Plan announced to put Jaguar back on track

Jaguar Cars on Friday announced details of a comprehensive business plan that will reshape the company and focus on the factors that have had a negative impact on the bottom line of the company.

The plan includes:

¤ product actions, including an all-aluminium XK sports car; strengthening of the XJ range with a premium diesel engine saloon in Europe and a new long wheelbase version in the US, a new high-performance X-Type diesel in Europe and an X-Type estate to be launched in the US;

¤ marketplace actions, including a review of Jaguar's retail and market infrastructure throughout the world, and revenue management steps that include a reduction in daily rental units and revised series and model actions;

¤ cost actions, including the discontinuation of assembly operations at Browns Lane; the transfer of 425 jobs to Castle Bromwich, including generous terms for 400 voluntary separations at Browns Lane; and a reduction of 750 staff and agency positions. In addition, the Jaguar brand will withdraw from Formula One at the end of 2004; and

¤ Coventry, Jaguar headquarters and the wood veneer manufacturing centre will remain at Browns Lane and the Jaguar Product Development Centre will remain at Whitley, both in Coventry.

The company said these short- and longer-term actions focus on Jaguar's immediate marketplace challenges and address the fundamental structure of the business and its future strategy. They will act as Jaguar's foundation for the remainder of the decade.

The new all-aluminium XK sports car, codenamed X150, will go on sale in early 2006. This will be the first production car to feature Jaguar's new design language, developed by design director Ian Callum.

The XJ range will be extended and strengthened by introducing a premium diesel engine next year to respond to growth in luxury diesel saloons in Europe and further enhance the customer appeal of a car which is already segment leader in the UK.

The market appeal of the X-Type compact luxury car will be extended by adding a high performance diesel version to the existing range of diesel and petrol-engined variants next year.

There will be a 15,000-unit reduction of production in 2004 to better align stock with on-going demand. A new board-level position was recently created specifically to drive Jaguar's programme to review its retail and market infrastructure in markets around the world with the appointment of Mike Wright, former managing director of Jaguar, to the new role.

Enhanced revenue management actions include reduced mix of daily rental volumes and revised series and model actions. Jaguar will refocus marketing actions on the unique brand position of its vehicles as beautiful fast cars.

As part of the package of measures to get the Jaguar business back on track and focus management and financial resources on the core business, Jaguar will withdraw from Formula One at the end of this season.

Joe Greenwell, chairman and CEO Jaguar and Land Rover, said: "Jaguar's presence in F1 has been a valuable marketing and brand awareness platform particularly outside our main markets of the US and the UK. However, it was our collective view that it is time for Jaguar Cars to focus 100 per cent on our core business."

After a thorough review over many months Ford Motor Company decided it can no longer make a compelling business case for any of its brands to compete in F1. Having reached this decision, its focus turned to securing the best future for its F1 businesses and employees in these businesses, which are being put up for sale.

Mr Greenwell added: "Our new business plan was developed following a rigorous review by the Jaguar management team. We examined a number of alternatives and I would not be presenting this plan today had I not been absolutely convinced that it is the right plan and completely necessary.

"The plan is wide-ranging, extends over a number of years and touches most aspects of the business. It also includes some severe measures that we do not take lightly. But that is a reflection of the highly competitive and global nature of the business we are in.

"The fact is, despite significant sales growth and excellent levels of quality in recent years, we have not been able to keep pace with significantly larger competitors. We have too much capacity and this is our underlying structural problem.

"Our bottom line has further deteriorated this year with the weakness of the dollar, unprecedented incentives in the premium market and the shift from premium cars to SUVs. We had no choice but to take action and I firmly believe that all the elements of this plan are essential if we are to stem the losses."

Mr Greenwell also confirmed that, despite the difficult business circumstances, it is the intention to do everything possible to achieve this restructuring on a voluntary basis. "It is with deep regret that we have had to announce some actions today which affect people's jobs. However I can give everyone my personal assurance that we will do everything we can to support those affected."

Mr Greenwell summed up: "The package of actions we have announced today will focus on the issues we currently face and will help position Jaguar for a bright future founded on strong product plans, a leaner cost structure and a stronger focus on margins in the market place. I believe this plan is essential to Jaguar's future and will enable us to contribute more positively to Ford Motor Company's bottom line."

Mark Fields, Ford Motor Company, executive vice president - Premier Automotive Group and Ford of Europe, said: "Decisive action was needed to get Jaguar back on track and to ensure a viable future. Despite the actions taken by the company's management over the past few years and, despite the fact Jaguar is again the highest rated European brand on product quality, Jaguar is back in a serious loss-making position.

"There are a number of external factors which have exacerbated the situation, but we have faced and tackled the fundamental reality, that Jaguar simply cannot support three assembly plants with annual sales of 125,000 cars."

Fields, Ford's most senior executive based in Europe, added: "Manufacturing capacity, although a significant factor, is only part of the issue and the solution. What we have developed is a series of actions to strengthen Jaguar.

"These also include a leaner organisation structure on the cost side of the equation and on the revenue and brand side, a package of product and marketplace actions which will drive the company forward in a way which is more appropriate for the brand and will drive a better bottom line."

Mr Fields concluded: "There is massive global affection for the Jaguar brand, but frankly we were operating to a business model that really offered little chance of generating sustained profitability, except in times of favourable exchange rates.

"That had to change. The challenges we faced were both strategic and tactical, requiring attention to all elements of the business. This plan has the full backing and support of the Ford management team. Joe and I will be working together with the Jaguar team to implement the plan."

Jim Padilla, Ford chief operating officer and chairman, Automotive Operations, said: "Jaguar is one of the most respected, valued and desired line of cars in the world. Ford... is committed to Jaguar and its customers, and we will continue to support this incredible brand and management team.

"The actions we are taking today, while difficult, are absolutely necessary to set Jaguar back on the right path and ensure a strong and sustainable business for the future."