The day Ford humiliated Ratan Tata

[Blue_Eyes]

No its the way the globalized free market works.

ok but I won't take my words back

 

[Chanakya's_Chant]

Ratan Tata and his team faced "humiliation" when they went to sell the group's fledgling car business to Ford in 1999, but came back to "do a big favour" just nine years later by taking over the American giant's marquee brands Jaguar and Land Rover.

"They told us 'you do not know anything, why did you start the passenger car division at all'. They said they will do us a favour by buying our car division," a Tata Group veteran said while recalling a meeting of Ratan Tata and other top executives with Ford officials in Detroit in 1999.

The Tata Motors team decided to return to New York the same evening and Ratan Tata, then the group chairman, was sombre throughout the 90-minute flight, said Pravin Kadle, who was part of the team at that time and now heads Tata Capital.

"This was in 1999 and come 2008, the same Ford's JLR was bought by us. Ford chairman Bill Ford thanked Tata, saying 'you are doing us a big favour by buying JLR'," Kadle said, to a thunderous applause at an awards function on Thursday night.

He was speaking, mostly in Marathi, after receiving the YB Chavan National Award 2014 on behalf of Ratan Tata, who is now Chairman Emeritus of the over USD 100-billion group.

The poor response to its maiden hatchback Indica had driven Tata Motors to sell the car business, within a year of its debut in 1998, to Ford Motor.

"Some people advised chairman Ratan Tata to sell the passenger car division following the poor response it got post launch. Ford officials came down to our headquarters Bombay House and evinced interest in our car business.

"We were called to Detroit for discussions and I accompanied the chairman. For nearly three hours, we discussed the sell-off with Ford officials but were meted out humiliating treatment," said Kadle, who played a major role in the turnaround and growth of Tata Motors.

During his tenure at Tata Motors, Kadle was part of the senior leadership team that managed the cross-border acquisitions like Daewoo of South Korea, Incat Technologies of the UK and eventually of Jaguar-Land Rover of UK.

The day Ford humiliated Ratan Tata | News Mobile

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He is one of those rare - honest and clean - businessmen India has - Reminds me of how Osamu Suzuki - Chairman of Suzuki Motors made fun of his idea of TATA Nano - to be more apt the "lakhtakia nano" by remarking that it was practically impossible for any car maker in the world to sell a car at such a low price - but then when Nano hit the showrooms - it's base price was 1 Lac. only! No wonder TATA is the most popular brand abroad!

JLR was always a "superb luxury brand". They make effectively the same kind/type of cars. Built, designed, engineered by the same team and even run/managed by the same people. Tata just got it through tough times due to them having good finances at the time and made good money from a good deal (buying it for cheap). That's all.

The very same "superb luxury brand" was running in loss while it was under both - first BMW then Ford - It was described by the investors as "a luxury car and utility vehicle group that has promised so much for its owners over the years and delivered so little" before TATA took over - which not only revived it from loss making firm to a profit making firm but also created thousand of jobs both in India and particularly UK. The reason why JLR was sold from BMW to Ford and then to TATA was it's stumbling revenue and acute losses! Here's was the Gaurdian said in 2013 - "A Shock Success"

Jaguar Land Rover: £1.3bn Tata gamble pays off as big cat purrs at last
The shock success of JLR is silencing the doom-mongers, writes Roland Gribben

By Roland Gribben

7:30PM BST 15 Sep 2013


Five years ago Tata Motors paid Ford £1.3bn for Jaguar Land Rover, the luxury car and utility vehicle group that has promised so much for its owners over the years and delivered so little.

At the time, Ratan Tata, chairman of an Indian group with small cars and trucks in its motor portfolio as well as Tetleys and steelmaker Corus from its earlier takeover forays into Britain, was told he was out of his depth in attempting to succeed where Ford, BMW and others had failed make JLR purr productively and profitably.

But the Indian industrialist has proved the sceptics wrong in a spectacular fashion. A relaxed but adventurous business style, a product range that holds more appeal and a little luck has turned JLR into the business 'steal’ of the decade.

Sales are up by 100,000 cars to almost 360,000 – 80pc of them overseas - on the back of an impressive Land Rover performance over the period.

Jaguar sales were down 12,000 to just under 54,000 last year but are showing a marked recovery following the launch of new models. The international appeal of the Land Rover range has increased sales by more than 107,000 to 303,000 units.

JLR has been self-financing since Tata took the wheel. The red ink has disappeared with pre-tax profits last year almost touching £1.7bn from revenues close to £16bn.

Around 9,000 jobs have been created in the three British plants, including 1,700 announced last week. Another 24,000 jobs could be added to a supply chain now enjoying the fruits of JLR’s success.

