and being bakrupt itself, it now has the task of assessing credit risk. You could not make it up. Iceland or Zimbabwe anyone?
Suggestions to the government - do nothing. Widespread unemployment and a severe recession are still better than borrowing more to waste resources producing unwanted goods and services for THAT bit longer. Only makes the future bleaker.
Our basic decency, rule of law, English language skills, reasonable education and whatever other strengths we have will at some point have an effect and we will find our place in the world again.
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#318 "The UK motor industry is facing unprecedented challenges and urgent action is now required. The sector has seen falls in demand, extended plant closures and the first signs of redundancies in the supply chain,? said Paul Everitt, SMMT chief executive. ?Without swift action and the ability to access credit and finance, significant damage will be done to the nation?s industrial capability ? leaving the UK poorly equipped to take advantage of any global growth when it returns."
So, the turkeys want to ban Christmas ?? Hooray !!
What do they want to do ?? Produce 100,000 square miles covered in unsold, rusting vehicles ?? Do they even have a viable business plan that *CAN* account for the drastic reduction in spendings ??
Or do they want free taxpayer handouts to carry on living the life of Reilly while millions of others suffer in this recession ??
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#317 "So, lets all have a Happy Holiday, salute 'The Professional Salesman' and get ready to stop the talking and do something constructive. Start the inevitable 2009 Fire Sales."
Couldn't have stated it better !!
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323
It's not random - it's very political
Who do (did) woolies employ? - sales staff and management - easily transferable skills, they could quickly move to the same jobs in tesco, sainsbury, homebase or whatever
bottom end jobs, and retail workers aren't really unionised, usdaw is a nothing union
compare that with highly trained people in manufacturing, who will have a big union backing (and remember Labour IS the unions)
this government won't be going near the retail sector
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#314 "What IQ does one need to be a Lord?"
Very high, if you wish to achieve it via the Teflon Mandy method !! Either that or a thick coat of slime !!
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Anyone checked Mandelson's mortgage arrangements or know where he is going on holiday over Xmas?
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Surely the key question is, 'will customers one day start buying their vehicles again?'
With Jaguar, my guess would be 'no', not least because this event may fatally shake customer confidence. There are plenty of alternatives in this section of the market, with Mercedes and BMW the most obvious.
With Land Rover it's a harder call - customers are likely to go on buying their military, commercial and agricultural vehicles, but the market for Kensington Panzers is unlikely to revive.
Conclusion might be to let Jaguar go but provide support to Land Rover conditionally upon downsizing?
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I am the owner of a small group of specialist engineering companies, fortunate with cash reserves and no borrowings/debt.
Why should I support the group through these difficult times when it seems other and far wealthier individuals/companies can go to the govenment with a begging bowl. It would be far easier for me to pull the plug and leave the taxpayer to pick up the bill. it seems incompetance is supported by imcompetance
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For anyone who likes facts and figures, this has come direct from the SMMT website again and shows New car registrations in November 2008 compared with November 2007. Looks like an industry wide problem to me!!!
MARQUE % Change
Abarth 0.00
Alfa Romeo -67.78
Aston Martin -72.54
Audi -13.20
Bentley -32.00
BMW -40.72
Cadillac -60.00
Chevrolet -28.59
Chrysler -76.38
Citroen -33.43
Corvette -100.00
Daihatsu -51.97
Daimler -25.00
Dodge -40.07
Fiat -42.60
Ford -11.91
Honda -42.49
Hummer -46.15
Hyundai -53.16
Jaguar -11.31
Jeep -46.51
Kia -46.85
Land Rover -64.42
Lexus -58.05
Lotus -72.97
Mazda -22.85
Mercedes-Benz -57.22
MINI -58.02
Mitsubishi -69.86
Nissan -40.18
Perodua -40.74
Peugeot -34.20
Porsche -56.93
Renault -63.99
Saab -57.91
SEAT -34.68
Skoda -30.06
smart -13.55
Ssangyong -60.00
Subaru -60.53
Suzuki -58.95
Tata -100.00
Toyota -40.77
Vauxhall -38.73
Volkswagen -33.10
Volvo -6.72
Other British -49.02
Other Imports -42.19
Total -36.79
Source: http://www.smmt.co.uk/articles/article.cfm?articleid=18615
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318,
Its a fact of life that we have reached peak oil or are very close to it, cars will quickly become a thing of the past.
Hope you stay next to a railway station because thats the only means of transport you or I will have.
We ALL need to realise our world is set to look very different in the very near future, even if there was plenty of oil left folk can't afford cars.
Why should we build stuff (in this case cars) when there is NO demand for them?
YOU like many other people MUST WAKE UP!
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Re #231
Sir, given the tone of your opening paragraph I draw the conclusion that you do indeed have an idea how the economy works.
May I suggest you contact Downing Street and make the necessary arrangements forthwith.
The blog is for both informed and uniformed to sound off in whatever may (moderation allowing) they wish.
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Tata has grown by buying up businesses all over the world, and presumably has now overreached itself.
Support for Land Rover/Jaguar would be support for the whole Tata empire. How would it be possible to ensure that the money was used only to keep the automotive firm going?
Tata should sell Land Rover/Jaguar, if it cannot afford to keep it going, with the government being the purchaser if no one else is interested.
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Given this is a foreign company, why do we not call their bluff on the funding?
If the company goes into administration, the government could provide support to whoever buys the knocked down assets if they are actually worth having.
This would be cheaper and leave Tata holding the majority of the loss and not taxpayers. If a company has managed assets badly then they should suffer and not expect us to pay for their mistakes. If someone believes they can make it work better then give the money to them.
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This comment was removed because the moderators found it broke the House Rules.
There is a lot of Jaguar knocking here which is detracting from the point - this is about how to get the commercial business environment working again.
Jaguar and Land Rover have award winning products and even if you may not like or consider buying one that is the fact. They are not lame duck brands.
Those who say they don't care because they will never buy one of these cars please remember that there are thousands of people and small businesses that depend on Jaguar and Land Rover who will never be able to afford one either - they are all stakeholders.
All manufacturers are seeing similar drops in sales, Renault have got a government loan as have VW. There have been closed production week announcements at Nissan and Honda.
