IMI Magazine

IMI Magazine

News analysis

Solihull under siege?

Despite the £200m investment programme which was recently confirmed for Land Rover's Solihull plant, there can be little doubt that the future size, scope and influence of the marque's spiritual West Midlands base is more uncertain now than for many years. This has been underlined by the decision to assemble the next generation Freelander at the former Ford facility in Halewood (alongside Jaguar's X-Type), which involves the transfer of 1,000 jobs from Solihull to the Liverpool factory. The move appears to have been prompted by growing dissatisfaction over quality standards at Solihull, along with the failure to improve working practices.

Although one of the world's most enduring brands, market performance is being undermined by adverse reports, including a position second from last in the influential JD Power 2003 Vehicle Dependability Study.

A further sign perhaps of an impending change of emphasis at the marque is seen with the early retirement of Bob Dover, head of the recently amalgamated Land Rover and Jaguar group and instigator of the decision to move Freelander output. His role is being assumed by Joe Greenwell who comes from Dearborn where he has been in charge of Ford’s global marketing. With competition intensifying in the world¹s SUV and luxury car segments, it is clear that the wooing and retention of customers will be the number one priority.

And, as Ford looks for its PAG operation to contribute a strong profits stream by the middle of the decade, time is running out for operations within the group which fail to deliver. The clear message for Land Rover's workforce is that there will be further erosion of the Solihull base - perhaps in favour of overseas assembly locations - without a better performance. The danger is all the more acute since the mystique of Land Rover is probably less dependent on its English manufacturing base than any other UK niche brand.


Abandon ship at DaimlerChrysler?

The prospect of DaimlerChrysler developing into one of the strongest global vehicle manufacturing networks has taken a severe knock in recent months following continuing bad news from Chrysler and a setback to Mitsubishi’s recovery programme. Operating losses at Chrysler are still piling up at an alarming rate due to the pricing war in its North American heartland and amounted to $1.1bn in the second quarter alone. Mitsubish’s return to financial health has been delayed by up to two years following losses of over $400m on loans to American car consumers.

These calamities aside, the group has hardly helped matters by failing to implement a wholehearted integration of its activities and, as a consequence, is nowhere near replicating the economies of scale which are increasingly evident at Renault/Nissan. In particular, Mercedes-Benz has seemed determined to stand aloof from Chrysler, worried that what it perceives as its pre-eminent image will be polluted by an association with an American tin basher.

Meanwhile, Mercedes-Benz has evolving problems of its own as its declared aim of being automotive technology leader has resulted in an increase in systems unreliability and lower customer satisfaction ratings. In addition, it faces a serious challenge as it grapples with the imperative of ensuring that urgently required cost cutting measures do not compromise the integrity of its products.

As DaimlerChrysler’s investors grow restless, what are the odds that the company’s management will be tempted to ‘do a BMW’ by allowing Chrysler to float off once again as an independent operation in the manner that Rover was abandoned? The rejoicing in America at such a move would probably be heard in Stuttgart.


JCB’s ‘can do’ move into diesels

Those seeking assurance that Britain still retains the remnants of an industrial culture which combined entrepreneurial flair and management competence with a bold vision look no further than JCB. Over the years this domestically-owned company has established itself as a formidable international competitor in the construction equipment sector, more than capable of matching itsmightiest American and Japanese competitors from its Staffordshire base.

Continuing its ‘can do’ philosophy, JCB has now announced plans to design and develop a new range of diesel engines in a move which will lessen its dependence on outside sources. For the automotive industry this development is highly significant insofar as it represents a reversal of the trend which has seen a widespread reallocation of research and development responsibility, and hence technological competence, from the UK to foreign locations.

However, it is unlikely that JCB’s investment would have been sanctioned if the company was foreign-owned. With almost all of the motor industry in Britain under the control of overseas groups, the likelihood of extensive and meaningful automotive R&D occurring on a wide scale in the UK looks remote. Notwithstanding the much-vaunted establishment of the global economy there is still a pronounced tendency, especially among companies in mainland Europe, to keep things in the family.

 Arthur Way