Controversially perhaps for purists of this very 'British’ brand, a joint venture with Chery Automobile will see JLR vehicles assembled in China, the group’s most important market. Saudi Arabia is next on the overseas assembly list while JLR is pumping almost £2.75bn into group research and new products this year.

The scale and speed of change since the arrival of new owners has been one of the key factors behind the buoyant performance of the British motor industry in difficult markets. Half the 500,000 unit increase in car production over the last four years is down to JLR’s bigger contribution.

There are other spin-offs. The West Midlands, one time heartland of the British motor industry, is benefiting from what is being termed locally as the 'JLR effect.’ Confidence is growing from suppliers down to the regional grass roots where Jaguar is part of the motoring heritage.

“JLR has had an effect on the region but it’s not just local, it’s national,” says Car industry expert and JLR watcher Prof David Bailey of Coventry University.

But it’s still early days in the JLR rejuvenation under Mr Tata and questions remains about whether the new owners and the current generation of JLR engineers – more than 7,000 of them – can make the great leap to reach the scale and size of BMW, Mercedes or Audi.

Tata almost walked away after the Labour Government set out tough terms for financial help when the takeover coincided with the economic downturn but stayed the course and is now reaping the benefits

“Ford invested very heavily because they wanted to be in the premier part of the market,” said Prof Bailey. “They messed up for a long time but towards the end they were getting things right in terms of re-positioning JLR as a major player. They had a great product pipeline going but simply ran out of cash.

Tata picked JLR up cheaply but to be fair to them they’ve invested very heavily in new models and research during the recession.”

A shortage of skilled workers risks slowing the pace of development and straining relations with suppliers equally anxious to grow with their biggest customer.

Over the last three years JLR has recruited almost 1,000 graduates and embarked on an extensive programme among 250,000 youngsters to get them to think more seriously about engineering as a career.

There are costly strategic issues involving product, technology and size. “They’ve got to double in size very quickly over the next few years while maintaining quality and keeping costs down,” said Prof Bailey

A large slice of the investment is likely to be on more overseas assembly ventures. JLR currently has three assembly plants in Britain – Solihull (3,500 employees) and Halewood (2,500) build Land Rovers and Castle Bromwich (1,100) is the Jaguar home.

The development of a new engine manufacturing plant at Wolverhampton (1,400) costing £500m will reduce dependence on Ford for engines but JLR risks over stretching itself and the engineering world by adding another vehicle assembly plant without a considerable addition to the labour pool.

Increased efficiency and productivity offers some headroom at a time when the Land Rover plants are running flat out to meet demand. Solihull has been operating a three shift around the clock 24 hour production cycle for the past year to satisfy customers.

The Jaguar car range lags behind the opposition in model terms and is a priority for the introduction of what Dr Ralf Speth, JLR chief executive, describes as the “all-new aluminium monocoque architecture.” A mid-sized sports car next year will be the first new Jaguar from the £1.5bn new aluminium product programme at Solihull.

There is more to come. Bob Joyce, JLR’s group engineering director, told a conference organised by the Engineer magazine earlier this year about how designers are turning the car into an “extremely sophisticated internet-enabled device.”

Jaguar has taken more than a decade to reach the starting line. For years a catalogue of blunders and an almost permanent shortage of funds combined to wreck the achievements of designers and engineers in matching the sleekness and power of the cat with the product on the road.

Now Jaguar and Land Rover are the only survivors of the series of attempts made to create a 'strong’ British motor industry to compete in world markets. They were among almost 15 British marques bundled together by the Industrial Reorganisation Corporation to form the British Leyland Motor Corporation in 1968 into a more powerful and efficient operation.

Austin, Morris, Wolseley, Riley, Leyland, Standard, Triumph and MG were among others who found themselves thrust together with a Government sweetener. The volume car approach was not suited to the specialist operations of Jaguar while Land Rover, the Jeep type copycat, was already well established in export markets so they formed a separate unit inside BLMC.

Tensions and jealousies among front line managers, proud engineers and work forces more committed to separation than integration strained relations and weakened management. It was a common complaint at the time that workers spent more time on strikes than on the production lines.

Geoffrey Robinson, now Labour MP for Coventry NW, former Paymaster General and one of the IRC motor industry reorganisation team had a two year spell heading up Jaguar between 1973-75 before falling out over reorganisation plans.

He was unhappy with the way Sir Michael Edwardes, then BLMC chairman was running the business and told him so. He was one of two Robinsons prominent in BLMC operations at the time. The other was militant union leader Derek 'Red Robbo’ Robinson, sacked by Sir Michael for allegedly causing labour unrest and strongly defended by Geoffrey Robinson.

By 1975 BLMC was bust and the Government was left to pick up the pieces complete with a shortened name British Leyland. Jaguar was a financial drain on its new parent and when Sir John Egan was appointed chairman in 1980 he was told in no uncertain manner to close the business if he failed to turn it around.

