Ralf Speth: Resurgent Jaguar Land Rover shifts up a gear
The Business Interview: A first factory in India is just the beginning of JLR's international ambitions, their chief executive tells Sarah Arnott
Thursday 14 April 2011
Not so long ago, Jaguar Land Rover (JLR) was in a bad place. Within months of being bought by India's Tata Motors in 2008, credit crunched drivers stopped buying cars. Tata Motors slumped £281m into the red, JLR went cap-in-hand to the British Government warning of long-term damage to Britain's industrial capacity, and more hysterical commentators prophesied the beginning of the end.
Two years on, things couldn't be more different. Sales are soaring, the mood is buoyant, and Dr Ralf Speth – who took over the top job in February last year – is fizzing with ideas. "We have a great heritage but a better future," the former BMW executive says, surveying the gleaming array of high-end Jags, including his own, outside his window at JLR'sengineering base in Warwickshire. "We are becoming more international, developing more products, investing in lots of different technologies in lots of different areas."
It has been quite a year. Dr Speth arrived just after the company hadfinally heaved itself back into the black. Since then, he has had his hands full: surfing the economicupturn, upgrading all nine JLR models, scrapping plans to close one of its three major factories, and setting out a new growth strategy.
"We've developed the most ambitious plans for the future in the history of either Jaguar or Land Rover," Dr Speth says, his enthusiasm overwhelming an already thick German accent. "The 2009 numbers were still not enough to survive but we have ambitious plans, everybody is very interested and all of a sudden we are on the stage again."
Sales are already showing marked improvements, boosted by the slew of upgrades – including the all-new Jaguar XJ and updated versions of the Land Rover Discovery and Range Rover Sport. Most British car-buying may be stagnating, but there were more Land Rovers sold in the UK last month than in any other month in the company's 63-year history. Over the year to date, sales are up by nearly a fifth worldwide, within which Jaguar sales are up by more than 7 per cent, Land Rover by more than 25 per cent. And that's before this summer's launch of the long-anticipated Range Rover Evoque, which is expected to prove as popular as the 55,000-a-year Freelander.
But the real eye-opener is thedeveloping world, where growth is soaring and Cool Britannia has as much cache as ever. In India, sales are up by more than half over the first quarter of this year. In China, they have doubled. Such a shift is central to JLR's strategy. "One of the things we've changed is that the focus is more international," Dr Speth explains. "We already export 75 per cent of our vehicles – which is huge – but we want to export even more and that's only possible if we go to the emerging markets."
Not only will exports keep both the Castle Bromwich and Solihull factories open. JLR is also on the brink of opening its first non-UK plant. A major training exercise is currently underway at a refurbished former Mercedes plant in Pune in India that will start producing its first Freelanders early next month.
It has taken more than a year to set up the supply chain, which involves all parts being delivered to JLR's Halewood factory, packed into a container and shipped to India for rebuilding. And although output may be tiny at first – a bare five cars per day – longer term, the facility could meet a significant chunk of Indian demand. "India's population is so big that if even 20 per cent become middle class, then there's a very, very interesting potential customer base," Dr Speth says.
The plan does not stop at India. JLR sold 27,000 cars in China last year, and is aiming for 40,000 in 2011. But expansion is trickier there than in India. Since last summer, the company has been in government-brokered talks with potential partners – a vital component of any venture in China. And although Dr Speth will hint that an agreement could be imminent, he will not give anything more away. "We don't have a memorandum of understanding yet but we are quite close," he says, and changes the subject.
Back at home, the focus remains firmly on the products. Dr Spethbecomes positively indignant at the suggestion that climate change, oil prices and congestion between them are relegating cars to technological obsolescence. "Airliners fly with 10 million software codes, you need 100 million for a car," he counters. "This is not outdated industry, cars are an advanced technology for the future."
JLR is doing all it can to lead the charge. The company has relocated its 170-strong advanced research team to Warwick University to forge closer links with academe, and plans to spend more than £100m on collaborative research over the coming years. Dr Speth also keeps an eye on opportunities to spin off technologies developed for JLR.
A prime candidate is the micro gas turbine developed by Bladon Jets for the Jaguar C-X75. The prototype vehicle is itself quite a coup, technically-speaking: a fully electric sports car powered by a battery on each wheel, with a petrol-fuelled turbine to recharge the batteries and add another 540 miles to its range. But the miniature turbines have much wider potential, particularly in developing countries with limited electricity grids, according to Dr Speth. "This could be an even more interesting business than the car industry," he enthuses. "We have the idea, now we have to find the rights partners to take this kind of risk."
The turbines are just one part of JLR's research and development (R&D) effort. The group already spends £1bn a year on R&D, a budget set to increase further with the extra 1,000 engineers currently being hired for Gaydon, not to mention the 1,500-strong recruitment drive to build the Evoque at Halewood. "There's no free lunch for this kind of growth – we have to invest heavily," Dr Speth says. "We had to hire human resources people just to hire all the new people."
Sales growth, rising exports, hiring staff: all are music to the ears of the Government, which is counting on private sector growth to make up for sharp public spending cuts. JLR is already playing a central role in efforts to revivify the UK's automotive components supply chain, handing out some £2.5bn-worth of Evoque contracts to local suppliers. But there are dangers ahead. "We are bullish, but there could be a famous black swan waiting around the corner," Dr Speth says. "If the economy is about to explode then that's a problem – if not, then we will have a brighter future."
In the driving seat
* Dr Ralf Speth joined Jaguar Land Rover (JLR) in February 2010 after eight years at the Linde Group, the German industrial giant.
* After 20 years at BMW, Dr Speth spent two years as Ford's director of production before moving to Linde in 2002.
* He is an unashamed motor-industry obsessive. "You can't buy it," he says. "It is an honour to work in the car business".
* Dr Speth drives a Jaguar XFR.
* He also has an E-Type, the classic Jag repeatedly voted "the most beautiful car of all time".
* He is married with two children and lives in Leamington Spa and Munich.
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