The Financial Times (sub) is pissed. Pissed at Peter Mandelson, Britain’s business secretary, and his planned bail-out of Jaguar Land Rover. Forgetting the old school of not mixing reporting with opinion, the FT pulls out the flame thrower and blasts away: “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 prop 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 UK 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 £50b industry, he should harness such public funds as are available to develop the green cars of the future, not pander to vested interests.”
Hmmm. Let us remind you: This is not a rabid blog. This is the venerable Financial Times. We kid you not. Would the pink Financial Times be so ferocious if Land Rover and Jaguar still be a company that’s firmly in British hands? We guess not. The FT seems to have issues with the current owners of Land Rover and Jaguar, who happen to sit in one of Britain’s old and long departed crown colonies. After refilling the flame thrower, the FT launches an incendiary attack in the easterly direction:
“The second reason Mr Mandelson should refuse to bail out JLR is that Tata Motors, the Indian company that paid $2.3 b for it, is capable of doing 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 $62.5b and profits of $5.4b 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 back-office jobs to India in their hundreds of thousands during the past decade. But that would be nutty. 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.”
Take that, Tata. If you don’t have the money, go back to elephants.
I can’t help but think that the FT is talking utter twaddle, partially.
The UK government should be using UK taxpayers’ money to support UK jobs. That’s an idealogy which I subscribe to whole-heartedly. However, the UK government shouldn’t let Tata off the hook.
If I were the UK government, I’d say to Tata “OK, lads. We’ll give you the bailout you want for Jaguar and Land Rover. But we want a stake in Jaguar Land Rover or Tata itself.”
Then, let’s see how willing Tata are to take taxpayers’ money…..
I think this whole scene in the UK is based on Class divisions, which even in the 21st Century is quite evident in everyday life!
Tata is a Foreign owned Company making Jaguar and Landrover brands, probably soon to be moved to either India or some other Asian Country, so all Money given to them would be a total waste imho!
Substitute Cerberus for TATA and you get the same result.
KatiePuckrik :
December 19th, 2008 at 7:21 am
I can’t help but think that the FT is talking utter twaddle, partially.
The UK government should be using UK taxpayers’ money to support UK jobs. But we want a stake in Jaguar Land Rover or Tata itself.”
Nationalization of and directing of private entities by states get back in fashion.
Whooow…
How retro.
That’s one of the many things that Karl Marx, Hugo Chavez, Iosseb Bessarionis dse Dschughaschwili (Stalin) and George Walker Bush thought and have in common – we know the results.
Thank you.
One (in case of W two) time is enough
@Bertel Schmitt
Please share your wisdom with us and broaden my horizon – say it clear what I understand in-between the lines.
What is your problem with a FT reloading the flame thrower (rarely enough) when public interests and taxpayers money are at stake?
TATA is a huge conglomerate and probably surpasses Cerberus in industrial output. They do have a large group of off shore service companies for US and European client companies, but I’m not so sure that they intend to pull Jaguar and Landy production out of the UK.
Still, if taxpayers are going to invest in auto companies, it should be as “secured creditors” with representation on the BOD.
“he should harness such public funds as are available to develop the green cars of the future, not pander to vested interests.”
isn’t “harnessing public funds” for “green cars” a vested interest?
The problem with Tata is they are in the steel business. Was a great place to be until Summer. Awful now. They are running out of money fast.
Robert Frankfurter,
The French Government own 15% of Renault and the German government still have a hand in VW.
Believe it or not, government and industry CAN work together…..
Also, I love the way you’ve taken my quote and put it completely out of context.
If you’d taken my quote as a whole you’d see that I was advocating that if the UK government were to give Jaguar Land Rover some money, they’d have to attach conditions with it (i.e a stake in the company). That way, it’d make Tata think twice before accepting the money….
Tata have got a whiff of cheap or free money being dished out by a government in panic, and thought “….. umm, yeah, we’ll have a bit of that, thanks very much”.
The government should be the lender of last resort; not the lender of first resort to canny multinationals.
But seriously, I think we’re being too hard on Tata. How were they to know that Jag was a massive sink-hole for money, with scant prospects? I mean, look at the billions that British Leyland and Ford made from it… Oh, right.
Cheers
Malcolm
Mandleson is saying that the money is just a loan
and will need to be repaid , however that will depend
on these companies making some money in the future,
at the moment I would say that is a pretty tall order !
I am English and have owned and run both Jaguar and
Land Rover cars in the past and feel that they are both
national institutions , however they are not cars for
these times and there has been precious little attempt
at moving them out from their 20th century technology,
like all other car companies their cars have become
bigger heavier and more costly to maintain , if you
compare the 1970s range rover to the current model
you can see what I mean !
At the end of the day these companies are now foreign
owned , and should be treated as such , I totally agree
with the opinion of the FT , they should not be bailed
out with taxpayers money , let TATA stick its hand in
its pocket !
KatiePuckrik :
True – the European governments have sometimes sorrily still some stakes left (from dark times) they will have to privatize the remains as soon as the market conditions allows. Besides – the British & US have no law requesting the copying of every stupidity anyone in the EU makes. Austria has “sold” (in fact given away for free & more) the partly state run Austrian Airline just days ahead and did not get money payed for, but has been forced to sweetened the deal to Lufthansa with € 500 $ 750 Million cash – just to get rid of all shares the state held.
They saw finally after continuous losses there is no way Gov. & Industry can work together – it was a very costly trial for the Austrian government & taxpayer.