Let's not mix this up with the ecological debate, Nissan and Honda are well into the frugal end of the market they aren't selling either.
Jaguar and Land Rover are symptomatic of how the manufacturing industry is suffering at the moment. HMG need to get the banks doing their jobs, they have far more of our money tied up in their lame duck businesses than is at issue here.
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#304 "It is astonishing how much nonsense is being talked about Jaguar Land Rover. The issue here is that Tata borrowed a large amount of money to buy JLR and now need to refinance it - but their original plans to refinance were wrecked by the credit crunch."
You have two possible scenarios here !!
(1) Tata borrowed the money - Then Tata should get the *Indian*government to bail them out if they are truly in trouble !!
(2) Tata borrowed the money on JLR's behalf (leveraged buyout, in Septic) - Then Tata has to get the money somewhere to pay for those debts and stop sticking its begging bowl in the face of the UK taxpayer !!
Perhaps if they sold a few steel mills and an IT consultancy or two, they may have the funds to finance all this and a bit extra to play with !!
I shed no tears for JLR every time I pass rank upon rank of Chelsea Tractors waiting to be sold !!
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Why is company of strategic importance to our economy which is owned and controlled by an Indian firm and which produces vehicles of a kind the Government is actively discouraging as part of its planet saving green strategy ?
Might it be that it political rather than economic strategy that is holding sway, bearing in mind that there are several Labour held marginals in the West Midlands area in which most of Jaguar's operations are based ?
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336 (stanblogger) and 337 (lightjussic);
Outstanding posts, the best ideas on here yet. There might be a case for helping JLR but there is no case whatever for helping Tata.
So HMG should let the company go down if need be, then either (a) buy it for peanuts or (b, and preferably) assist whichever viable buyer purchases it from the receivers.
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Just under 4 years ago I was made redundant from my IT job because my employer was outsourcing it to India. And who was the company to whom they were outsourcing my job? Why, it was a subsidiary of Tata, of course.
No bloody government jumped in to save my job.
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# 322 alexandercurzon
Silly me; I should have guessed! I look forward to hearing the Stock Exchange announcement.
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It hope it is nothing sinister or corrupt but Mandelson's past involvement with the Hinduja brothers and now appears to want to give £1bn of UK tax payer's money to an Indian company. This is starting to puzzle and worry me. I know we can neither trust nor believe politicans, so what are we not told and what have been distortured and dressed up for a good spin ???
Here is a good test to see whether it is a good deal. Would Mandelson and his friend Rothchild put up £1bn of their own money to give to Tata, and if yes, with what terms and conditions?
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I do agree though there may well be a game of brinkmanship going on here between Tata (wanting finance that's going to be very expensive on the open market) and the Government who won't want to lose 15000 jobs of labour supporting unionised staff.
#340 - Careful you're showing your bias there - if it was the other way round you'd be a snob but "bottom-up" is ok!
#341 - I refer you to the figures in my posts 31 and 37 - the vast majority of JLR sales are not of the evil "gas guzzling" versions.
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Ref 334
To say that the motor car will soon be consigned to the history books is just nonsense, don't get me wrong the internal combustion engine most definately will, but I'm sure road vehicles will carry on being the number 1 means of transport for most of us well into the future. From the information I have seen we have at least 20 years of Oil reserves which should give us the time to develop a robust infrastructure to support renewable sources of fuel such as hydrogen power cells.
This is along way off but who do you think is pioneering this research, it isn't the Government. Its coming from Honda, Toyota, Ford and yes, even Land Rover.
Good luck with the train though!!
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Mandelson said WHAT?!
Of strategic importance to the UK economy??!! Strategic??!!
IS there a strategic plan for the UK economy as a whole or is the Govt reduced to a Uzbekistan style selective and subjective judgement on restriction of interest to the most significant objects someone in Westminster thinks the UK produces?
Any other 'strategic' things on the list while we're about it? It reminds me of the Govt talking about the 'National Herd' during the BSE and foot & mouth crises, as if they were talking about the Royal navy, like they had some kind of national/strategic over-riding interest in the cows.
Never heard such Politico-claptrap junk in my life. What this fundamentally tells me (and I know more about cars and what goes into them than most) is that British manufacturing industry is going down the plughole and the sooner the CBI gets off its mighty high horse and says so the clearer the need for talk of coherent 'strategy' will be.
GC
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I'm watching News 24. Gordon Brown has just claimed he is going to concentrate on the Big Issue. Good. On which street corner will he be selling it?
Honestly, Mandelson and Brown are crazy. There's a queue of businesses large and small who desperately need a bail out and we're about to bail out a foreign company that already owns about half the world?
I doubt any unemployment that stems from the failure of L/R / Jag would be any worse that Woolworths or the construction industry.
If this bail out goes ahead I'd like to know in advance how I can sell my shares in Tata and say tata for now as I want to pop out to see who's selling the Big Issue in town.
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If there are two words which can be said to underlie the whole global economic crisis, they are 'bad management'. The whole planet is 'badly managed'.
When managers fail it is never their fault it seems, so what is the point of having them?
The UK has lagged behind the rest of the developed world in management training for decades.
Neither Mr Brown nor Mr Mandelson have any management training whatever as far as I can tell. Clearly it isn't needed.
So what exactly is it then? An extension of the class system? Something one is born to?
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To #333
It's not a car industry-wide problem.
It's much bigger than that.
Too big to fail? No, impossible to save.
Why? Well, where are the thousands marching down Whitehall chanting "We want cars"?
That said, there is a possible justification for artificially preserving elements of the existing car industry. That is to protect its diversified engineering suppliers. The UK has a clear strategic need of such companies. It needs to build the post-cheap-oil, post-credit-fuelled-happy-motoring Britain that we'll be living in soon - far sooner than most people think.
As long as LR and Jaguar realise that they're not being bailed out to prolong their own pointless and ultimately damaging existences, they can have some of my taxes.
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Jaguar's problem was Ford's approach. They wanted them to be like BMW and Mercedes.
Jaguar has never been that type of product. The X-type and the X-type estate in particular are aberrations and were plainly targeted at the BMW 3 and 5 series and Mercedes E class. Ford tried to make it all things to all men (and women) and put blunty, diluted the brand.