At the time Jaguar was losing £50m a year and 9,200 workers were building just 14,000 cars a year.

Sir John, a marketing rather than a car man, used his flair as a salesman to keep the business on the road but admitted later it was a close call. Enter Ford, searching for a place in the premier car league. A bid of £1.6bn put Ford in the driving seat and complaining it had overpaid after taking a closer look at Jaguar’s worn out production kit accused Sir John of selling a business worth only £300m in asset terms.

Sir John’s tongue in the cheek reply is colourfully recorded by Ray Hutton in his new book on the Tata deal Jewels in the Crown: “When you go to a fancy restaurant you go for the steak and the sizzle. You have paid £300m for the steak and £1.3bn for the sizzle.”

Land Rover meanwhile had been sold by the Government to BAeSystems along with the rest of BL for a giveaway £150m. The aerospace group then collected £800m from BMW for the Land Rover package.

The German giant toiled unsuccessfully to come to terms with the British production mentality and was losing £2m a day on its purchase before selling the rump of the business – the Mini remained under German ownership – to an eager Ford for £1.85bn in 2000.

The Land Rover was the final fit in a Ford Premier Automotive Group that had Aston Martin as well as Lincoln, Volvo and Jaguar in membership. Ford planned to turn Jaguar into a 200,000 a year production unit but quickly ran into an image problem by integrating production platforms and seeing the Jaguar X become the Jaguar Mondeo.

Tata has delved deeply into the Jaguar history and wants to add value, prestige and profits. So far a back of the envelop calculation by analysts suggests Tata now has a 'steak and sizzle’ worth $16bn.

Source:- Jaguar Land Rover: £1.3bn Tata gamble pays off as big cat purrs at last - Telegraph

The firm for which the TATA's paid some £1.3bn in 2008 now has an annual revenue of some £19.386bn and an annual net income of some £2.501bn...

[QUOTE="Donatello, post: 6906778, member: 22032"]Unlikely, since Ford never bothered to develop the Jaguar/Land rover as it's own brand. It was a wholly owned, indepedent company but that's it. That's why they sold it easily.
Same as in RollsRoyce owned Bentley, then sold it to Volkswagen, and meanwhile RR itself was owned by Volkswagen and now by BMW.

I don't know where comes the revenge part, when Ford never actually had anything to do with Jaguar LandRover, which itself had been through a lot of re-organization.

But of course, sensationalism and spice.[/QUOTE]

Ford made huge investments in engineering and design facilities of JLR at Gaydon and Whitley. They messed up for a long time before they finally sold it to TATA. They sold it because their core brands in the US were losing money at the time of the recession.

 

[CONNAN]

Tata's turnaround of JLR exemplifies the idea that high technology and a competent management can combine to produce wonderful results. It should also serve as a reminder to those whinging about loss of low value back-end jobs to India that globalisation need not always be a zero sum game.

 

[Faiez]

.......................

All of the cars that turned jaguar's fortune around were designed during Ford's period...It was their investments that resulted in what Jaguar has today. Jaguar's long term prospects were great. They had all the homework done and Ford had funded them throughout. But then the financial crisis came and Ford needed cash and so did Jaguar, neither had any. So Ford had to sell it and they did and couldn't reap off any of the profits on its investments. Jaguar would have had similar success had it been bought by any other company or individual...Tata saw an opportunity and grabbed it. Just good business...

 

[Levina]

Ratan Tata and his team faced "humiliation" when they went to sell the group's fledgling car business to Ford in 1999, but came back to "do a big favour" just nine years later by taking over the American giant's marquee brands Jaguar and Land Rover.

"They told us 'you do not know anything, why did you start the passenger car division at all'. They said they will do us a favour by buying our car division," a Tata Group veteran said while recalling a meeting of Ratan Tata and other top executives with Ford officials in Detroit in 1999.

The Tata Motors team decided to return to New York the same evening and Ratan Tata, then the group chairman, was sombre throughout the 90-minute flight, said Pravin Kadle, who was part of the team at that time and now heads Tata Capital.

"This was in 1999 and come 2008, the same Ford's JLR was bought by us. Ford chairman Bill Ford thanked Tata, saying 'you are doing us a big favour by buying JLR'," Kadle said, to a thunderous applause at an awards function on Thursday night.

He was speaking, mostly in Marathi, after receiving the YB Chavan National Award 2014 on behalf of Ratan Tata, who is now Chairman Emeritus of the over USD 100-billion group.

The poor response to its maiden hatchback Indica had driven Tata Motors to sell the car business, within a year of its debut in 1998, to Ford Motor.

"Some people advised chairman Ratan Tata to sell the passenger car division following the poor response it got post launch. Ford officials came down to our headquarters Bombay House and evinced interest in our car business.

