JAGUAR, FORD TO THE RESCUE

Written By Peter Murphy

Reproduced from Overdrive Magazine

Eager to enhance it's image in the luxury car market, the Ford Motor Company swooped on Jaguar, purchasing it outright in 1988, only to find that it had purchased a "can of worms". Judicious management and Ford's generous chequebook helped Jaguar survive and re-establish itself as one of the most well-known names in the luxury car market.

Entrepreneurial Flair

Not yet 21 years of age, a young Bill Lyons, later to become Sir William, admired the handiwork of one William Walmsley, who was manufacturing a particularly handsome sidecar for motorcycles.

Despite his youth Lyons displayed a high level of business acumen and an eye for style that bode well for the future.

Convincing Walmsley that there was a good future in what he was doing, if organised correctly. The pair set up the Swallow Sidecar Company on the 4^th September 1922 in Blackpool. The manufacturing of sidecars proved successful and continued through the next 25 years to the start of WW11.

Car Production

Despite the production of sidecars being successful, Lyons was always looking for new ventures with which to expand the scale of his business.

An opportunity arose for the Swallow Sidecar Company to build special bodywork for the Austin Seven and by 1927 the company was producing a particularly attractive two-seater body. So impressive was their work that a London dealer ordered 500 of the cars!

To identify better with the expanded operations, the company changed its name to the Swallow Sidecar and Coachbuilding Company.

The initial success of the coachbuilding operation saw the Company producing custom bodies for the Morris Cowley, Fiat 509A, Wolseley Hornet, Swift Nine and Standard cars.

Never content however to stand still, Lyons saw an opportunity to manufacture a car in their own name rather than customising bodies for other manufacturers.

The SS is Born

In 1931, their first car was produced. It was not a car for the masses. The sleek low lines, extremely long bonnet and wire wheels, oozed sophistication, while the price it was offered at suggested extraordinarily good value for money.

A Standard 6-cylinder motor powered the larger SS1 while the smaller SS2 had 4-cylinder propulsion.

The cars were launched at the London Exhibition of 1931.

Lyons' vision and drive that had taken the company from sidecars to high performance sports cars in a relatively short period of time, and would, over the ensuing years, place it amongst the most well known luxury and sports car marques in the history of automobile manufacturing.

1933 saw Lyons established as Managing Director of the Company, which had changed its name to SS Cars Ltd.

The following year Lyons proposed that the company be listed on the stock exchange. His long-term partner Walmsley was not comfortable with this and agreed that Lyons should buy him out of the business.

The first SS sports car appeared in 1935. The SS90 was soon followed by the sensational SS100, which remains today, the epitome of the classic 1930's sports car.

Significantly, at this time, William Heynes joined Lyons as Chief Engineer along with engine specialist Harry Weslake. The trio made a formidable team with Heynes designing the chassis, Weslake the engines and Lyons providing the body styling.

The Jaguar Appears

Lyons' ability to conceive and successfully market a product is evident in most things he touched. His inspired choice of the Jaguar name occurred in 1935. In the name he saw the embodiment of feline grace, agility, elegance and power. That name was to grace, and still does, cars of sophistication and performance.

By 1939 Britain was in battle mode and SS Cars Ltd was pressed into duty supplying the war effort with aircraft fabrication while producing some 10,000 motorcycle sidecars.

The war was not all bad for SS Cars. The fabricating experience set it in good stead for the future, but more importantly valuable development work was done during that period on the XK motor, which would later establish the company as a world force in high performance automobiles. In 1946 the company became officially known as Jaguar Cars Ltd.

A Marketing Triumph

It is difficult to find fault in Lyons ability to "read the market". During the austerity that followed the end of WW11 Lyons was planning a new car that would revolutionise the concept of sports cars.

Around the XK motor that was developed during the war years, Lyons wrapped a sleek, all enveloping body. The 3442cc DOHC 6-cylinder motor combined with the aerodynamically efficient body resulted in what was reputed to be the fastest road car manufactured to date with a claimed top speed of 120 mph. The XK120 was launched at the 1948 Earls Court Motor Show to a rapturous public.

