Monday, 23 July 2007

Have US HealthcAre Costs Sunk Jaguar

There is no doubt that the US automakers are in trouble, GM, Ford and Chrysler are all giants struck low. Chrysler was recently sold to private equity partners Cerberus Capital Management and both GM and Ford have been struggling to reduce their cost base. The big weight around their necks are the historic costs of pensions and in particular, in the US, health insurance costs which have always been a major part of contact negotiations with the powerful United Autoworkers Union.

What changed the structure of the US auo industry was the arrival of the Japanese, first Honda then, Toyota and Nissan locating plants on green field sites far away from the historic centre of the industry in Detroit. With new employment practices, state of the art plant and workers from outside the traditional auto industry culture they where able to create an industry with a much lower cost base.

This year Toyota overtook GM as the world's largest auto makers and in the last financial year struggling to adjust to this new environment Ford lost £6.5billion. With sales falling across all its product range US commentators warn that this summers contract negotiations between Ford and the United Auto Workers could be brutal with the Union determined to defend the system of job banks which keeps idle workers on the payroll to maintain contracted US employment levels.

Ford synonymous as a mass market brand had pursued a strategy of trying to take the company up market in search of higher margins. This was partly achieved by buying 'up market brands' like Mercury and Lincoln in the US, Sweden's Volvo and Aston Martin, Jaguar and Land Rover in Britain.

Initially they sought to integrate these businesses into the Premium Automotive Group. The hopes that integration woulkd reduce costs whilst maintaining brand values have only been partly met. In the UK Land Rover has probably been the most successful in Ford ownership. BMW, the previous owners, had developed a new product development and introduction process at Land Rover. This resulted in the new Range Rover, The Range Rover Sport and the Discovery 3, which have all been well received by customers.

Aston Martin too has a good product range but it is always going to be a small prestige brand. Ford sold the marque to Prodrive and there is no reason the brand cannot continue to be a player in the very high value auto market allow at low volumes.

Jaguar is however in a much more difficult position. There was a great deal of heart searching when the firm left its historical home in Coventry. For many industry commentators however that plant closure was too little too late.

Jaguar seems to have managed to get both its product strategy and its production strategy wrong. The vehicle that was to be the flagship for the company was the X-Type the "baby jag" that was to take on BMW.

The car was a retro design looking back to the Mark 2 "Inspector Morse" style. The Morse program was very popular when the car was being designed. The Rover 75 launched very close to the X-Type also looked back to what was perceived to be the golden age of British car design in the 1950's and costs where cut by using Ford components under the bonnet sadly whilst a lot of people said they liked this style of the vehicle not in sufficient numbers to sustain either model and no one wants to pay extra for a Jaguar that looks like a Rover.

The X-Type never reached the 250,000 levels of production that may have justified having a production strategy that included a third plant at Halewood on Merseyside. Whilst Jaguar manged to increase production across the product range from 50,000 to 150,000 this was not enough to support three production sites. Halewood with its supply chain up and down the M6 may have been closer to the USA the main market for Jaguar than Castle Bromwich, in Birmingham, but not close enough.

The introduction of new product in Jaguar has been too slow and the production base too expensive. With the US as their main market a rising pound and sinking dollar means that the argument that Jaguar, like BMW, should produce cars in the US rather than Liverpool has never been stronger.

Jaguar and Land Rover are both iconic recognisable global brands but to compete globally they need the global volumes they need to be profitable - that means they need to be produced globally. At the very least in Asia, the US and in Europe.

The current owners have clearly run out of patience and cash. The new owners if they are to turn around these companies and retain the 50,000 jobs that are dependent on them will need both cash and patience but they will also need flair and ambition if these iconic brands are to become the world beaters they deserve to be.

At least however much we complain about the National Health Service UK healthcare costs will not be a mill stone around the necks of the new owners.


What did for George Bush's Republican Party in the mid term elections was not just the continuing quagmire in Iraq but the complacency and incompetence of the Federal authorities in dealing with the terrible floods in New Orleans.

