Government To Bail Out Jaguar?

I think it depends on the nature of the private company. It's very interesting to see whats happening to the car industry on a global scale at the moment. The major Japanese companies are having their export markets eroded because of the credit crunch and because the Yen is very strong. Honda, Suzuki and Subaru have pulled out of Motorsport very recently. Honda have left Formula One, Suzuki and Subaru have left the WRC. Thats a huge hammer blow for the WRC because Subaru have been an iconic part of the WRC since the early 1990s.

As for Jaguar. Well they employ around 15,000 people directly. The brand image is a good one and Jags always sell. The trouble is that they were bought out for £1.15 billion by Indian firm TATA . Their chairman Ratan Tata said Jaguar and Land Rover were "two iconic British brands with worldwide growth prospects" back in June when TATA bought both Jaguar and Land Rover from Ford. the problem is since then TATA haven't been doing well back home and they've also decided to try and revive their own brand by deciding to sponsor the Ferrari F1 team. In a way TATA are asking (in a very tacit way) the government to step in and subsidise the cost of sponsoring Ferrari so it doesn't;t harm the 15,000 Jaguar employees and the many more who are indirectly linked to the Jaguar supply chain including the bloke in the burger van outside the factory who make the gear knobs for Jaguar!

I feel that TATA are holding our government to ransom over this. I think its right that the government should step in and safeguard British jobs but I would much rather that they toughed it out a bit longer and actually bought Jaguar Land Rover and nationalised the ownership. Ford bought Jaguar Land Rover in 1989 for a combined £3.4 billion, they then sold it for half of that to TATA. I wonder what would happen if the government offered a billion quid now. Directly and indirectly there's probably about 60,000 (figures claimed by the company) jobs at stake here. I guess you would have to weigh up the cost of 60,000 people being out of work and how much importance and prestige the government thinks that Jaguar Land Rover have.

I don't think that you can compare it to Woolworths or MFI because both of those companies have been dying on their arse for years. Woolies in particular hasn't refreshed its brand image in years or been particularly innovative in the services it offers. MFI has just been blown out the water by the SS Ikea who offer a bigger, cheaper range of products. Ok, so it would cost £300 million to safeguard their jobs this year. But I would think you would be sinking the money into a bottomless pit. It stands to reason that they would have to be subsidised heavily every year.

The situation with Jaguar Land Rover is somewhat different. The chairman of TATA was right about them being global iconic brands but I'd rather the government buy them outright.

But when compared to France and the USA this proposed state aid of Jaguar Land Rover is a mere fraction to what Mr Sarkozy has proposed to bail out Renault, Citroen and Peugeot. The importance of these three companies can't be underestimated as they employ around 10% of the French workforce. If they go under then it has huge implications for France. Sarkozy came up with a £26 billion rescue package specifically designed to help out the manufacturing industry and even broke news of it in the northern town of Douai, where there is a big Renault factory.

I guess the dilemma that Peter Mandelson and the government have is that they have no way of knowing what will actually happen to the car industry in the long run. The big three in the states (Ford, GM and Chrysler) are in serious trouble because they are not selling enough cars in the US because their customers have been turning to cheaper alternative models from oversees that have a combined MPG of more than 20 miles!! If the US government don't bail out GM, then it'll be Vauxhall and Opel that will be hit in a big way. At the moment I guess the US government is having the same dilemma about bailing out hugely important firms because they've been complacent and ignored the threat of globalisation for years. The ironic thing is of course that over here certainly Ford have really improved their cars since the original Ford Focus was released and a have a reputation for being a maker of quality cars. Vauxhall and Opel on the other hand have really gone to town with their designing.

Well after this afternoon's buy emergency measures announced by Bush to spend $17.4 billion on loans to help the US car industry I wonder if thats twisted Mandelson's arm into action with Jaguar. It makes for some very interesting readiing. The break down of the loans goes is $9.4 billion to General Motors and $4 billion to Chrysler with another $4 billion in the kitty. The interesting points of the deal is that Ford have decided to go it alone and see if they can get by without government help. I suspect that one reason they've chosen this route is that the General Motors have virtually allowed themselves to be nationalised by accepting government help. The loan has a few conditions in place and this afternoon the GM Chief Executive Rick Wagoner went on TV said his company would focus on "fully and rapidly implementing the restructuring plan that we reviewed with Congress earlier this month".

Barack Obama who would've approved this along with George W. this afternoon said "The auto companies must bring all their stakeholders together, including labour, dealers, creditors and suppliers, to make the hard choices necessary to achieve long-term viability."

This suggests that it's almost last chance saloon for two of the big three US car makers. Its quite surprising that Ford didn't want assistance or want that kind of assistance. Out of the 3 they are probably in the best shape and probably have the best range of models.

In comparision the French have 3 major car makers to rival the US in terms of importance of their well being to the national economy. Citroen, Peugeot and Renault do enjoy the fact that the French will buy French cars before anything else. To be fair Citroen have improved in recent years and they've come up with some decent cars. Peugeots have pretty decent build quality and pretty decent engines. Renault probably have the worst reputation for build quality and product range out of the three but they have recently employed some Ex Nissan employees to help out on the reliability. During the late 1980s of course all three companies were privatised by Chirac and nationalised by Mitterand!

In response to your question about whether the government should bail out Jaguar Land Rover. I think that the answer has to be yes. The brands and products are good. Whether or not they are going to sell enough cars in the current climate is anybody's guess. Thats the really question mark hanging over any possible deal. Perhaps its too big a risk to nationalise Jaguar Land Rover. Maybe a loan with strict conditions would be the best option. After all we are talking about is a solvent foreign private company going cap in hand to the government and asking them to provide enough finance to safeguard British jobs.

It is my view Chris that they should put their own money into the company, as I said if our government does it for one private company, then where it does it draw the line.

I understand about how many jobs are at stake here and all the others that come from those who supply to Jaguar, but if you can't help Woolworth's who only had a cash flow problem, when 30.000 jobs were going to be lost, then how can you help Jaguar.

aussie, there is not much left in this world that is fair anymore, the workers are always the ones who pay the price for others failings, while they carry on smiling as they look at their bank balances full up with all those bonuses.