I had hoped that Tata would bring fresh hope and drive to Jaguar, but I would venture that this was almost certainly a leveraged buyout; if thats the case, this is Tata chancing their arm and getting in ahead of Vauxhall/GM/Aston Martin etc. Only if Mandy refuses to be suckered by this sharp, emotional blackmail will they bother going to either their shareholders, the Indian Government or the open market for funding. I must profess myself disappointed, I expected better of Tata than that.
Eitherway, what Jaguar needs to do to survive and move back to profitability, is to follow Aston Martins' example and downsize and become a more esoteric brand. Stick to what they are good at. Drop the XF (or the S type) and the X type. Keep the XK and XJ. NO ESTATE VERSIONS!!! Smaller volumes, higher quality.
Previously I would have agreed about Labour marginals in the midlands. However, with the death of Jaguar's spiritual home at Browns Lane in Coventry (right next to Geoffrey Robinson's constituency), I'm not so sure. Call me maudlin or overdramatic, but I will never, ever forgive Ford for that, it was like a knife in the city's heart.
Mind you, I bet Halewood is Labour. If anywhere gets the chop its going to be Whitley (interiors/fittings) in Coventry, Gaydon (R&D) and/or Castle Bromwich in Brum. Not sure which party controls that seat. MG Rover at Longbridge was allowed to die... not a squeak from New Labour at all.
The only reason Mandy is doing it is to make it look as if Gordon is doing something to protect their jobs so that when he calls a snap election in the spring, 15000 grateful scousers will rush to the polls ticking the box for the Labour candidate. Exactly the same reason Northern Crock was nationalised. Buying votes.
A cynical ploy by company that should know better and an equally cynical response from a Government who wrote the Cynics Rule Book.
A Shameful and disheartening episode all round...
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POST 350
Management??
I employ mangers that have done and can
DO what they are asking others to DO,
wherever possible.
THE MAIN CAUSE OF FAILURE IN THE UK
is SHORTERM THINKING , LACK OF
INVESTMENT and BAD PRODUCTS.
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Had Luke McCormick been driving a car instead of a Land Rover Chelsea tractor, that poor family he killed might have had a chance. It is unconscionable that this worst example of the destructive car industry be given anything except compassionate help to die. The further economic benefit of reducing the oil import bill will also ameliorate the short term pain of the dead-end jobs that are lost.
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Ref 354
That is well below the belt. Are you really saying that if it had been a poorly maintained and modified Ford Focus that was packed to the gunnells with children they would have all survived the dip in the icy river completely unscathed.
You are a GENIUS!!!!
(Slow hand clap)
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#354 - what about freedom_of_choice?
Last time I looked it wasn't illegal for anyone including the Armed Forces, to buy a Range Rover.
GC
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POST 354
McCormick's vehicle was unsafe and he drove like an idiot.
DONT BLAME THE PRODUCT.
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Hurrah for the Swiss!
Or, anyway, Credit Suisse. For insisting that banker bonuses are paid in the dodgy funds that the banking industry created. Probably the only way to get the banking bosses take any notice and make things right?
Am I correct that John Major is on the Credit Suisse board or equivalent? Clearly an example of Tory superiority over Blair (JPMorgan six months after PM and loads of dosh from Goldman Sachs too...)
Hear that money is just disappearing into RBS faster than the Government can pour in. If Gordon'll do this for the Scotland vote, what won't they do for their marginals? Be confident Jaguar
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354:
It might have helped quite a bit more if he hadnt been off his face on booze as well.
It could have happened just as easily had he been in charge of a horse.
What would you do then? Shoot all the horses to reduce the bill of hay imports??
Short term pain of dead end jobs?
You might like to visit the former mining communities of South Wales, or the old steel town of Corby and say those words.
I'd advise you pick something solid to hide in before saying it though. Like a tank perhaps.
Short term pain, indeed.
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THE MAIN CAUSE OF FAILURE IN THE UK
is SHORTERM THINKING , LACK OF
INVESTMENT and BAD PRODUCTS.
And has that nothing to do with bad management then?
If not please inform me what it is to do with.
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Hang on a minute, Luke McCormick was the Plymouth Argyll footballer who was sent down for causing death by dangerous driving and being over the drink/drive limit....
Dont remember it being in a Land Rover.
Think some of us have crossed wires
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Meddelsome is an idiot. He should be pushed once again through his favourite swing doors. How can Tata stump up between 5 and 7 million for "sponsorship" for F1 and ask the British tax payer to pay for the survival of J/LR. The company is NOT British anymore. It has 17,000 employees. If the government pays them a decent redundancy they will have time to find new work. It will cost 1/10th of what Meddlesome will finally throw at this empty NON BRITISH hole. It will NOT stop at a one off pocket money job. Wake up Conservatives. It is your duty to bring down this government. The people cannot boot out the NuLab fools, only the Conservative and Lib Dems can do that with constant votes of no confidence. This issue is one of but a few where it can and should be invoked. It is your duty as the peoples representatives. Or do you not have the courage. Poor England
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Post 355-357 - think you've got the wrong accident. Luke McCormick is the footballer who was drunk and smashed into the back of a family's car, killing two children and critically injuring their father. It doesn't take a degree in physics to figure out that a car weighing half what a Land Rover weighs will inflict much less damage at the same speed. The height of the bumper further increases the fatality. Yet another case of others having to pick up the tab for the choices of others...
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#354
I just love you Chelsea tractor bashers, but I can never figure out what it is you dislike about them so much. It just has to be some sort of envy.
I have a 15 year old Landcruiser. It has done 176000 miles and I expect at least a further 10 years from it. Never had a problem with it from new apart from the electric windows.
Last weekend I picked up 2 door sets in it and took my son's band to their gig complete with all equipment. 200 mile round trip and no need for a Transit (which by the way is larger).
Most dry weekends it can be seen pulling my gang mower across the fields. Very bumpy but it doesn't mind. No need for a tractor.
The rest of the time it works as a people carrier accomodating 7 with ease and about the same size as a London black cab.
So what would you suggest, help the world out with THREE vehicles to the job of one?
Hence, envy is the only conclusion I can come to regarding people like you.
