Jaguar Cars, Ltd.

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Jaguar Cars, Ltd.

Browns Lane
Coventry CV5 9DR
(011) 44 1203402121

Wholly Owned Subsidiary of Ford Motor Company
1922 as Swallow Sidecar Company
Employees: 250
Sales: $2 billion
SICs: 5013 Motor Vehicle Supplies & New Parts

Jaguar Cars, Ltd., is one of the most famous luxury automobile manufacturers in the world. With its sleek lines, leather interiors, and smooth engines, Jaguar is the car of choice for wealthy brokers who work on Wall Street in New York and the nouveau riche in Japan who shop on Tokyos Ginza. However, like many other luxury car and sports car producers, Jaguar experienced many financial difficulties during the 1980s. Although the company was purchased by Ford Motor Company in 1990 for $2.6 billion, sales remain far lower than those posted by competitors like Mercedes Benz and Rolls Royce.

The driving force behind Jaguar, William Lyons, was born on September 4, 1901, in Blackpool, a town in the county of Lancashire, England. Uninterested in academics as a teenager, he was on the verge of entering the shipbuilding industry when his father encouraged him to work at Crossley Motors, Ltd., and attend engineering classes during the evening. Crossley was a distinguished automobile manufacturer during the early twentieth century. By the time Lyons went to work at its factory in Manchester, near the end of World War I, Crossleys chassis were used by the British government for military ambulances, staff cars, and small trucks. The success of the war years carried into the early 1920s, and sales of Crossley cars increased. Lyons was unhappy at Crossley, however, and he soon left the company to work for Brown and Mallalieu, an automobile distributor, as a junior salesman.

In the early 1920s Lyons met William Walmsley, a veteran of World War I whose hobby was building sidecars for motorcycles. Lyons approached Walmsley, a neighbor of his parents in Blackpool, about setting up a joint effort to manufacture and sell sidecars. Walmsley was reluctant at first, but was finally overwhelmed by Lyons enthusiasm. The two men procured a loan of 1,000 pounds from a local bank and established the Swallow Sidecar Company in 1922. While Walmsley focused on building the companys sidecars, Lyons concentrated on hiring labor, renting a working place, and advertising. Soon the company was garnering a reputation for its sidecars, which were used during motorcycling competitions. By 1926 the rapidly expanding firm was operating from three different locations in Blackpool and had hired numerous employees. The companys rapid growth prompted Lyons and Walmsley to leave Blackpool and relocate in Coventry, where there was more than enough space to accommodate further expansion. In 1928 about 50 employees moved to Coventry to continue working at the renamed Swallow Sidecar and Coach Building Company.

With the move to Coventry, Swallow began to produce coach-work for chassis provided by Fiat, Austin, and Alvis. The Fiat-Swallow, with its two-door salon coachwork, impressive radiator, and two-tone coloring, was an immediate success, and soon the company was manufacturing 50 cars per week. In 1929 the company unveiled its Standard-Swallow; two years later, brand new cars such as the SSI and the SS2 (which could cruise at 50 mph) were introduced. The SSI was a low-built, two-door, sports coupe that featured two passenger seats and room in the back of the body for a large luggage box. In order to increase sales, Lyons encouraged owners of Swallow cars to enter motoring competitions. The first SSI made its racing debut in the 1932 Torquay 1,000-mile rally.

The decade of the 1930s was a watershed period for the company. Sales of Swallow cars were increasing at such a fast pace that by 1933 the company counted 18 distributors worldwide. Continental agents included those in The Netherlands, Denmark, Austria, Portugal, Belgium, and Switzerland; non-European agents were located in Calcutta, Delhi, Cape Town, and Johannesburg. In the spring of the same year, Swallow manufactured its first touring sedan, a car that featured coachwork on a SS1 chassis. The new sedan sold well from the start. During the mid-1930s, the SS product line offered four engine sizes, two chassis, and a choice of sport coupe, salon or touring coachwork. Comfort in the cars interior design, the elegance of the cars body lines, and its reliable engine performance began to garner the company a reputation in such prestigious auto publications as The Standard Car Review, The Autocar, The Motor, Motorsport, and The Motorist.