The disaster unfolding on live national and international television showed the world how out of touch central government was with its own people.

It has been rather surreal watching our TV news over the past week seeing how disconnected some of our politicians have become from the concerns of our people. This was made apparent to me when I saw Sheffield MP David Blunkett carefully polishing Tony Blairs halo. This at a time when the home of Sheffield Wednesday was - in high summer- under water. His constituents had been struck by an almost biblical tsunami and had abandoned their homes and businesses.

I suspect had any journalists asked someone wading through three feet of water in his living room what he thought of Tony Blair's legacy he would have received short shrift.

Now our ex- PM is going to Jerusalem to act as a peace envoy. Of course we all wish him the very best of luck. Peace is a precious thing. But given his record on the Middle East, well what is a man who has been incapable of coming up with a transport policy or a health policy that works or now apparently being unable to keep us dry in high summer going to do to bring to a political, economic, cultural and religious conflict that has been going on for the best part of a century is hard to fathom.

The national media have become part of the problem when it comes to this disconnect between politicians and the people they are meant to serve. There are thousands of column inches and hours of speculation on who will fill this or that position and what it all means. This is truly the time when yesterdays papers are fit only for chip wrappers.

The contrast between regional and national coverage is stark. As the national press obsesses if a Tory or Lib Dem will be junior minister for paper clips it has been left to the regional press to ask why half the country is under water?

The regional press is asking the hard questions and expressing the real concerns of the people whilst the national media have been searching for Tony Blair's legacy.

Well part of that legacy is the inadequate flood defences in South Yorkshire, Lincolnshire and here in Shropshire and Worcestershire. The Environment Agency and the Association of British Insurers had warned us repeatedly about the inadequacies of our flood protection systems and as long as ten years ago academics at Sheffield Hallam University warned about the weaknesses in that city's flood defences.

The safety of citizens has to be a governments first priority as John Reid was always reminding us. But safety is about much more than terrorism.

Water is a vital resource for farmers and many of our key process industries but we cannot manage with hose pipe bans one day and floods the next. Here in the West Midlands the Regional Assembly and Development Agency are rewriting the regional economic strategy, does it contain a policy for water? Does our regional spatial strategy take into account the likelihood of what the climate scientists call, "extreme weather events"?

Responding to these issues will require some of those hard choices politicians are so fond of. Choices like serious reafforestation in Mid- wales and the Marches, the abandonment of flood plains to soft flood defences like wet land and marshes. This will require us to say no to inappropriate development whilst still requiring a significant budget to protect what already exists.

It is not as if we are not capable of looking after our own water supplies and drainage systems. We know how to do this the City of Birmingham was building pipelines from Mid-Wales before most of us where born.

In New Orleans the US Federal Government response was too little too late - the impact of flooding on that great city destroying the homes and businesses of thousands of people but also destroying the reputation of George Bush in the process. Let us hope Gordon Brown does not make the same mistake.

One of the key messages from his lengthy non-election campaign was the need to reconnect the political class with the British people. Here is his chance to make a new start he was too slow to go to Sheffield and Gloucester go to Gloucester and Upton find out what they need and get it too them.

Tony Blair's gravest fault was to mistake headlines for action. Good government gets a good press for good works. If Gordon Brown is looking for a new motto it should be - by your works shall you be known.


Historically Birmingham and its very near neighbour the Black Country have enjoyed a close but separate existence. Birmingham's reputation as the workshop of the world was underpinned by the coal and steel supplied from the Black Country. Withe the massive transformation of their economies in the 1980's and 90's there is no doubt that Birmingham recovered a sense of purpose much more quickly than the Black Country becoming the thriving multicultural centre it is today.

The Black Country has always had very close communities despite the view from Birmingham that everybody in the Black Country is a Yam-Yam. For those unfortunate enough not to come from Birmingham or the Black Country, Yam-Yam is an affectionate onomatopoeic term for us Black Country folk based on the sound of our accent. Local history experts however tell us that the tightness of each local community in the Black Country is such that each small community generated its own accent. Indeed it is said that even communities in such close proximity as Bilston and Bradley or Dudley and Gornal had distinctive local dialects.