To gamble with other peoples money that a Indian company would refuse money because there are strings attached is either childish or criminal – in any case getting he wrong way on the horse and hope that the horse finds a way to correct that. You underestimate the cleverness of a indian businessmen by a mile. Governments have no, I said no business in private companies matters. They simply fail all the time, repeatedly in a row without exception
If history is any guide, your mentioning that state and private industries / entities can work in harmony is not founded on any empirical data. Not even in a size of a proton one can hardly show any positive example.
Negative examples of failed trials to mix state and private matters are available daily in boatload sizes. The current financial housing crisis is in core a result of a failed trial of US government mixing private matters (housing for every bump no matter what, ignoring commercial fundamentals and the cost to others)- it took a while until the ceiling came down. But it started under Clinton, broke down under W.
Your proposing the same now.
The medical definition of insanity is trying the same failed approach repeatedly expecting another outcome.
A “green” approach, being nice to each other and hope for the best by mixing water and flame leaving anyone familiar with historic & empiric facts baffled – to say the least.
Government & industries can never ever work together as they have opposite mutual excluding aims.
andrichrose :
December 19th, 2008 at 9:00 am
Mandleson is saying that the money is just a loan
and will need to be repaid , however that will depend
on these companies making some money in the future,
at the moment I would say that is a pretty tall order !
Indeed.
They can never get profitable with the anchor of a government commissar as led on their feet. If the government hold shares in their fat and incompetent hands the outcome will be the same as with Austrian-Airlines – a total failure and huge losses are predictable- see same posting above.
I feel a bit worried about Merry Old England when The Financial Times starts spouting concerns about grammes of carbon emitted as a reason for not financing something.
I’d feel a whole lot better if they were saying that the decision makes poor economic sense for whatever reason.
Tata bought the pig in the poke, and they should own it. It’s an illusion to think that British jobs will be protected by giving Tata money. The fact is not enough people are going to be ordering Land Rovers or Jaguars for the next year or so. That means no work for the British workers.
Any money is going to go to management, and the workers are going to be laid off anyhow.
As far as I know Tata has retained the full British character of JLR- all the employees have been retained, even the top level executives are British. Tata announced during the acquisition that they would like to keep it a completely British carmaker and fully autonomous..only ownership has been changed.
Of course going by your argument if the TATAs have to bail out the company on their own fully, they might as well go the full distance and move all of the production to India, make use of cheaper labour and raw materials. As long as the TATAs are committed to keeping it a British company I dont see any reason for such jingoistic comments…
Wake up people. We are in a globalized economy.Very few companies are fully owned by individuals or groups from a single nation.. The government should only be concerned about the employees losing their jobs. Again by the same logic countries shouldn’t be doling out sops for foreign companies to set up shop there.If they want to setup a factory let them do it all alone.We’ll do nothing for them.Common sense says they will just go to some other place where the government will accept them with open hands and export their products to your country.
All I’m saying is this..if the government is going to bailout industry by means of loans then JLR shouldn’t be made an exception for the said reasons.
Jaguar went to Ford in what, 1989? Land Rover went to BMW, then Ford in the ’90s.
Neither have been British owned for a long time, and when they were British owned it was as part of the disaster we call British Leyland.
If they were still British government owned I think the Financial Times would demand immediate divestment. And I don’t think that the Financial Times would have much sympathy for a weak Jaguar and Land Rover under Ford.
“True, the UK car industry employs 190,000 people directly and supports several hundred thousand more once components and retailing are taken into account.”
That number includes Ford of Europe, Vauxhall, Mini, a number of Japanese transplant factories, Bentley, Rolls Royce, and the sole British owned company, Morgan.
Jaguar and Land Rover Probably employ 5,000 UK citizens and indirectly support another 7,000, at best.
That is not too big to fail, it is a good size for recievership. If Tata does not want to keep the company afloat a new buyer can.
Lokki :
I feel a bit worried about Merry Old England when The Financial Times starts spouting concerns about grammes of carbon emitted as a reason for not financing something.
The British Government, like the rest of the EU have bought into the Global Warming crisis – maybe they are right. I won’t pretend to be educated enough to make sense of all the conflicting arguments.
One thing for sure, we will soon be hearing a lot more about it from our own government, and will certainly following the GW line.
I agree with Philbailey that it is similar to the Chrysler issue here. That said, the need for a bailout is a prime chance for the gov’t to ensure that those manufacturing jobs that are in the U.K. stay there. Strings are an important part of any bailout plan.
Jaguar has been losing on the order of $2B annually for at least the last 20 years. There isn’t an amount of money they couldn’t burn.
@Katie
I wonder if its more along the lines of TATA suggesting they will let Land Jaguar fail unless they get cash. They own the IPR so they could just let the UK factories die and move them to cheaper places elsewhere.
MGs are made in China, so why not ?
Im sure if they didnt give this bailout, Tata would threaten to produce Jaguars and Land Rovers from India.
If you’d taken my quote as a whole you’d see that I was advocating that if the UK government were to give Jaguar Land Rover some money, they’d have to attach conditions with it (i.e a stake in the company).
Assuming this is not taken out of context, you are advocating government ownership of a British car producer. I seem to remember something like this happeening in the past. British Leyland? How did that work out?
anthroguy,
What makes you think that Tata won’t still do exactly that?
Looks like its still not decided. Not too surprising as uk.gov has no cash to spare.
http://business.timesonline.co.uk/tol/business/economics/article5372774.ece