The success of Swallow convinced Lyons to exercise his purchase option agreement with Walmsley. The partnership was dissolved, Walmsley resigned, and a new company, SS Cars, Ltd., was formed. The company was incorporated in 1933, and soon afterwards offered the sale of its stock to the public on the London Exchange. Lyons become the chairman and managing director of SS Cars. He assumed total control of all its operations. Although the sidecar business remained lucrative, Lyons kept careful watch over this portion of the firm, and thought it best to organize its operations as an entirely separate entity, called the Swallow Coachbuilding Company, in 1935. With the administrative duties out of the way, and a reorganization of the company complete, Lyons turned his attention to advertising. He wanted a brand new name for his cars that would capture the imagination of the motoring enthusiast. The Nelson advertising agency, hired by Lyons to create a new image for his automobiles, selected the name Jaguar.

The first SS Jaguar 100 was introduced in 1935 and, as the company dropped the SSI and SS2 product lines, sales for its new unit increased dramatically. The firms first all-steel car was brought out in 1937. It featured a broader body, overhead valves, and a choice of 3.5, 2.7, or 1.8 litre engines. The 3.5-litre model was the companys first car to reach 100 mph. Armed with a work force of over 1,500 in Coventry, by August of 1938 SS Cars, Ltd. was producing more than 5,000 cars per year. Profits continued to rise, and the companys success seemed unlimited.

Unfortunately, the onset of World War II abruptly halted production at SS Cars, Ltd. All of the companys factories and plants were reconfigured for military use by the British government. Within a very short time, SS Cars, Ltd., was the official repair company for the Whitley bomber. It also was contracted to make parts for airplanes such as the Stirling, the Mosquito, the Spitfire, and the Lancaster bomber. One bright spot during the wartime era was the purchase of up-to-date equipment by the Ministry of War for the companys use in its factories. The only portion of the company that maintained its pre-war level of production was the sidecar shop, which manufactured over 10,000 units for the British armys motor corps.

Management at SS Cars, Ltd., announced in early 1945 that it intended to change its name to Jaguar Cars, Ltd. A short time later, the symbol of the SS hexagon was replaced with the new J and Jaguar symbols. Jaguar was now a completely independent British-operated and managed companythe fulfillment of William Lyons dream. Without wasting a moment, Lyons decided that Jaguar could increase sales and improve its engine design by engaging in even more racing competitions than before the war. This decision resulted in the formation of a Jaguar racing team that competed in all the major car races. The SS Jaguar 100 was the winning car in the Palos Verdes road trials in the United States in 1947. Other racing competitions, such as the Concours dElegance, run in the city of Brussels were also won by drivers in Jaguar 100s. The additional publicity helped the company export its first cars to the United States and Australia, an indication that the companys reputation had reached international proportions. By the end of the decade, Jaguars name was synonymous with the British export business.

During the decade of the 1950s, Jaguar experienced unprecedented success. Back in 1928, when the company moved from Blackpool to Coventry, there had been only 40,000 square feet of floor space for employees to build cars; by 1950, expansion at the Coventry assembly plant had surpassed 600,000 square feet. In 1934 the company reported that exports amounted to less than ten percent of total sales; by 1951 exports amounted to 84 percent of total sales.

In 1952 over 20 constabularies throughout Britain were using Jaguars as police cars, and arrangements were made for police mechanics to attend the companys repair school in Coventry. The Jaguar racing team won the prestigious 24-hour LeMans race in 1953 as growing numbers of drivers competing in international races began to use Jaguar engines in their own vehicles. As Jaguar team drivers earned plaudits and laurels for Coventry, export sales continued to increase, particularly in the United States. By 1954 management decided to form Jaguar Cars North American Corporation in recognition of Jaguars large share of the sports car market. In 1956 the British government formally recognized William Lyons for building the company and developing such a remarkably successful export business by naming him a Knight Bachelor. But just as gratifying to Sir William were reports published in both Road & Track and Popular Mechanics magazines in which readers selected Jaguar as the worlds most popular sports car, with Porsche a distant second in both polls. Jaguar had become a household word in the automotive industry.

During the 1960s Jaguar implemented a comprehensive expansion through acquisition strategy. In May 1960 the company doubled its size with the purchase of Daimler Company, Ltd., of Coventry. Unrelated to the famous German car company Daimler-Benz, the British firm was an old and distinguished manufacturer of automobiles, bus and coach chassis, and armored vehicles for the military. With this acquisition, the number of Jaguar employees doubled to 8,000. Guy Motors, a small manufacturer of trucks and trolleybuses, was purchased in 1961. Within a few years, Jaguar management had revitalized the company and re-engineered its factory to produce a new line of trucks and farm tractors.