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Post 363
Sorry thought it was the idiot that went in the river.
I still blame the Driver not the product.
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318. At 10:29am on 19 Dec 2008, Tongue_Monster
You are having a laugh.
The 'Society of Motor Manufacturers and Traders Limited' (SMMT) is largely responsible for this country's long-running love affair with the car. Though it has always been more like a business transaction, as in the oldest profession, where we are the punters, the workforce lay down and take the pain while the powers that be take the rewards.
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Critical comment..
...on an accident in which whatever vehicles were involved - in the context of a constructive discussion on the COMMERCIAL future of Jaguar LandRover - is absurd in the extreme and absolutely, completely irrelevant and inappropriate here.
I hope the shop-floor workers and managers and directors of the firms under discussion are not reading some of that stuff because they are going to find it extremely offensive.
Accidents are not the sole province of Range Rovers or any_other_roadgoing vehicle. Posters who keep harking on about it really do need to get with the programme.
GC
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Post 356 - freedom_of_choice comes with responsibility. By all means drive a massive truck, but if it poses a well known and substantial extra danger in car crashes, the consequences should be proportionate. Who knows how many people have died needlessly in similar ways? If a lorry driver is caught drunk driving, etc. the consequences are more serious, for good reason. My thoughts go out to the that poor family. I might be biased, but I think my freedom of choice is being restricted a lot more than a 4X4 driver's in that I have to take special measures to protect my family like not driving and having to pay extra for life insurance, etc. to subsidise road deaths.
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It is an Indian Company and I agree with everyone that UK tax payers money should not be used to bail it out,.
Having said that, don't expect Tatas to keep producing cars in the UK. Let them ship entire plants to India and have a low cost centre to manufacture cars with JLR technology.
UK can keep its tax pounds and spend it on dole for unemployed workers in the whole supply chain.
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When it comes to what car you drive, that is surely a matter of free choice and taste, so is not directly relevant to the JLR bail-out debate. Since I call them "Kensington Panzers", you'll know where I stand on 4x4s, which IMO clog up our roads, cause too much pollution and use too much fuel; but this is not about one lifestyle over another; free choice matters, and others may quite legitimately dislike my preferred vehicles (small sports cars) whilst respecting my right to make that choice.
What IS relevant is what the market may look like for JLR products in the future, and here I would say the picture does not look promising.
Customers are downsizing, and the recent (surely temporary) retreat in fuel prices is very unlikely to reverse the trend towards smaller, more economical and environmentally-acceptable vehicles. The campaign against thirsty vehicles has momentum, is backed by fiscal policies and education; and tastes are changing.
This looks bad for the JLR product slate. Logically, that should mean downsizing. Jag should concentrate on its most prestigious models, and LR on its commercial, military and genuinely off-road products. Any help for the company should have restructuring strings attached, and should be strictly on an equity basis.
There may be a case for helping JLR; there is surely no case whasoever for helping Tata.
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BTW my comments are not driven by envy my net worth will cross the £100k barrier if the ZAR GBP exchange rate dips another 10%. Luckily most in cash in a South African bank, the business model of which is a beacon of sensibility in this day and age.
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JAGUAR LAND ROVER
In my view the business needs a TOTAL
RETHINK.
New products new production methods
If TATA want state aid they should put it
up for sale and let an owner driver
entrepreneur take it on.
This is a business that NEEDS a owner
with vision and patience to deliver the
goods.
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#346 "I refer you to the figures in my posts 31 and 37 - the vast majority of JLR sales are not of the evil "gas guzzling" versions."
You will note that I made no reference to "gas guzzlers". As a matter of fact, when I spoke of "the kind of vehicles the Government has been actively discouraging, I just meant cars.
Incidentally, are not the Jaguar/Land Rover models, cited by you, in the second highest/most penalised bracket for road tax purposes - albeit alongside the mighty Mondeo?
Anyhow, my main question was, and remains, - might this be more about political strategic importance than economic, given the presence of several Labour marginal seats in the West Midlands vicinity ?
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With the current drop in tax receipts it's going to be debatable whether the government can afford to loan any companies hard cash (with the banks it was largely a paper exercise of guaranteeing risk.)
Since government borrowing is increasing faster than anticipated and tax revenues are decreasing significantly it would be useful to understand where you see the government borrowings are in relation to next year's predicted GDP and not last years GDP as currently reported.
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Nobody seems to have considered that it might be in the UK's best interest to nationalise one of the two and let the other go where market forces take it.
Jaguars are luxury cars that we can all live without, however much the petrolheads among us may yearn to own them. A lot of us want them but we don't need them.
Land Rover on the other hand, ignoring the Chelsea Tractor image that they have acquired from being used in urban areas, are useful, decent quality tools of the trade in agriculture, the military and the emergency services.
I can't help but believe that the New Capitalism (see RP's other blog) will have far more room than there has been for many years, for specialist businesses that know their niche in the market, are expert in what they do and help to provide support for the UK's infrastructure too much of which is now in foreign ownership that has no interest in our future. We need rather than want such businesses and Land Rover falls into that category.
If you think all this makes it sound as though we are already in the bleakness of a siege economy, then you ain't seen nothing yet.
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What a deep irony that at the same moment Gordon Brown is making a big song and dance about "£25m in funding for developing countries to invest in low-carbon initiatives" he appears to be quietly contemplating £1000m in funding to subsidise one of the most environmentally irresponsible products on the planet.
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BEST SOLUTION FOR JAGUAR / LANROVER ?
Offer TATA a 10 year zero % Corporation tax incentive providing NO JOBS are lost in the UK.
This will give the owners and the banks an opportunity to re-appraise the companies abilities to repay loans etc and if the owners or banks dont want to take that offer it would show NO CONFIDENCE in their own predictions of the business in the long term. As such, we should not invest ourselves as tax payers.
Hopefully, by making the UK their most Tax Efficient base, TATA will be more inclined to transfer profitable business to the UK and if production needs slowing or halting they will view other locations as better targets for closures.
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Jaguar's may be nice cars...but they are a dinosaur in these times....job's or not it's like supporting a company to continue making steam trains! Their day is over.
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Of course the fact that Mandy offered you an exclusive interview had no bearing on the tone of your reporting on this case???
