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Editor/Photographer : Mark Charles

September 17 2004

Jaguar production to end at Browns Lane

Jaguar Cars today announced details of a comprehensive business plan that will reshape the company and focus on the factors that have had a negative impact on the bottom line of the company.

The plan includes:

Product actions, including an all-aluminium XK sports car; strengthening of the XJ range with a premium diesel engine saloon in Europe and a new long wheelbase version in the US, a new high-performance X-TYPE diesel in Europe and an X-TYPE estate to be launched in the US.
Marketplace actions, including a review of Jaguar's retail and market infrastructure throughout the world, and revenue management steps that include a reduction in daily rental units and revised series and model actions.
Cost actions, including the discontinuation of assembly operations at Browns Lane; the transfer of 425 jobs to Castle Bromwich, including generous terms for 400 voluntary separations at Browns Lane; and a reduction of 750 staff and agency positions. In addition, the Jaguar brand will withdraw from Formula One at the end of 2004.
Coventry, Jaguar headquarters and the wood veneer manufacturing centre will remain at Browns Lane and the Jaguar Product Development Centre will remain at Whitley, both in Coventry.

The company said these short- and longer-term actions focus on Jaguar's immediate marketplace challenges and address the fundamental structure of the business and its future strategy. They will act as Jaguar’s foundation for the remainder of the decade.

Key elements of the plan:

Product:

New all-aluminium XK sports car

Confirmation of a new XK sports car codenamed X150 that will go on sale in early 2006. This will be an all-aluminium car and will be the first production car to feature Jaguar’s new design language, developed by Design Director Ian Callum.

XJ range significantly strengthened

The XJ range will be extended and strengthened by introducing a premium diesel engine next year to respond to growth in luxury diesel saloons in Europe and further enhance the customer appeal of a car which is already segment leader in the UK. The new long wheelbase version of the XJ, which is targeted at the US market, has received very strong reviews having just gone on sale.

New high performance X-TYPE diesel

The market appeal of the X-TYPE compact luxury car will be extended by adding a high performance diesel version to the existing range of diesel and petrol-engined variants next year.

X-TYPE Estate to be launched in the US

X-TYPE Estate (Station Wagon) will be launched in the United States to broaden the X-TYPE range in this key market.

Market place:

Supply and demand balanced

We have announced a 15,000-unit reduction of production in 2004 to better align stock with on-going demand.

Market strategy and distribution

We are reviewing our retail and market infrastructure in markets around the world to improve both dealer and market profitability. A new board-level position was recently created to specifically drive this programme with the appointment of Mike Wright, former managing director of Jaguar, to the new role. We will find the optimum solution for each market for Jaguar, Land Rover and Premier Automotive Group.

Revenue management, Brand and marketing

We are implementing enhanced revenue management actions including reduced mix of daily rental volumes and revised series and model actions. Jaguar will refocus marketing actions on the unique brand position of its vehicles as beautiful fast cars.

Leaner cost structure:

Consolidate premium aluminium vehicles in Castle Bromwich

Consolidate production of premium aluminium vehicles (the XJ saloon range and the new X150 sports car) at Jaguar's Castle Bromwich plant in Birmingham. This will result in a fully integrated, efficient and technically advanced aluminium vehicle production facility with panel stamping, body assembly and final assembly on the same site.

Cease final assembly operations at Browns Lane. Wood veneer manufacturing retained on site

Cease vehicle final assembly at the Browns Lane plant in September 2005, but manufacturing will be retained on the site with the wood veneer manufacturing centre, which will employ 310 people. This specialist facility uses a unique combination of traditional skills and high technology to produce the trademark wood veneers for Land Rover and Aston Martin as well as Jaguar.

Transfer 425 jobs to Castle Bromwich and with generous terms for 400 voluntary separations at Browns Lane

425 jobs will be transferred for those employees that wish, to Castle Bromwich plant for the final assembly of the XJ saloon and new X150 sports car, which will be produced in early 2006. The separation terms for the remaining 400 positions will be Jaguar's most generous ever for a voluntary redundancy programme. Jaguar will work closely with Trades Unions, government and local development agencies to oversee implementation of the Employee Support Programme.

A reduction of 750 staff positions. This is part of a 15% salaried equivalent cost reduction since 2003

Further back office synergies with Land Rover will result in a leaner Jaguar. There will be a voluntary redundancy programme for 500 salaried employees and a reduction of 250 agency positions. These reductions are an essential part of a leaner organisation and cost structure and a re-sizing of the Jaguar business.

