JLR thrown into confusion after chief executive steps down
The short term direction of Jaguar Land Rover has been thrown into confusion with the sudden departure of chief executive David Smith.
JLR’s parent Tata Motors announced yesterday that Mr Smith was stepping down from his role and that board member Ravi Kant would assume his responsibilities until a permanent successor was found.
The departure comes at a difficult time for the company. A bitter industrial dispute over pay and pensions has stalled, while overall sales although showing signs of improvement, are still well down.
Long term, workers remain uncertain of their futures because of Tata’s decision announced last year that one of either JLR’s Castle Bromwich or Solihull plants will close.
Whether Mr Smith’s decision to resign is linked to the deadlock in the pay dispute is unclear but Tata now have to tread a fine line in order to define the future of the company, which remains the UK’s largest car producer and whose general health is crucial to the future of the West Midlands economy.
Whatever the reason, his departure is bound to occupy the thoughts of the Tata Motors board when it meets on Friday.
Mr Smith was acting chief executive when Tata purchased the luxury brands from Ford for £1.15 billion in 2008. He had previously been chief financial officer and had been with Ford for more than 25 years.
Tata, along with every other global carmaker, took a major hit during the depths of the recession as the credit crunch dried up demand for the iconic vehicles.
Ironically global sales in December were up 33% compared with the same month in 2008 and Mr Smith was confidently predicting an increase in sales during 2010 backed by new models such as the Jaguar XJ.
Nevertheless, cumulative sales for the period April to December last year were down 26% overall, a position which failed to impress the bond holders in India who helped to finance the massive loans necessary for Tata to complete the takeover.
Efforts now will be on a resolving the industrial dispute as quickly as possible so the company can revert to its preferred path.
JLR has offered to guarantee that 8,000 full time workers will be kept on until 2015 in return for cuts to new starters’ salaries and pensions.
The company wants to save around 20% on the wages of new employees and close its final salary pension scheme to new members, moves opposed by union leaders.
General Motors yesterday ended its search for a new chief executive by appointing Ed Whitacre to the role. Mr Whitacre had been serving as the ailing company’s chairman and interim chief executive.