My grandad said:
Judge a man, not by his wealth, his wit or his strength. Judge a man by his honour.
Is naked ambition and self promotion at the expense of impartial reporting for the british people in the only state media available to them honourable.
You decide, unless the moderators do first.
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But... but... but... so what if it's an industry wide problem? It's wider than that, it's a global economic problem. The point is lots of industries face downturns, the companies that are best prepared for the possibility and with the best prospects will survive and the ones that don't probably weren't viable long-term porspects anyway, even if they did OK in the good times. You can't pretend that the bad times "don't count", they're part of the long term cycle and conpanies should plan for things going wrong.
On a semi-related point, there is something really wrong with the kind of short-term financing that seems to be involved here. From what I understand, Tata Motors can't roll over the financing they used to buy the companies, or at least not at a price they like. (Apologies if I have misunderstood). It stirkes me that buying a major business with a short term loan and hoping credit conditions will allow you to extend it this time next year is a pretty stupid idea, and similar to Northern Rock's problems. If I bought a house on a one-year loan in the hope I could roll it over the next year on the same terms, people would think rightly I was pretty stupid. (In fact, in some ways variable mortgage rates give rise to the same problems, though at least there it's only the terms of the loan rather than its very existence at all that change. Makes me think that countries with long-term fixed rate mortgatges are more sensible). Maybe if some companies suffer for this kind of practice this time around, the economy will start being shifting towards a more stable and flexible foundation that takes longer term views.
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One minute we want to sell off Royal Mail to an overseas Company, and then we want to give more money to another overseas Company, I may be silly but if they gave Royal Mail the money destined for India not only does it protect 96,000 jobs but the UK keep the assets.
It might be easier for Mandy to take all our deeds and give them to his mates in the Global Market place.
Did the Europeans open up their markets especially the Postal Market to competition, NO and they have no intention to do so, in fact the German Postal Organisations have increased pay to postmen to such a level it is almost unprofitable and no one else wants to match it.
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Why not reduce VED on L/R & Jaguars ( new ones) to say, £10 a year?, that should encourage sales and become a proper incentive.
Bailouts do not work and what if Tata then go bust anyway?, you have lost the taxpayers money.
Incredible mentality of Government
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Governments must take a capitalistic approach to using tax payers' money. Industries and companies which are deemed too important to be allowed to fail should be nationalised at firesale prices, then ran at an arm-length distance.
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hang on fuel consumption experts...
A car that does 40 to the gallon with one person in it - is a less cost-effective and carbon-friendly means of transport than a vehicle that does 25 to the gallon with two people in it. And getting 40 to the gallon is a pretty tall order if your drive everywhere flat out, as they seem to in Lincolnshire, unless they're driving a tractor. If you drive alone - you need to think about your carbon footprint. And if you're accelerating hard a lot of the time, overtaking etc you are going to bring the urban cycle mpg way down from steady state 40 to easily under 20.
I say this because I drive an old petrol Range Rover with two of us in it some days to work and back and virtually every other car we see has, er one person in it and they mostly tailgate me and drive absolutely flat out whereas I rarely top 50mph.
GC
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Tata own Land Rover Jaguar. Tata have announced they are sponsoring Ferrari F1 next year. Not exactly poor then, are they? Why is it always the tax-payer that ends up out of pocket?
Poor management, poor Government- poor us.
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The reason for the bail out is obvious and nothing at all to do with the car industry....it is because the labour party need donations to fight the election next year and the uk subsidiary of a foreign company apparently currently qualifies as a legal source.
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I agree entirely that we should not allow our politicians to give our cash to Tata. But we do need to encourage high technology manufacturing. Perhaps Jaguar is not the best case. But we do need to keep and increase manufacturing - i do not believe for a moment those who claim that it does not matter where our goods are made. So this is a plea for ideas. Robert, how could we stimulate high tech manufacture please?
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Let me get this straight.
The Government imposed higher taxation on 4x4s and high performance cars in order to stop everyone buying them. Now that no one is buying Jags/Land Rovers and the company is going down the pan, GB has decided the tax payer has to bail them out.
You couldn't make it up !!!
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#388 you got that right to a degree.
How about publicly funded BBC FINED?
How the heck can you fine the BBC when their revenue comes from the TV Licence? You might as well fine the licence payers.
Sorry, off topic but relevant in the grand stupid scheme of things from this Guvernment.
GC
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Jaguar LandRover export most of their production, and with the recent fall in the pound, the Company should be able to avoid most of the 35% fall in sales in the UK.
Mandy's involvement in Jaguar LandRover, together with Sainsbury's recent contributions to the Labour Party, are a sure sign of an impending election in the spring.
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Of course this latest bail out would have nothing to do with all those marginal seats in the midlands some of which would only need a 5% swing to go Tory including Jaqui 'femasaur' Smith? It would be just typical of Mandelson to use the current situation to look after ZaNuLab's interests, wonder if he would be so keen if an election wasn't due in the next year or two? TATA can find the money if it needs to and if it can't then I wonder, perhaps a quick look at Rover might give you all a clue!
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In reply to:
I hope today's government doesn't repeat the mistakes of 30 years ago! We've precious little car industry left and we must hang on to it!
It isn't our car industry, it's not a british manufacturing industry, the owners of the businesses that make cars in the UK are foreign! The UK car industry is not strategic to the country's welfare. Tata need to raise funds elsewhere, they knew the risks. They'll gladly take the profits in the good times but won't ride the wave in the downturn.
25000 Woolies workers, untold UK banking staff gone.......who knows where it will end. Why couldn't their jobs be saved?
Don't get me wrong, if I worked at Jaguar I'd be very worried but from an objective view, the Government can't sub the Indians for Jaguar. It would be ludicrous.
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I think it is a false comparison to liken the USA car market to that of the UK. Given the formers' leaning to large, high consumption vehicles like 4x4s that give poor MPG and are made for big smooth open roads, the market for exporting such vehicles is limited.
Also given that producing such vehicles is a core component of the American way of life, with producers of such held in high regard and a barometer of the economy, the Government there had little choice but to act, albeit with strings!