Doubts as to the car's ability to achieve its quoted top speed were dispelled when in standard trim an XK120 achieved 126 mph at a press demonstration!

The sports car was soon followed by a 5-seater saloon designed with the American market in mind. The MkV11 took US$30 million in orders within months of its introduction in 1950.

Despite the success of his cars, Lyons was concerned that his limited product range was focused on a sports car and a luxury sedan leaving him vulnerable. An economic downturn would result in a disastrous decline in his sales.

He saw a niche market for a high quality compact sedan. In 1957 he released the Mk1 Jaguar, which later evolved into the highly popular Mk11 Jaguar that combined elegance with a performance that saw it as a leading contender in saloon car racing and on occasion endeared itself to bank robbers as a get-away car.

A Sporting Image

While the original SS100 sport cars had achieved some success in competition, helping to enhance its sporting image, the XK120 hit the competitive scene with a vengeance. It's first attempt at Le Mans in 1950, while unsuccessful, showed that the car had huge potential. The following year a racing version of the XK120 was introduced under the name of C Type Jaguar. On its first outing at Le Mans, it won. The following year further streamlining modifications resulted in heating problems that forced the team out of the event. 1953 however saw C Types victorious again when the introduction of disc brakes gave the car a major advantage. Jaguar had established itself as a Ferrari beater.

Further development of the C Type saw the introduction of the amazing D Type Jaguar, which continued Jaguar's winning ways in 1955, 1956 and 1957.

There was no greater sports car marque in the 1950s than Jaguar. For his contribution to the automotive industry, William Lyons was knighted in 1956.

The racing D Type spawned the E Type Jaguar. The E Type was not a racing car. It was however one of the most stunning sports cars ever built and rapidly gained massive popularity, and along with the Mini, became an icon of the Swinging Sixties.

The XJ Series

By the late 1960s the Mk11 Jaguar was starting to show its age and other saloons such as the S Type, 420 and the MkX had failed to enthuse the marketplace. The replacement for these cars was the XJ6, which has proved to be a major success for the company. It was launched in 1968 and found immediate acceptance. It was larger than the Mk11 but more elegant than the MkX and successfully established itself as a single successor to both those vehicles. The XJ series has had incredible longevity given that it has essentially evolved into the modern Jaguar produced to day. This remarkable car has withstood the ravages of factory ownership changes, a period of very poor quality, and inefficient manufacturing processes to be one of the leading luxury car brands in the world today.

Ownership Changes

Jaguar had by 1966 become part of the British Motor Corporation and subsequently that entity was merged with British Leyland. The idea was that the combined companies would form a massive conglomerate that would have the economies of scale to take on the world.

Sir William chose to retire in 1972. Fifty years after he had started the Swallow Sidecar Company.

Jaguar suffered under the new ownership structure. Many of its operations were merged with other British Leyland departments and it began losing its identity. For a period it did not have its own CEO. Its nominal Chairman was Percy Plant who had a reputation as a hatchet man. Morale dropped to all-time low levels.

By 1980 the workers had had enough and went on strike over job grading and pay levels. The strike action was met with the demand by Sir Michael Edwarde "return to work or lose your jobs." Labour relations crashed even further.

In desperate need of a full-time Chairman, John Egan was appointed Chief Executive. This proved to be a wise move with Egan's enthusiasm permeating its way through the organisation. His first impression of the business was "One cannot get a better ground to build on." By 1985 morale and production efficiencies had been restored and the business stabilised.

In this climate Sir William Lyons passed away, leaving a legacy of excellence that was so nearly destroyed by incompetent management and belligerent workers.

Jaguar Breaks Free

Jaguar was floated on the stock market in 1984. Difficult trading conditions however saw the company suffer and the Board of Directors decided that an association with a major manufacturer was necessary to ensure Jaguar's survival. Discussions were held with General Motors with the view to forming several joint venture operations and the prospect of GM taking a minority shareholding was mooted.

On the 19th September 1989 Ford came to the table announcing that it wanted to take a 15% shareholding in Jaguar. After further research Ford came back to the company and advised that it wanted to make a bid for full control of Jaguar.