Other actions:
Jaguar Headquarters and the Jaguar Daimler Heritage Trust to remain at Browns Lane in Coventry

Jaguar has very strong ties with the City of Coventry. It has been located in the city since 1928. As part of this package of measures it was considered important that Jaguar remains headquartered in Coventry at Browns Lane. Bibiana Boerio, Managing Director of Jaguar, will be based there. These facilities together with the JDHT and the wood veneer manufacturing centre, take up a small part of the Browns Lane site. The rest of the site will be sold for re-development.

Whitley to be retained as Jaguar Product Development Centre. Science and Business Park to be developed at Whitley with Coventry Council to develop hi-tech hub for Coventry

Whitley will be retained as the Jaguar Product Development Centre where all future Jaguars will be designed and developed. Jaguar will press ahead with Coventry Council and other local enterprise agencies to develop the science and business park which has already been granted planning permission. It is hoped that this will become a flagship venue for Coventry’s increasing focus on high technology industries.

The Jaguar brand to withdraw from Formula One at the end of 2004

As part of the package of measures to get the Jaguar business back on track and focus management and financial resources on the core business, Jaguar will withdraw from Formula One at the end of this season. See end of release for further detail and for Ford Motor Company Formula One business plans.

Joe Greenwell, Chairman and CEO Jaguar and Land Rover, "Our new business plan was developed following a rigorous review by the Jaguar management team. We examined a number of alternatives and I would not be presenting this plan today had I not been absolutely convinced that it is the right plan and completely necessary.

"The plan is wide-ranging, extends over a number of years and touches most aspects of the business. It also includes some severe measures that we do not take lightly. But that is a reflection of the highly competitive and global nature of the business we are in. "The fact is despite significant sales growth and excellent levels of quality in recent years, we have not been able to keep pace with significantly larger competitors. We have too much capacity and this is our underlying structural problem. Our bottom line has further deteriorated this year with the weakness of the dollar, unprecedented incentives in the premium market and the shift from premium cars to SUVs. We had no choice but to take action and I firmly believe that all the elements of this plan are essential if we are to stem the losses."

Mr Greenwell also confirmed that, despite the difficult business circumstances, it is the intention to do everything possible to achieve this restructuring on a voluntary basis. "It is with deep regret that we have had to announce some actions today which affect people's jobs. However I can give everyone my personal assurance that we will do everything we can to support those affected."

Mr Greenwell summed up, "The package of actions we have announced today will focus on the issues we currently face and will help position Jaguar for a bright future founded on strong product plans, a leaner cost structure and a stronger focus on margins in the market place. I believe this plan is essential to Jaguar's future and will enable us to contribute more positively to Ford Motor Company's bottom line."

Mark Fields, Ford Motor Company, Executive Vice President – Premier Automotive Group and Ford of Europe, said: “Decisive action was needed to get Jaguar back on track and to ensure a viable future. Despite the actions taken by the company’s management over the past few years and despite the fact Jaguar is again the highest rated European brand on product quality, Jaguar is back in a serious loss-making position. There are a number of external factors which have exacerbated the situation but we have faced and tackled the fundamental reality, that Jaguar simply cannot support three assembly plants with annual sales of 125,000 cars."

Fields, Ford's most senior executive based in Europe added, "Manufacturing capacity although a significant factor is only part of the issue and the solution. What we have developed is a series of actions to strengthen Jaguar. These also include a leaner organisation structure on the cost side of the equation and on the revenue and brand side, a package of product and marketplace actions which will drive the company forward in a way which is more appropriate for the brand and will drive a better bottom line."

Mark Fields concluded: “There is massive global affection for the Jaguar brand but frankly we were operating to a business model that really offered little chance of generating sustained profitability except in times of favourable exchange rates. That had to change. The challenges we faced were both strategic and tactical requiring attention to all elements of the business. This plan has the full backing and support of the Ford management team. Joe and I will be working together with the Jaguar team to implement the plan."

Jim Padilla, Chief Operating Officer, Ford Motor Company and Chairman, Automotive Operations said, "Jaguar is one of the most respected, valued and desired line of cars in the world. The Ford Motor Company is committed to Jaguar and its customers, and we will continue to support this incredible brand and management team. The actions we are taking today, while difficult, are absolutely necessary to set Jaguar back on the right path and ensure a strong and sustainable business for the future."

The Jaguar brand and Ford Motor Company withdraw from Formula One at the end of 2004 and Ford puts its Formula One businesses up for sale:

Joe Greenwell said, "Jaguar's presence in Formula One has been a valuable marketing and brand awareness platform particularly outside our main markets of the US and the UK. However it was our collective view that it is time for Jaguar Cars to focus 100% on our core business."

After a thorough review over many months Ford Motor Company has decided it can no longer make a compelling business case for any of its brands to compete in Formula One. Having reached this decision our focus has turned to securing the best future for our Formula One businesses and our employees in these businesses going forward. We are therefore putting our Formula One businesses up for sale.

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