Here we have no such ties. Jaguar Land Rover produces for the most part higher end vehicles that sell in limited numbers in the UK but have had a bigger USA market (the American Jag-waarrrr) which has wained of late.
So I agree that we should not throw money at JLR just because Tata see a weakness in the Labour party to remain popular at any cost, we need to draw the line somewhere.
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392 Cravingawin:
Spot on - if we save it, we must own it.
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The government should not put cash into Land Rover and Jaguar. It did not put cash into MG Rover, so why is this case different. For a start at least MG Rover was UK owned. Why are we about to put cash into a foreign company. It should not be allowed. Like any business, if it is not making money, it should be allowed to go bust!!! It's hard but that's the way it works!!!!
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Car companies make lots of money in good times but can lose lots of money in bad times, by common consent this is a bad time! Some analysts predict even Toyota will make a loss this year. The US, French, Swedish governments have all provided assistance for their car businesses. Why shouldn't the UK government provide assistance for the UK car industry provided they have fundamentally sound businesses. Perhaps the historical lack of understanding of Manufacturing explains the small and shrinking UK manufacturing base. That wasn't supposed to matter because the service industry (banking) was the future... looks a bit wrong now. Perhaps the support needs to be balanced to ensure both the manufacturing and service sectors survive this financial crisis.
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I've got an even better wheeze.
The government should loan the money to Tata but at the same penal rate as the banks, about 10%. Then get the BOE to slash rates to 0%, which is likely anyway, introduce quantitive easing which involves the BOE buying up debts (mostly if not entirely government bonds). The BOE will purchase this government debt at about a 2% coupon rate. And as if by magic the Government makes an 8% margin to help pay off it's already massive debt burden. This 8% effectively comes off Jag's profit margin making it a nationalised company in all but name.(profits remain in the UK not exported to India).
Off course this huge amount of extra money being created either from cheap credit(eventually) and the printing of extra money will lead to uncontrollable inflation 1 year down the line, making all our mortgages(debt in general) a lot less of a burden, to allow us to start the cycle again. Hoorah.
Don't sweat it it's only funny money anyway it has no intrinsic value, it's just a means of exchange, and who has savings nowadays anyway, life's too short.
I have saved thousands of pounds with a tracker mortgage obtained last year I'm off to buy me some oil!
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This comment was removed because the moderators found it broke the House Rules.
Has anyone thought why we are in this mess. The bankers went off pretending they were so clever with slicing and dicing toxic debt to make it look like a AAA security, and now will not loan to businesses to help through the downturn. The loan guarantee to Jaguar Land-Rover will support lots of jobs in the suppliers. The French Germans and Swedes supported their Car makers, UK delays so it can rely on the money pumped into the banks
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I can't make my mind up whether this article is kite flting for a Government plan to bail out Jaguar / LandRover or whether it is GB firinga shot across PM's bows. Either way, it would be nice if the Govt spoke directly tto us rather than via an opaque interview with a favoured journalist. Incidentally, I see tonight's BBC News at Ten splurged RP's New Caputalism theory - looked very like a party political broadcast.
On Tata / JLR, it is a joke that they are seeking refinancing just months after buying te comnpany. If the poor old taxpayers money is to be squandered, we should get something - e.g. shares - in return. JLR has lost money for years but, ironically, the sliding sterling exchange rate might remedy that
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194 magicblackfrog
British Industry is good. I've seen it, worked in it as well as working in other countries. Frankly, Germans and Japanese are over-rated.
Jags and LR's are reliable......I tend to see more BMW's on the side of the motorway awaiting the RAC than any other. (But JDPower say the same thing).
Ive had many different cars and I have never had to go to a J or LR dealer. The Merc and BMW's did have to (Strangely ...both had gearbox problems)
I can't accept your comments. Get behind britain...unless you're not british....
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Posting 333 is the most interesting on here by far, because it lists facts, doesn't just re-cycle the writer's existing prejudices. Note that BMW's sales are down almost 4 times as much as Jaguar's - maybe even the thick middle-classes who bought these over-priced, under-specified, cramped and unreliable cars purely on snobbery have started to wake up (read Clarkson's review of the ludicrous 1-Series and you'll see why).
Yes Land Rover is suffering badly as you'd expect in the circumstances - but within a few percentage points of Saab, Renault and Mercedes.
As others have noted, it's not the current range of cars which make these companies worth saving, it's their world-class research, development and design capabiilities - of which Britain now has far less left than most other European countries, thanks to Thatcher - which make it critical that they're given the chance to develop a new generation of cleaner, greener cars.
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The goverment is clearly keen to support Tata. Tata is currently stealing jobs at Scottish Widows - part of Lloyds TSB. The government has recently oiled the wheels of the questionable takeover of HBOS by Lloyds TSB. British jobs for British workers may sound good but the govt doesn't practice what it preaches. Not where Lloyds TSB and Tata is concerned anyway.
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Loans and help, if any, should be made equally to EVERY car makers, not just the ones asking for it. In case of Jag/LR, Tata owners are multi-billionairs who can easily- afford to keep Jag/LR going without needing tax payers' money. Otherwise, why should any one of us borrow from the banks and use our savings when we can just demand cheap mortgages and loans from the governments. Better still, 0% interests.
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The only thing the Government should be throwing 'OUR' money at, is alternative technology.....and that's not simply out of a desire to save the planet, but because we have to escape from having our whole economy and our way of life being at the mercy of the price of Oil or Gas.
French electricity, Russian gas, Arab Oil.....with the right investment we now have the technology to become self sufficient and not to need any of it.
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Surely our Lordships' dark forces are at work here...
Why would we, British taxpayers, wish to bail out an Indian owned company? What next? State support for Africa?
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What about buying the company?
Might give India some more money to buy out more call centre jobs from the UK ?
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I sincerely hope MP's will speak out against any proposed loan to the Car industry to enable them to continue producing cars.
Recent news is that sales are down by a third. If this is the case then we should not be providing yet more taxpayers money to produce products that nobody wants.
The basic law of supply and demand should prevail!
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This is the industry that Thatcher bailed out when she refused taxpayer-billions to other lame ducks. It's entirely predictably come back to the taxpayer for more every few years ever since.