"We were called to Detroit for discussions and I accompanied the chairman. For nearly three hours, we discussed the sell-off with Ford officials but were meted out humiliating treatment," said Kadle, who played a major role in the turnaround and growth of Tata Motors.

During his tenure at Tata Motors, Kadle was part of the senior leadership team that managed the cross-border acquisitions like Daewoo of South Korea, Incat Technologies of the UK and eventually of Jaguar-Land Rover of UK.

The day Ford humiliated Ratan Tata | News Mobile

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Lol
Ford was running into losses as early as 2003-04. I remember reading news about it back then.
And hats off to TATA group who've lifted the image of Jaguar and Land Rover. My fav is range rover Evoque.

Btw I had read a similar story about Ferruccio Lamborghini, when Enzio Ferrari had insulted him for being an owner of a tractor or something to that effect.
Moral of the story:
Humiliation is the mother of inventions (or new car companies )

 

[wolfschanzze]

Isko bolte hai,MOOH TOD JAWAB!

 

[takeiteasy]

Tata cars...reliably so unreliable..even after JLR take over. People consider Tatas as taxis..even though there recent cars are some what better, still lacking the reliable build quality that Japanese and Koreans are famous for. India is the land of Marutis and Hyundais. Tata service= parts swapped between cars. Desi Jugaad! rusting and rattling is so common with Tata cars..patriotism will not help. Tata fails to be like TVS or Hero group when it comes to reliable automobiles.

 

[Chanakya's_Chant]

All of the cars that turned jaguar's fortune around were designed during Ford's period...It was their investments that resulted in what Jaguar has today. Jaguar's long term prospects were great. They had all the homework done and Ford had funded them throughout. But then the financial crisis came and Ford needed cash and so did Jaguar, neither had any. So Ford had to sell it and they did and couldn't reap off any of the profits on its investments. Jaguar would have had similar success had it been bought by any other company or individual...Tata saw an opportunity and grabbed it. Just good business...

Yes of course - that's what you would expect a "businessman" to do! BTW TATA is investing heavily in R&D - It has already helped to yield cutting-edge projects such as the Range Rover Evoque and CX-75 hybrid supercar. It invested some £500m to build a new plant in Wolverhampton, which started producing its own engines for the first time recently. Tata is backing the plans with investment of £10bn to launch 40 new models within five years, including the Jaguar XE saloon and a sport version of the Land Rover Discovery.

 

[wolfschanzze]

Actually i do, due to suffering from GERD.
But, i definitely don't prefer BS level of spice in news articles.

Do you get checked regularly? to see if there are any changes in oesophagus due to GERD.

 

[HariPrasad]

What Ratan did is a typical Parsi Response to Humiliation. When Jamshedji TATA was not allowed to enter in a posh hotel in Bombay, he responded by building a 1000 time posh TAJ hotel in Bombay. Ratan is his disciple and followed the footsteps of Jamshedji.

 

[browser]

Does anyone other than taxi drivers drive a Tata car in India ?

A very good strategic and business move to buy JLR..and he should get credit for that together with managing the turnaround of JLR.

 

[utraash]

--
One of few role model for anyone who want to make their and other life bit better than yesterday in positive way .
@thesolar65
make same philosophy successful for your venture too..

That's my official signature buddy....
But that quote belongs to jinnah if I m not wrong......

 

[Ronin]

@thesolar65 I was thinking about opening this thread when I get home!

I think Tata had a similar incident with a foreign hotel brand also.

Jamsetji tata wasn't allowed Into a whites only
Hotel in Bombay

He vowed to make the best hotel in India for Indians where he employed whites. That's how
Taj Bombay was born

 

[bloo]

LOL.
How you like them apples?

 

[Black Mamba1]

Okay, i know what you call it, but hey, this isn't the kind of act that constitutes as a 'revenge'.....maybe when TATA purchases Ford itself.

Friend, once in 1999 Ford management scolded (as per the news) Mr Tata for venturing a passenger car segment. As if Tata is not technologically and managerially incompetent to run a passenger car business. Tata Listened quietly .

Ford failed to run JLR profitably for long in fact it was giving huge loss to Ford.

Tata acquired JLR in 2008 , no revenge till this part.

But Tata converted a loss making luxury car unit to a extraordinarily profitable one within 3 years and also converted JLR to a huge brand within 5 years. Tata proved that they are technologically and managerially better equipped than Ford at least in case of running JLR. Now this is a bloodless revenge in our thinking.

Its not a revenge of an Indian, its a revenge of an achiever.

Note : I remember British luxury car dealers refused to sell JLR fearing that in the hand of Tata the brand will lose its value as a luxury brand. This created so much fuss that Mr. Ratan Tata himself met the dealers to give them confidence. The dealers who trusted him and remained invested in JLR are now patting their own back for their decision. And who left dealership that time are mourning.