labels: Interviews, M&A, Ford Motors, Tata Group, Cars
Ball now in Tata Motors' court to tie up deal: Union news
04 January 2008

Roger Maddison, national secretary, Unite, the Jaguar-Land Rover union, said they are quite excited about the future of Jaguar-Land Rover with Tata Motors as the new owner. ''Just complexities like the price and things like that will have to be ironed out now. Ford will now open all its books so that Tata can actually finish their due diligence. It will be then that they negotiate some sort of price.'' CNBC-TV18 shares with domain-b

You were backing the Tata's from many months. I imagine your response to these statements from both these companies is very positive. What do think are the complexities likely to be as both these companies work to bring this transaction to a close over the next few weeks?
First, I would like to say it is a very good move. We are going to have a partnership with Tata. We already have a partnership with them at Corus Steel and Tetley Tea. We are quite excited about the future of Jaguar-Land Rover with Tata as the new owner. I am sure now that they will be.

Tata MarinaJust complexities like the price and things like that will have to be ironed out now. Ford will now open all its books so that Tatas can actually finish their due diligence. It will be then that they negotiate some sort of price.

Now with that along the way, the trade unions would want to meet with the Tatas as well. We would want to make sure that we have got all agreements on commitments, pension, and job security in place. We have to make sure that all our plants survive a takeover from Tata.

We are pretty convinced and hopeful that will be the case. We know Ford wants to raise money as quickly as can be, so the ball is in Tatas' court now to tie-up the deal as quickly as they want to.

The pension commitments are also being taken care off by the Pension Regulation in the UK and the regulatory authority will ensure that Tatas bring enough money on the table to meet with whatever pension deficit there is in both companies' pension funds. But you mentioned job security and I guess this is the time when you will put your demands finally on the table. You have been telling us all these months that you don't have any demands when it comes to layoffs or shutdowns but I understand the severance cost for the Tata Group would be very high if they do take these two brands over and do look at streamlining operations. What is your take on that?

Yes. But the two brands put together will make a profit this year in excess of a billion dollars. It is not as if it is a company that is in turmoil. It is not a company that is in trouble.

As far as pensions are concerned, the regulators will ensure that the pensions are in place now and legislation ensures that they are in place and are fully funded. We want to make sure that the Tatas are prepared to continue to fund pensions in future in the same way as Ford would have always done.

Are you going to put in any conditions regarding layoffs or shutdowns?
We have agreements in place. We would be insisting that the Tatas comply with all agreements that are already in place.

Tata Safari DicorHow restrictive are those agreements?
They are not very restrictive. They are pretty basic restrictions and agreements for the car industry in the UK. We are not asking for anything that people haven't already got. We won't be asking for anything that isn't the norm in the car industry here in the UK. Some of those things may come as a surprise to Tata but they will know exactly what they are buying into.

Which agreements won't come as a surprise either to the Tatas or analysts here? Do those agreements allow for any kind of layoffs or shutdowns?
People get full pay for layoffs in the UK. They don't get laid off without any pay. They get laid-off with full pay. We have agreements in place on job security in plants but unfortunately we do have plants that close from time to time.

That's the sort of situation we negotiate, we don't receive payments like that. Hopefully, we are not in a situation like that.

Tata said that they would look at the business plan for the next five six years. If they see good business, then they are prepared to invest without making any change. We are hopeful that even after the due diligence they would keep their promises.
 
This is an issue that has gotten quite a bit of coverage across the world. If Jaguar is owned by an Indian company, will it erode the brand image of Jaguar? If it does become Tata-Jaguar, do you think it's going to hurt the way customers perceive that brand?
Jaguar lost a lot of money trying to make the Mondeo into an X-Type. The X-Type was basically a Mondeo with a Jaguar badge on it and they cheapened the brand and it really did not work.

I think that has been a lesson for everybody to learn. You are absolutely right that you need to keep the two brands separate. But Tata would bring in a whole new market for Jaguar cars.

Jaguar very often hits and misses with the UK pound against the US dollar. That can affect sales dramatically, just by the dollar changing a few cents against the pound.

So, Jaguar-Land Rover needs to go up a bigger sales pitch into these progressive markets. There are some things that Tata will help us do. It is something that Ford has been unable to do. Ford has not been able to break into the Asian and the Far East markets. The Tatas are already there. Tatas know how to sell cars in that market.

The problem with Jaguar-Land Rover over the last few years is selling them. It has not been the problem of poor quality or the cost of making it or anything. It has just been the case of not being able to sell them. So, we hope with Tata's expertise in these growing markets, Jaguar and Land Rover will grow very quickly


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Ball now in Tata Motors' court to tie up deal: Union