Every new bailout is perpetrating a fraud on everyone in the supply chain who invests good money on the strength of it. If Thatcher hadn't bailed them out, all those suppliers would've been spared the best part of 30 years investing in failure.
http://bahumbug.wordpress.com/2008/12/20/investing-in-obsolescence/
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Before we let these car companies have our money because that is what it is.Can they start building fuel efficient cars instead of these dinosaures.We are paying green taxes and then lending the money to companies who give no thought to energy efficiency.
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Reading these blogs depresses me enormously. The general lack of understanding of economics and particularly manufacturing industry is beyond belief. The standard of living in Britain will continue to decline in comparison to the Germany and Japans of this world due to the lack of understanding of the true worth of a manufacturing industry. Even the government now believe that shopping is the true British industry and that is supported by the British public by all accounts.
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Lending money to Jaguar is not wise nor indeed necessary. We learnt a painful lesson about politicians lending/investing in commerce and industry over a period of 40 years after the war - they do not know what they are doing. Although we are in a credit crunch, it seems to me that Tata do not want to take a difficult decision about financing. Why should the British tax payer provide financial support any cheaper or on conditions less onerous than the free market? I cannot see the reason. So if tax payer finance is no better than free market finance why should Tata take our money? Ford invested billions in Jaguar and frankly it is still not competitive. In the great scheme of things, recessions are about shaking out those that do not have a competitive offering. Regretfully Jaguar is one of them. I also think the US government is mad lending to GM/Chrylser/Ford. There is actually too much car manufacturing capacity in the world. If politicians interfere and prevent a shake out they just end up penalising those that have survivable businesses. Politicians are no good at these decisions.
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I hope this is not going to become another British Leyland.We taxpayers paid millions into BL and it was all dead money,a complete waste.This shouldn't happen again.Do we need Landrovers and Jaguars when there is a need to pollute less? If they are to be subsidised by the taxpayer they should design and make environmentally friendly luxury cars.
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One question, why should the government have to bail out a failing company?
Is it the governments fault that demand has reduced in that sector? Nope.... Is it the governments fault that Jag Land Rover havent introduced a new eco friendly, hybrid land rover? Not at all....
Thats what Land rover should be doing, innovating, adding value to their current products, because at the end of the day, thats what business is all about, if you dont innovate - expect financial backlashes due to a drop in demand...
But dont expect the government to come running to the rescue... your problems are self-inflicted, land rover.
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Whether you like the varous products
or not,if these manufacturers are NOT
SAVED it will be agreat loss for the UK.
Of course they can eventually get jobs
at minimum wage,the skills can be lost
along with all the suport industries.
Then we can be a POTATO republic.
OH I FORGOT FARMING HAS BEEN
TRASHED TOO.......
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Those who make the point that JLR is not a viable business long term are ill informed. JLR was profiable last year under ford. Land Rover as a business was the most profitable division in 2007 making more than financial services, and 3rd most profiable division 2006.
So essentially the problems are affecting the whole industry as many have said. If no government in the G8 was to get involved then you would looking at 5 manufacturers left, BMW, Daimler (Merc), VW/Porsche, Honda, Toyota. That is how bad the situation in the industry is.
To those who think market forces should be left to themselves, are you ready to pay 20k for an entry level polo size car because that is what you would pay partially because of reduced competition but mainly because alot of cross business subsudies would have been removed. Yes the industry sells the non gas guzzlers at a loss at present.
Those who advocate a fire sale obviously do not monitor the market as you would already know that the market as a whole is not far off that, most manufacturers are already selling there small vehicles at substatial losses just to clear stocks and generate cash, BMW, Audi are doing this you think everyone else is not.
I think preferably the solution proposed by the EU about 6/8 weeks ago would have been best, but does not seem to have moved. The question is are you happy for French to rescue there insdutry and stand by for most of you that seems an infatic yes at present but one which you may regret longer term.
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Perhaps we should let our manufacturing companies fall again?
Perhaps we shouldn't of let them fall into foreign hands in the first time..
At the end of the day we can all ways fall back on our finanical industry, cause were really good at that...!
It seems in the UK we just don't appreciacte what it is to make something..to design something..to manufacture something..it's dirty and difficult work and take a while to recoup you investment, so lets let someone else do it. From my experience in the UK, worknig for both UK bosses and foreign bosses, its our top management who are incompetent in this area, they just are not good enough, and find an easier more profittable life in finance, or public life..
The answer, let be competitive with the world, re-educate to raise the status again..making something is very very important to any country.
Please..Please save our industry..if we don't we will be a third class nation in years to come..no public sector...no finance..nothing..dead....
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I want a subsidy too!
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By all means subsidise car manufacturers via the taxpayer - if every manufacturer can get the same deal - but it should be paid for by increased direct taxes on the motorist - let's say by an increase in fuel taxes or road pricing.
Don't like this? Well, tell me why we should subsidise the motor industry in particular above other businesses. Maybe because they shout louder?
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Tata should find the funds itself or it should go to the wall.
Jaguar's problem isn't technical innovation, quite the contary they have always been in the forefront. Nor is it reliability -they regularly beat Lexus in JD Power surveys! Instead they have something in common with Cadillac, namely an aging customer base and a lack of models suitable to attract younger buyers. This market was given away to the Germans.
A particular blunder was the X-Type. It is based on a Ford Mondeo, actually some of the best & most reliable running gear available. I used to see the breakdown stats from UK's biggest motoring organisation and they had the Germans beaten out of sight on reliability.
Its problems were towfold - firstly and rightly it was seen as an expensive way to buy a Mondeo (particularly in the USA) and secondly it was to say the least an ugly duckling, the stylist probably intended it as a lampoon of the classic XJ6.
LandRover is very innovative, but the market is moving rapidly away from thirsty SUVs. They need to reinvent the Land Rover as the Army's main light armour again as this is great advertising (finest 4WD used by the finest soldiers in the world) a thing Ford scorned originally.
Jaguar needs to have another go at BMW three series. All they really needed was a chance to be Jaguar and not be forced to use a Chassis from a lesser manufacturer. They have the brains and talent to take this market from BMW if TATA are bold enough to splash the cash and back an all new small Jag.
If Government is to invest at all it should be in a new product to revitalise not in maintaining the status quo, and this should be more than matched by the parent else over the long term their investment will wither on the vine.