It was the strength of these local communities that held the place together in the dark days of the industrial restructuring in the 1980's. Today whilst many people think that Birmingham needs to rediscover a sense of purpose the Black Country has been quietly breaking out of those tight communities and getting on with it.

The four Black Country Boroughs, Dudley, Sandwell, Walsall and Wolverhampton have been working on Black Country wide development plans which have begun to change both the perception and the destiny of this important sub-region. Today this sense of renewal is well represented in Gordon Browns new Government.

The man with Gordon's ear, his Parliamentary Private Secretary is Dudley North MP, Ian Austin. Ian cut his political teeth on Dudley Council before becoming the press officer for the Regional Labour Party progressing by replacing the infamous Charlie Whelan as Gordon Brown's press spokesman before becoming the MP for the town in which he lived.

Across in West Bromwich we have Tom Watson, from Kidderminster, former curry house plotter; now given the responsibility of protecting Labour's majority in the government whips office. Tom has found his true vocation; his skills have always been in organisation, firstly, with Young Labour, then in the Engineers Union, before being one of Labour's key by-election specialists, he is currently working in Ealing Southall, indeed Liam Byrne MP now 'Mr West Midlands' owes a his by-election victory in large part to Tom's hard work in Hodge Hill.

In Wolverhampton South East we have Pat McFadden, another rising star on of the few who worked in No 10 to have been on good terms with the Blairites and the Brownites.Edinburgh University educated Pat first made a name for himself by being one of the most effective members of John Smith's team before going onto work in government with Tony Blair. He was spotted by 'Lord Bilston, Dennis Turner, the towns longstanding MP. For many Bilstonians Dennis was a Lord long before he received the official confirmation. Dennis is a shrewd politician who was aware that his beloved constituency had gone through a fundamental change and that nostalgia for a past industrial glory was not going to equip Wolverhampton to compete in this new world.

Pat is now Minister of State at the new Department of Business, Enterprise and Regulatory Reform. An important set of issues for many businesses across the Black Country.

The last member of the quartet is Ian Pearson MP. One of the few MP's to represent the constituency in which he was born, another who cut his political teeth on Dudley Council but who has a few years extra parliamentary experience than his colleagues having come into the house following the Labour landslide in the Dudley West by-election. Ian, a Brierley Hill Grammar School boy, who has a reputation for being rather clever, with his Oxford degree and Masters and a Doctorate from Warwick University, did have a life before politics being joint Chief Executive of the West Midlands Enterprise Board.

Today Ian is Minister of State in the new Department of Innovation, Universities and Skills, with responsibility for Science. A Black Country lad responsible for the nations science!

As an unapologetic Yam-Yam I feel that it is great to see so many high fliers being attracted to a place that once exported its best talent and to see Black Country MP's making the decisions rather than just making up the numbers. After all the Black Country is and important place with a population larger than Birmingham, Leeds or Manchester or for that matter Edinburgh and Glasgow added together.

At last it is getting the kind of political representation it deserves. This quartet certainly have the youth, energy and intelligence on their side to be able to turn that Black Country marketing slogan from rhetoric into reality - Black Country Bright Future.

Nick Matthews is a Son of Wednesbury or 'Ikea Junction Nine' as it is now known.

Dope at University: Not Me

I see it is now fashionable for cabinet ministers to admit to smoking cannabis at University. Including our own Worcester Woman no less than the Home Secretary Jaqui Smith. When I wonder will it be fashionable for my own vice to reach such high levels of respectability. Yes I can now admit it, having studied at what was Wolverhampton Poly, I like a nice pint of Mild. Even Banks's can't bring themselves to call their famous beverage mild any longer preferring the epithet "Original". It is now time I think for us Mild lovers to come out of the closet. Yes let us proclaim we are "born to drink mild".