Tough road ahead for Jaguar Land Rover after Smith's surprise exit

JLR boss David Smith is suddenly ex-JLR boss David Smith, as the company's union wrangle continues.

Last Updated: 06 Nov 2012

An abrupt departure from Jaguar Land Rover for David Smith, the local-born CEO who’s been running the company since its takeover by Tata Motors in 2008 – in a short statement, Tata said he was leaving with immediate effect, to be replaced (for now) by director Ravi Kant. The Indian company refused to explain this sudden and largely unexpected exit, although it did deny that it was anything to do with the recent breakdown of talks with unions last week over proposed changes to pay and conditions. Nevertheless, this just adds to the question marks currently hanging over Britain’s biggest automotive employer…

Smith has not exactly had an easy ride in the JLR top job. Previously a Ford lifer, he was parachuted into the top job from the FD role soon after Tata’s takeover in 2008 – to be promptly faced by the worst recession in the UK car industry for decades. Not surprisingly, this had a huge impact on the sales of the company’s expensive gas-guzzlers. Smith has spent most of his time either wrangling with the Government over possible financial support (which ultimately never came, because Lord Mandelson’s terms were too onerous) and negotiating with the unions to cut costs.

And he seemed to be doing a pretty decent job, all things considered. When MT interviewed him last year, he told us that the firm had had to ‘move quickly and take some hard decisions… I'm not saying we did everything right, but we did get everyone in the business thinking about cashflow.’ He was even singing the praises of the unions: ‘It's fantastic that they were so realistic. We got a really good agreement, we got it quickly and without any disruption or fuss in the papers.' Last year was a stinker, but by the final quarter, Jaguar and Land Rover sales were both starting to grow again and the company as a whole was back in the black.

However, his most recent negotiations clearly haven’t gone so well. Smith apparently wanted to close the final salary pension scheme to new members, and slash the pay of new staff by 20% - in return for which the Unite union wanted a guarantee to protect 8,000 of JLR’s 15,000 jobs until at least 2015. For whatever reason, the talks broke down last week. Tata may insist otherwise, but the timing makes it hard to believe that this wasn’t a factor in the decision somehow.

Smith is a local boy, and we could see he had a real passion for keeping Jaguar and Land Rover production in the West Midlands. Tata, on the other hand, are widely expected to close one of its plants and outsource some bits overseas. Whether that’s true or not, the hastiness of Smith’s departure clearly points to some serious differences of opinion over strategy.

In today's bulletin:

The recession is over - or is it?
Apple reports record profits as recession fails to bite
Tough road ahead for Jaguar Land Rover after Smith's surprise exit
Employees can't get no satisfaction, says CIPD
How the public sector has been propping up the UK economy

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