Ford should be credited with revitalising Jaguar and putting the fundamentals of the company right, but the new owner should also remember their real tactical error and not repeat it.
A new Tata with Jaguar technology= sales success. A new X-type with Ford Technology = Sales failure.
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Frankly no way. I feel sorry that Jaguar is going to the wall, more for the workforce than for the marque but what's sauce for the goose etc. Rover was not bailed out and was so restructured that it failed whilst the profitable part was sold to Ford who later picked up Jaguar and Volvo. Essentially Rover was taken out of the equation so that Jaguar and Volvo would have no competition. It was bled dry so that BMW could unpick the 4x4 market before selling on Land Rover. Nothing the Labour Government ever touches works. It was the same in the 70's when Rover was roped into BLMC whilst jaguar bled off the funds on that heap of execrable rubbish called the xj6. Now they have been bought by TATA, who should be told no way jose, but then we should have said that to the banks as well.
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I am stunned at the amount of people on here commenting on a position of pure ignorance.
First JLR is NOT an Indian company, it is a British company based in Britain with British workers, Yes it has Indian owners, but so what, previously the owners American and before that they were German.
Second it is not a bail out, it is not a gift and it is not chucking away tax payers money. It is a short term loan, that is required because the finance sector is knackered. The loan would be paid back with interest. The amount they are talking about is £0.66Billion, which kind of pales into insignificance when you look at the amount that has been provided to the banks who are largely to blame for this mess. If this money safeguards 15,000 British jobs it will be well worth it. If you do the maths you will find through keeping these people in jobs, the tax revenue gained through income tax and saved in job seekers, it will pay back very very quickly.
Third, Land Rovers and Jaguars in the main are not Gas Guzzlers, the majority of the vehicles produced have very good mpg \and low CO2 for example anything with the V6 Diesel engine in it. In the future im sure they will bring out even more fuel efficient and hybrid vehicles, as this is clearly what the customer is asking for, but this takes TIME and MONEY to do.
Forth, JLR exports many of its products, and therfore is a net contributor to the British economy, if it is allowed to go to the wall as so many of you want to happen, we will all be a little worse off.
Fifth and finally, yes I agree That TATA should provide funds to help JLR in preferrence to the British governement, and actually I wouldnt mind betting that when all the talking finishes this is what will happen. However the so called bailout is for the whole British motor industry including the supplier base. So who is going to help these companies, or are you going to stick 2 fingers up to them and their workers as well
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It's refreshing to see that #422 pilotp8 and a few others on this forum have managed to grasp the fundamentals of the situation. The rest appear to be purely media driven, shocked by the large amount of cars stuck in fields. If they did but look at those fields at other times and not just during a global credit crisis they'd realise that those fields are always full of cars.... they're in a distribution holding area!! Many cars are pre-ordered by customers Who have chosen the specification, colour etc. Consequently, it may be necessary to hold cars until there are enough to fill a transporter going to a certain area. However, perhaps many of you are naive enough to believe that they leave the end of each assembly line and go straight to the dealers all over the world. Or maybe you'd like them to be transported individually to wherever they have to go as soon as they're built?
Nevertheless, it's perfectly clear that sales for all manufacturers are down dramatically at the moment but to single out Jaguar Land Rover as a lame duck is absolutely ridiculous. In the past two years it has had record sales. Up until it's sale by Ford in June it had made £300 million+ profit. However, when the sale was completed, as part of the deal, JLR started with no debts but equally no cash, a zero balance.... It was purely bad timing. Effedtively, it had no chance to build a cash reserve before the credit crunch and has been unable - like many others - to borrow any since!!
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It's probably a bit late to comment on "The Jag" as they call it around here, but I have not found any comment in this column on Jaguar over the next few years.
If Mandy really does hand over cash to Tata I hope he has a cast iron clause in there preventing Tata moving ANY manufacturing currently in the UK over to India.
Personally I don't think Tata will accept that because I am sure that within the next few years all parts will be made in India, starting with the simple things such as nuts and bolts, bumpers, hinges, panels, etc, until India is clever enough and has enough equipment to make everything.
We might be lucky and hang on to Design and Development, but jobs will go, believe me.
Governments just do not understand cars, as witness the continuous oppression of the car driver. And what about the Delorean adventure. Every 12 year old schoolboy knew that would go belly up.
SeniorC
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What is it about the British (and yes I am one) their never happy unless they have something to complain about, the cups always half empty and even when it overflows, we still aren’t happy because we have to clean up the mess!!!!
I read the blog about Jaguar Land Rover and I have never read such a load of rubbish and miss information in my life.
Firstly, Gas Guzzlers - if any of you are fortunate enough to own a Range Rover you will know the cars fuel consumption these days at over 30mpg is remarkable for a car with such capabilities, try towing a horse box with a Nissan Mica and if you watched Top Gear the other week you will have seen Clarkson gobsmacked at having covered over 600 miles on a single tank in a Jaguar Diesel out gunning a Diesel Polo driven by co-star Hammond!
I am fortunate enough to have driven many of the finest cars in the world and my current steed from a certain German Manufacturer of some repute named only by three numbers could not hope to get anywhere close in terms of fuel consumption or emissions to my Range Rover but no one seems to talking or targeting them – just because the vehicle is large and expensive does not automatically mean it is rubbish on fuel. And let’s not forget, the German Government were one of the first to announce extensive support for all homeland manufacturers.
Jaguar Land Rover is a British success story, but they are being affected by a Global Downturn that has affected everyone.
Land Rover has been hugely profitable for a good number of years and has seen successive years of record breaking sales in this country and I estimate even this year will prove to be its third best result ever for vehicles sold! And whilst Jaguar hasn’t been so lucky in the recent past, that was due mainly to its product cycle and this is an important issue everyone seems to ignore. Look at the current offering from both these Brands and they have World Class Award Winning products we should be proud of whether we choose for our own reasons to buy them or not, they are as English as the Queen!
Yes the companies were bought by an Indian Company but so what. TATA I believe will prove to be fantastic custodians of these iconic British Brands.
Stop kidding yourselves (not helped by the media) that these companies are fading or failing completely,