Why Jaguar is suddenly in a jam

DAILY EXPRESS
By Declan Cunningham

Jaguar Cars, the glittering success story of the British motor industry, will end the year with more than one ugly dent in its bodywork. And the man in the driving seat, chairman and chief executive Sir John Egan, must be wondering what has happened to his golden touch. His leadership over the past eight years has put Jaguar in the fast lane to record sales, booming profits and an apparently contented workforce at its three Coventry factories. Earlier this year.

Jaguar achieved the ultimate glory by winning at Le Mans for the first time since 1957. But now the dream is in danger of turning sour. Profits have been slashed by half, pay talks are currently deadlocked and the company admits industrial relations are at their lowest ebb since privatisation in 1984. The next few weeks will be crucial tor tho firm as it faces an uncertain New Year. Unions are demanding a one-year pay deal with a seven per cent rise or £17 across the board.

The management wanted to hold them to a two-year deal which will put an extra £13 In pay packets over the entire period plus consolidation of bonuses worth £20. They say that with the strong pound hitting U..S. profits they need tho stability of knowing what the wage bill will be for the next two years. Jaguar's problems are further compounded because, as a low-volume manufacturer, it cannot generate the profits to plough back into developing new models. Had the U.S. market held up, the expensive research and development centre built by Sir John may have paid off.

But now Jaguar needs assistance from the giants of the car industry if it is goingto maintain the essential new model development programme. Already the V12 engined version ot the XJ40 saloon car has been put back until late 1990 and it looks increasingly likely that the XJ220 sports car – unveiled at the Motor Show last month – will never go into even limited production. Meanwhile, there are several predators waiting to aquire the prestigious Jaguar name. General Motors and Ford in America are said to be ready to buy put the company when the Government's Golden Share scheme expires on December 31st 1990.

Until that date, no shareholder may buy more than 15 per cent ot the stock without the Government approving. The Japanese are also said to be interested. But if Jaguar is taken over by a foreign car maker it will certainly lead to job losses with tho introduction of increased automation. Typical of the new mood of militancy, among the 12,500 workforce was a four-day strike earlier this month over sacked senior shop steward Tommy Wheeler.

He was dismissed from his job as a storeman when he was caught using a company photocopier. It led to 7,000 being laid off and cost the company £20 million in lost production. The dispute ended when 63-year-old Mr Wheeler accepted early retirement and a lump sum pay-off.

He said last night: "Many workers don't like the new style of management which has been creeping in recently. They seem to want a Japanese-style workforce with total loyally to the company and no union power. I believe the management has been looking for an excuse to get somebody. In industry, if you can sack a shop steward, it makes the rest of the workforce pull back a bit."

Despite profits down by half to £22.5 million in the first half of this year. The underlying strength of Jaguar sales worldwide is impressive. In the 10 months to October, world sales of the XJS sports car and XJ6 saloon topped 42,000- 3,000 up on the same period lust year. European sales are at a record high and the company will sell more than 1,000 cars in Japan for the first time this year. Jaguar's financial headaches are all in the U.S. where sales are down eight per cent because ol a growing consumer reluctance to buy luxury foreign ears. Every cent the dollar loses against tho pound costs Jaguar a staggering £3 million. A company spokesman said;

"We are making and selling more cars than over before. The problem is the American market which takes well over 40 per cent of our production. We have told the union pay negotiators that when times were good employees at Jaguar's benefited. Now things are not so good we are still offering them what we think is a very reasonable increase. We need stability and need to know where we stand."