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The man who saved Jaguar

Motoring Research logo Motoring Research 2015-08-14

© Rex Jaguar Cars was almost out of business when John Egan was appointed its new boss in 1980; nine years later, the company was sold for £1.6 billion. Now aged 76, he has written a memoir about his experience.

Egan gives a quick appraisal of what got Jaguar – and the wider British car business – to its nadir. He is scathing of the foolishness and compromises that epitomised the industry in the 1960s and 70s.

He paints colourful descriptions of managers who were too scared of their own workers to ever visit the factory floor, and the thoughts of some that the most militant of them were even in the pay of the Soviet Union. Egan had first-hand experience of this, running the successful British Leyland (BL) parts operation Unipart in the ‘70s, before being appointed by BL chief Michael Edwardes to rescue its troubled luxury car division.

Baptism of fire

Egan faced a strike on his first day; strikes are more than usually deadly for car companies because of their enormous fixed costs; if they do not have output, the cash can rapidly drain away. Having defused the strike by speaking confidently but firmly to troublesome shop stewards, he persuaded many of them to leave with generous redundancy payments.

One of the main reason for Jaguar’s problems was over dire quality issues, failing fuel pumps, a plummeting reputation, and enraged, influential owners. Electrical faults caused by poor quality parts, especially from Lucas (known as the “Prince of Darkness” in the USA), came in for particular focus.

Installing new leaders across the business, Egan and his senior management took ownership of some of the most critical issues, solutions for which were often disarmingly simple and not necessarily expensive.

Testing times

When his new models arrived – updates of its primary model the XJ which dated from 1968 – he realised he needed to test them relentlessly. Having heard that police patrol cars often do 10,000 miles a month, he sold XJs on the cheap to local police forces, so he could effectively get a year’s worth of use in a month. Egan stamped on the problems reported from this exercise, and fed solutions straight back to the production line.

The results were good, the cars becoming much more reliable quickly. One unlikely hero of the book is revealed as Norman Tebbit, who as Trade & Industry secretary had been told to slash subsidies and in the case of BL, to order it to kill off its biggest losers: top of the list, Jaguar, which had managed to lose £50m on sales of £150m in 1981.

Tebbit supported the investment that led to the launch of the new XJ, the XJ40, in 1986; my personal view is that however much she hated subsidising losers, Mrs Thatcher would rather be seen dead than drive in a foreign-built prime ministerial limousine. Egan asserts that without her support, and especially her trade union reforms, Jaguar would not have survived at all.

US sales increased significantly, and that together with a rationalisation of the UK dealer network and a sharp decline in the value of the pound quickly transformed the company’s finances, so that it was earning £100m in profit in 1984. Jaguar even had unlikely support from the boss of BMW, who advised on early quality issues, and even offered partnership later.

Recovery

To the workforce Egan offered a combination of bribes and threats. Carrots were innovative: a chauffeur-driven Jaguar for every staff member when they got married; sticks were more conventional – if industrial problems and productivity did not improve, Jaguar would close.

Productivity trebled, and having been a dismal last place in 1980 in the US JD Power reliability survey, Jaguar was 5th by 1985, behind Mercedes and the Japanese, but ahead of all of Detroit, and all other European makes.

At this point General Motors (GM) wished to buy it but, having worked there in the ‘60s, Egan fretted that it would not thrive amid GM’s infamous bureaucracy and strict 12-month budget cycles.

Privatisation was chosen instead, supported by treasury secretary Norman Lamont. Anxious to update facilities, Jaguar opened a new engineering centre at Whitley outside Coventry, and shortly after had to fend off an interest from the empire-building of Hanson Trust. Hanson later bought 100 XJ40s instead, but it was a reminder that as a small company in an industry of giants, preserving its independence would not be easy.

John Egan with the XJ40 in 1986 © Rex John Egan with the XJ40 in 1986 XJ40

The new 4-litre AJ6 engine was troublesome at first, and Jaguar effectively used the XJS as its testing platform ahead of it its installation in the XJ replacement, the XJ40. After a protracted development of over ten years, the XJ40 launched in 1986. Egan confirms the motoring lore story that it was deliberately designed to not allow the Rover/Buick V8 to be placed in it, but this also denied it the gorgeous if thirsty Jaguar V12, though this problem was eventually solved at the end of its life in 1993.

Having largely nailed the previous XJ’s reliability by the end of that model's production, many quality nightmares emerged on the XJ40, and the chief test driver begged for a further delay to iron them out. He did not win, and it launched with familiar problems including electrical faults and ill-suited tyres; Jaguar saw its US JD Power ranking plummet to mid-table as a result.

Egan tried to entice Toyota – with its legendary quality obsession – into a joint-venture with the company, but Toyota concluded that “cooperation was much more complicated than control” and set up its own UK manufacturing business at Derby, and indeed its own luxury brand, Lexus.

The XJ220 supercar is briefly mentioned, but only to say it was “extremely profitable”, which was not most people’s memory of the car that eventually emerged in the teeth of recession after Egan had left Jaguar.

John Egan with the XJ220 supercar at its unveiling at the British Motor Show at the NEC Birmingham in 1988 © Rex John Egan with the XJ220 supercar at its unveiling at the British Motor Show at the NEC Birmingham in 1988 Ford and the future

Though Egan talked to seemingly every major car company in the world about a partnership, ultimately Jaguar was unable to ward off the cheque book waved by the British-born Ford executive Alex Trotman. As with his worries over GM, Egan thought that Jaguar would be stifled by Detroit bureaucracy, and these were not allayed by an early visit to Ford HQ in Dearborn after the deal was done, when he found most senior Ford people entirely uninterested in their new toy for which they had paid a more-than-handsome £1.6 billion.

Egan lasted a short time at Ford. The Ford people derided the low-scale Jaguar facilities, foisted an unsuccessful and distracting F1 team onto the brand, and in Egan’s view did not move the design language on; his most charitable comment was that it did “an honest job of making Jaguar part of Ford”, and that it certainly improved quality.

After a variable period of ownership, Ford would sell Jaguar, together with Land Rover (which it bought in 2000 for £1.8bn from BMW, and then merged with Jaguar (‘JLR’)), for just £1.3bn in 2008 to Tata of India; Ford had spent billions more along the journey.

Tata’s purchase would prove a bargain, but largely because of the explosive interest in SUVs that Land Rover benefitted from, and indeed capitalised upon with popular cars like the Evoque and latest Range Rover. Land Rover accounts for around 84% of JLR’s unit sales; while Egan judges Tata’ ownership as ‘excellent’, there were just 82,000 Jaguar sales in 2014, from a product range much larger than the 50,000 annual sales attained by Egan in his heyday.

Audi shifted 250,000 Q5s alone; there is much still to be done. As ever, the company must today turn many more fans of Jaguar into cash-paying customers too.

Egan writes as he clearly talks: directly, with little time to waste on trivia. Thus it is an easy, breezy read, and a must for anyone with an interest in British car engineering in general and Jaguar in particular.

‘Saving Jaguar by John Egan’ is available now from the Porter Press in hardback, available on Amazon for around £18.

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