New Jaguar model to be produced at Halewood

In January 1998, Jaguar announced that its new car will be produced at Ford's Halewood plant in the UK, to the surprise of some and the delight of trade unions.

At the beginning of January 1998, Jaguar, part of the US-based Ford motor manufacturing group, announced that it is to produce a new smaller luxury sports car to compete with the BMW 3 series and the Mercedes class 3. Jaguar's chair and chief executive, Nick Scheele said that :"our preference, naturally was to build the car in the UK and I regret that we are not able to produce an affordable investment proposition to make the new car at our plants in the West Midlands but I am pleased that we will be going to Halewood."

The existing Jaguar cars are produced in the West Midlands, but the company argues that locations were assessed from a business case perspective and, after thorough analysis, it believed that Halewood, on Merseyside, can produce the car at the right cost and the right quality. The chair of Ford UK said that Jaguar conducted a great deal of analysis before identifying Halewood as its choice for the new car, and that he was confident that all employees in the Halewood body and assembly operations will meet the challenge of producing this "exciting new product".

The Halewood plant has a chequered history and was threatened with closure only a year before the recent decision (UK9702101F). The Transport and General Workers Union welcomed the announcement, saying that it was an important New Year boost for the British motor industry. The union said that the decision means that one of the most famous brand names in UK manufacturing will continue to be built in its home country, and that this was in large measure because of the work by the trade unions in resolving the issue.

Jaguar will invest up to GBP 400 million in modernising Halewood and switching production from the Ford Escort to the new Jaguar, so that the first cars will leave the production line in 2001. The only caveat to the whole deal is that the UK Government must agree to an aid package estimated at between GBP 40 million and GBP 50 million to support the investment. A sum of GBP 15 million was already agreed from last year's reprieve of Halewood when it was proposed that a new multi-activity vehicle should be produced there. The new multi-activity vehicle will now be produced at another Ford plant.

Halewood is seen as a surprise choice for the Jaguar investment and, although dogged by poor labour relations and quality problems for years, a remarkable turnaround in productivity and quality has been highlighted as one of the key factors behind the decision. The decision, however, has conveniently reduced much of Fords overcapacity headache in Europe. The unions stress that, although the future now looks good for staff at Halewood, it is important that Jaguar management has given them firm guarantees over the future of workers in the West Midlands as part of the agreement to produce at Halewood.