27 Jul 2010

The Indian firm with doubts about the UK’s car commitments

I’m in India as Britain mounts the mother of all economic charm offensives.

Today I was in the biggest control room for British manufacturing in the world. And that room is on the fourth floor in age old building in Mumbai. Bombay House has been the home since 1927 for Tata & Sons, parent company of Corus, Land Rover, Jaguar, Tetley tea.

Tata is Britain’s biggest manufacturing employer. So when the government is advocating a rebalancing of the UK economy away from banking and finance towards manufacturing, it’s small wonder that George Osborne today made an important beeline to Bombay House to meet with many of the managers of Tata’s companies.

And he was still raving about Tata’s investment in the UK later in the afternoon when he launched the VF247, a new solar powered mobile phone, developed by Vodafone for the Indian market.

He may have had concerns however if Tata’s most senior boss, repeated what he told me, a few hours before.

Mr R Gopalakrishnan, invited me up to the Tata & Sons boardroom where key decisions about new Land Rover production will be made. When I asked how Tata’s purchase of Land Rover and Jaguar was going he replied: “If Britain wants an auto industry then Tata intends to be a part of it, if Britain doesn’t want an auto industry then I don’t see how we can be part of it”.

I asked him to elaborate on the clear implication that our government was lukewarm about the car industry, and he admitted frictions but would not elaborate. Vince Cable’s department have been keen to commit to the car industry but without the company specific subsidies offered by Labour. Tata motors insiders pointed to a bruising set of negotiations with the previous government over a possible support loan that never materialised.

Gopal, as he likes to be known, gave some fascinating insights into the Indian corporate mindset.

He says there is an entirely different set of business values. He disputed any jot that India was corporate juggernaut gobbling up foreign companies. He contrasted the expansion of western multinationals with the more recent shopping spree of India’s big corporates.

“Western companies went as conquerors, Indian companies went as partners,” he told me, stressing the consultative takeover style. Yet there have and will remain very difficult decisions at Corus and at the UK car plants.

For now some of those decisions are made easier by the good sales figures from both Jaguar and Land Rover around the world.

All of which goes to show no matter what the warm words and charm offensive from No 10 and 11, there are some tense business decisions even in the coming days.

2 reader comments

  1. Paul Begley says:

    Hmm. Finance and banking is now so powerful it can demand government support when it chooses. Global industries like Tata are rather more polite, but essentially ask governments to bid against each other with taxpayers’ money to win new investment.
    Small wonder we find it so difficult to fund care for the elderly, new schools, decent roads, etc. I can’t help asking – when politicians speak of “welfare dependency”, where should they point the finger?

  2. Tom Wright says:

    Jaguar and Land Rover are in exceptionally good shape with frankly quite tasty order books.

    Gopal’s language seems a diplomatic way of asking for state subsidy. Why? The answer is greed.

    Tata does not need UK taxpayer support, and asking for it, however politely, smacks of blackmail. How does that measure up to ‘partnership’?

    All this shows is that overseas ownership of UK manufacturing is a threat to employment – just as the aquisition of Mars by Kraft will be a kick in the teeth for British jobs, I have an uncomfortable feeling the Tata aquisition of Corus, Land Rover, and Jaguar will be the same.

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