Stefan Stern - Ford's lessons

‘Just like a car, you're pleasing to behold, I'll call you Jaguar if I may be so bold'. Anyone attempting a cover version of T-Rex's ‘Jeepster' might have to consider an urgent rewrite. This morning's news, that Ford is indeed on the verge (as was speculated recently) of selling its Jaguar and Land Rover marques, brings to an end a corporate rollercoaster ride violent enough to test even the most robust of suspension systems.

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Last Updated: 06 Nov 2012
It is, of course, another sad day for ‘British' industry, and British workers, for whom the outlook is uncertain at best. But the management lessons here are no less stark.
 
Cars, football clubs, restaurants: rich men can find any number of ways of throwing good money after bad. Simply mentioning the Jaguar name will cause the salivary and adrenal glands of many apparently sensible adult males to slip into overdrive. Rationality stalls when those shining grilles and hubcaps appear from round the corner.
 
The economics of the auto industry today are horrendous. Look at Daimler, first gobbling up and then spitting out Chrysler after only a few years. Look at Fiat, over-manned and under-productive. Hardly any car companies are making any money at all at this game right now - save our old friends Toyota and Honda, closely followed by the odd Korean upstart and, coming soon, some ultra low cost Chinese entrants. The Detroit giants, saddled with massive ongoing pension and health care liabilities, are rusting fast. Their Japanese rivals are free of such costs. Generous state benefits and welfare provision allow businesses to get on with business.
 
In Adrian Slywotzky's new book The Upside there is a fascinating chapter which looks at the possibilities of collaboration breaking out in this industry. Simply out, these companies simply cannot afford to carry on developing new models on their own. They have to partner up, and share investment costs.
 
Will it happen? Not until we apply the jump leads to the tender parts of motor company CEOs.

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