To facilitate this, the Secretary for Trade and Industry announced in the House of Commons that the restriction of anyone owning more than 15% of the company had been lifted.

On the 1st November 1989 lengthy discussions took place between Ford and Jaguar where agreement was reached that Jaguar would remain a separate entity under Ford's ownership and have its own Board of Directors.

On the 1st December 1989 Jaguar recommended that Ford's proposal be accepted and by the end of February the following year Ford owned Jaguar and the company was delisted from the stock exchange.

Major Problems Discovered

Ford spent US$2.5 billion to purchase the shares in Jaguar. When it finally gained control it found a commercial disaster in the making.

A factory, that looked as though it had been designed in Dickens' time and little subsequent investment made, was achieving appalling manufacturing efficiencies. 200 man-hours were required to complete a vehicle when the equivalent Lexus took 1/10^th that time!

Quality defects were legendary, with an average of eleven per vehicle when Japanese manufacturers were averaging less than one per vehicle. The market was deserting the marque for that very reason. Product development was completely inefficient in both time and money.

Global recession in the early 1990s saw sales tumbling and losses mounting. Jaguar was now like a wounded animal, and Lexus and BMW were making inroads into it's markets. Jaguar had few redeeming features. Even its product development was running years behind schedule while incurring cost over-runs of millions of pounds.

By 1992 Jaguar's vehicle sales had dropped to a paltry 22,074 vehicles.

At this point Ford seriously considered writing off its entire investment in Jaguar.

Ford to the Rescue

American W Edwards Demming, who achieved fame by directing Japanese industry in the pursuit of quality, co-operation, teamwork and continual improvement, once said that America should " Export anything to a friendly country, except American management." From personal experience I would agree, however in Jaguar's case Ford has been an impeccable owner.

Rather than shut down the operation, Ford chose to invest more in Jaguar.

The Jaguar factory in the Midlands was completely rebuilt and some of Ford's most capable personnel were assigned the task of turning around the failing operation.

Key to a quick return to efficiency was the need for new work practices that were negotiated in the 1990 wage agreement. With greater labour flexibility available it was found that the factory was massively over-staffed. In 1991 an offer of early retirement and voluntary redundancy saw the staff levels drop by 1/3 to 8,000.

The international recession of the time restricted sales, and severely hampered Jaguars turn-around. Improvements came slowly but surely. As efficiency improved and quality restored to levels expected of a luxury car, sales also began to improve. By 1997 sales had doubled, with the American market accounting for 25,000 units alone.

Product development had also been fast-tracked. First to arrive was the sporty XK8 to replace the ageing XJS. This was followed by the mid-sized S-Type saloon, designed to attack the 5-Series BMW market, and the Compact X-Type saloon, which would compete with the 3-Series BMW and Audi A4. The strategy worked well and by 2000 sales in the USA accounted for 40,000 vehicles and improved further to 60,000 by 2002. It was noted that during the last ten year, Jaguar has sold more cars than it did in its first forty years of operation!

Still Some way to Go

While progress has been very good, last year Jaguar reported a loss of US$500 million. This was the company's first loss in a decade and occurred at a time when Ford least needed it, having suffered major reversals in fortune itself in recent years. The management see it as a "wake-up" call given the massive increase in scale of the business in the last decade. A major contributor to the loss was the delay in the launch of the new XJ model, which is obviously not an on-going situation. Some of the new models have had their share of criticism as well. The X-Type has been accused of having too much "Ford", with some suggesting that it is too much like the Ford Mondeo with which it shares the same platform, while others see Ford Falcon styling traits in the S-Type. Ford executives acknowledge these criticisms and believe that the replacement vehicles will be more independent of Ford.

It is possible that Land Rover and Jaguar may be joined together to provide the Jaguar distributors with a broader product range, which appears very sensible given that BMW and Mercedes have 4WD vehicles in their product ranges.

All in all Ford must be congratulated for its intestinal fortitude in taking up the challenge of rectifying the ills at Jaguar, and thanked for preserving a great British automotive institution.