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Full steam ahead for Jaguar Land Rover
Jaguar Land Rover’s acting CEO looks forward to a future under Indian control
7 May 2008
JAGUAR Land Rover (JLR) acting CEO David Smith says that his former boss GeoffPolites left a legacy that will continue to influence the company well into the future.
Mr Smith came to Australia for just one day to attend Mr Polites’ funeral last week and was to spend another day in India talking to JLR’s new owner, Tata Motors, before returning to the UK to finalise the takeover deal.
Although he rejoined JLR only a month ago as chief financial officer after three years in the same role at Ford of Europe, Mr Smith lives justtwo doors away from Mr Polites’ home just south of Coventry in central England and also worked with the popular Australian at Ford.
“His mantra, which he always used to put at the bottom of any employee letter, was ‘excellence is a habit’ and I think he really tried to make sure thathe demands excellence from everybody in the company, especially the design team,” Mr Smith told GoAuto.
“That is certainly his legacy for the whole business. I had a shop floor employee write to me last week and say, ‘Let’s make sure we keep that’.
“There were 500 people here at the funeral, but we’ve also got 16,000 people in the UK who are great advocates for everything he was trying to do.” Mr Smith is a 25-year Ford veteran who worked with Land Rover after it was bought from BMW in 2000 and oversaw the sale of Aston Martin last year as well as the JLR sale to Tata Motors.
He said that Tata would decide who would replace Mr Polites in about six weeks’ time and that, although he would “love to do” the CEO job permanently, is committed to staying with the company as CFO even if he misses out on the promotion.
“Ford has been a very kind employer for me and it’s a very good company, but what I really love about Jaguar Land Rover is that the passion for the brand just permeates through the whole business,” he told GoAuto.
Left: Jaguar Land Rover (JLR) acting CEO David Smith.
“I feel I’ve had a lot to do with helping the business get back into shape again, restructuring and transferring the business over the last few years, and I want to see that through. It’s not a three-year journey it’s a five- to 10-year journey as far as I’m concerned.” In the course of negotiating the Tata Motors deal for JLR, Mr Smith has become familiar with the Indian company and its method of doing business and is convinced that the British company will thrive under new ownership.
“I’ve met (Tata chairman) Rafan Tata several times during that process and he’s a really good guy, I think.
He’s got a terrific long-term view of the business and he’s an enthusiastic car guy as well – very dignified and humble, but intelligent and an impressive person, so I think he has all the right qualities for us.
“Tata’s view is they would like us to operate as an independent business within their overall global framework, so we’ll be working as part of the Tata Motors group.
“But they very much want us to develop our strategy as we have been over the last few years. They will help to finance it, but it’s really up to the Jaguar Land Rover management team to plot the way forward.
“They think that the design direction that we’ve been going in is just right for the brand and they want us to continue with that. They bought the business because they believe strongly in the long-term potential of the brand.
“I know there’s been lots of speculation about synergies and things like that, but they’ve bought into the plan of a brand that they think has more growth potential they’re not coming in thinking of using synergies with their core business because, as many people have remarked, they’re at different ends of thespectrum.”
Mr Smith said that Tata should not even need to provide extra capital investment because JLR’s business plan was to cover all future product and engineering development costs.
“JLR as a total business is making money (but) we are still working on Jaguar. It’s made a big improvement over the last two or three years and we’re getting close (to profit).
I’m not going to commit to a timeframe, but it’s getting pretty close.
“Tata Motors provide us the right financial security and stability for investment over the long term. It’s our aim to make sure all our investment plans are self-funding, but they will stand behind those.”
While JLR already buys components and tooling from low-cost countries, Mr Smith said there was no thought of cheapening the brands and rejected any notions of Jaguar-engineered Tatas or the X-Type becoming a luxury model in India after its life as a Jaguar is finished.
“They care about the quality of the final product (but) we have been sourcing from lower-cost countries and I think Tata may help us in India specifically.
We have been buying services and tooling from there for a while but they’ll probably just help us accelerate that process.
“And clearly they’re going to help us in developing the Indian market and maybe some other markets where they have a strongerpresence.
“We bring a lot of automotive engineering expertise (to Tata). I don’t think that’s necessarily hugely relevant to their current product portfolio, but over time I’m sure that’s going to be something we’ll learn how to use better.”
Part of the deal with Ford involves development of future powertrains to meetincreasingly demanding emissions and fuel consumption expectations and requirements, including new diesel and petrol engines and, well into the future, perhaps hybrids, but JLR is a partner in these and not just a customer.
“Some (engines) have been developed with Ford and in some areas we’ve agreed tocontinue to work together, but mainly they are JLR-specific because our main powertrains, the larger diesels and gasoline engines, are really our own engines and Ford isn’t a big user of those,” Mr Smith said.
“I think we will have some smaller engines in our cars (to meet future regulations) but it’s really going to be a whole combination of things.
“At the end of the day we have to meet these regulations, but also give our customers what they want – and they still want the power and torque of larger engines, so there’s more effort going into trying to improve the fuel economyin those.”
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