The most important acquisition during this time, however, involved the takeover of Coventry Climax Engines, Ltd., a small but world-famous producer of racing and passenger car engines. Other acquisitions made by the Jaguar Group during these years included Lanchester Motor Company, Ltd., Barker and Company, Ltd., Henry Meadows, Ltd., and Newtherm Oil Burners, Ltd.

As Sir William Lyons grew older and realized that retirement was drawing near, he became increasingly concerned about the survival of his company. He felt that trade unionism, and the effects of its wage demands, contributed to rampant inflation and harmed the automobile industry in Britain. With these concerns uppermost in his mind, in 1966 Sir William decided perhaps unwiselyto merge Jaguar Cars, Ltd., with the British Motor Corporation, an organization that controlled and operated a growing number of British car manufacturers. Lyons retained his title of chairman and managing director, and appointed Raymond England and Robert Grice as joint deputy managing directors to coordinate administration and manufacturing during the early months of the merger. In 1968 Lyons relinquished his managing director title, although he remained chairman and chief executive; England and Grice were appointed joint managing directors. But the year ended on a sour note when British Motor Corporation announced its merger with British Leyland. The new British Leyland Motor Corporation opened for business in May 1968.

By 1972, when Jaguar Cars, Ltd., celebrated the 50th anniversary of its founding, the company had almost ceased to exist as an independent manufacturer. Although the brand new XJ series of Jaguar cars were designed and produced during this time, British Leyland was in the throes of severe financial difficulties. With all the old management team from Jaguar gone, the companys departments were incorporated into the Leyland administrative structure. When a government report revealed that Leyland was in debt, management responded by implementing a comprehensive reorganization that eliminated Jaguar as an operating entity and replaced it with a division called Leyland Cars. Jaguar Cars, Ltd., was now a committee within the administrative hierarchy of British Leyland. By 1980 Jaguar workers were still engaged in car manufacturing, but were without management power. Morale among Jaguar employees in Coventry was at its lowest ebb.

A change in management at British Leyland, coupled with a desire to reinvigorate Jaguar so that it could sell more cars, led to the appointment of John Egan as the companys new chief executive. Egan immediately assumed greater control over Jaguars marketing and exporting plans. He also revived Jaguars role in international racing competitions. In the United States, the name Jaguar Cars, Ltd. was used once again, while Jaguar Deutschland GmbH was formed in West Germany. The XJ-S sports coupes and XJ salons began to sell in significantly larger quantities than any time in the previous 10 years. By 1983 sales of Jaguar cars in the United States amounted to over 15,000, and sales in other countries registered rapid improvement. Under Egans leadership, the company regained its name, Jaguar Cars, Ltd., and in 1985 the firm was given its freedomJaguar Cars, Ltd., was spun-off and became an independent company.

Despite its successful push for independence, quality control problems plagued many of Jaguars final products. Problems with complicated and unreliable cooling and electrical systems in the XJ models began to drive away customers. Sales dropped from a high of 50,000 units in 1989 to 30,000 in 1990; pre-tax profits decreased from $150 million in 1988 to a loss of approximately $25 million by 1990.

In 1990, as a result of these problems, Ford Motor Company acquired Jaguar for $2.6 billion. Ford removed Egan and appointed its own man, Nicholas V. Scheele, as the company chairman and chief executive officer. With the unlimited purse of Ford, the new chairman began a comprehensive reorganization of Jaguar, including a cost-cutting strategy that eliminated half of the companys employees (from 12,000 down to 6,000), the improvement of the fragile electrical system in all XJ models, and the overhaul of the assembly line in Coventry.

In 1994 sales of Jaguar cars rebounded to 40,000 units and sales increased to $2 billion. It is Jaguars hope that new management and Fords financial backing will enable the company to regain the reputation that it had for years as one of the worlds preeminent luxury car manufacturers.

Further Reading

Flynn, Julia, Is the Jinx Finally Off Jaguar? Business Week, October 10, 1994, p. 62.

Leather, Luxury, and Losses: Jaguar and SAAB, Economist, July 17, 1993, p. 65.

Taylor, Alex, Shaking Up Jaguar, Fortune, September 6, 1993, pp. 6568.

Whyte, Andrew, Jaguar: The Definitive History of a Great British Car, Somerset: Patrick Stevens Ltd., 1985.

Thomas Derdak