Phase Four: 1986-1994 – The Legend Stumbles. As Jaguar’s woes multiply, Ford senses its moment and strikes.
Jaguar’s rehabilitation was dubbed the Egan Miracle by a UK press charmed by a compelling narrative and the Lancastrian’s charisma. But by 1989, Sir John’s halo had slipped and the knives were out.
The clamour swiftly reached a pitch where few believed he could hold out, and with Jaguar’s financial prospects in retreat, journalists speculated over who would blink first once the Thatcher Government waived its controlling ‘Golden Share’. The cash-rich and acquisitive US automotive multinationals, smelling blood, began circling.
Most damaging was the effect of Sterling’s strength against the Dollar. Previously around $12k more expensive than a rival Cadillac, Jaguars now cost $20k more. Faced with a car less well liked than its predecessor, yet costing substantially more, the situation didn’t look good. Speaking in an interview with Performance Car in 1989, he stated; “Running this company at $1.20 [to the pound] is very easy, whereas running it at $1.80 is immensely difficult… a great mountain of money is lost on currency each year… in the region of £60m for the last two or three years”
Egan also faced XJ40 quality issues head on, declaring; “We discovered that it was much more difficult than we thought and we did take a backward step with the first year or so. It wasn’t because the car wasn’t very robust – it was. The problem was the creation of manufacturing processes to equal the design intent. I suppose it’s natural to say we were inexperienced”. As usual, Egan talked a good fight, but beneath the veneer appeared a man growing somewhat weary of the struggle, adding; “I’ve often wondered what I’ve done to deserve all this… Every damn year has been very, very difficult”. Nevertheless, he reiterated his belief that Jaguar could maintain its independence, saying; “we’ve been approached over the years by most of the world’s car industry. And we explain why we want to remain independent and I must say a lot of very serious people have respected that. I also know we’re been offered tremendous help by some of the people we thought as competitors.”
Facing the prospect of a corporate raider taking control, Jim Randle told author John Underwood, “I would feel that in some way I had failed… I feel a tremendous emotional interest in keeping the company independent.” Hampering matters was the fact that not only were Jaguar’s shareholders mostly speculators with little long-term loyalty, the UK Government were of an entirely non-interventionist bent. The newly deregulated market must prevail, being the DTI mantra.
Talks with General Motors were opened over an equity stake that would retain some autonomy and a jointly developed medium-sized car. Of all interested parties however, Ford was making the most noise. The summer of 1989 saw the sudden termination of the government’s Golden Share and this development, coupled with September’s half year profit collapse of £21m, prompted the Blue Oval’s offer to swallow the company entirely.
With GM appearing to prevaricate, Egan and his board viewed Ford’s offer as hostile, urging shareholders to reject the deal, but once it became apparent there was little alternative, he relented. Ford, in their eagerness to carry the day, paid over five-times Jaguar’s market value. With the deal done, Egan departed – the brief era of independence and hope was over.
Sir John Egan’s skills lay more with people and processes rather than design or engineering. However, his contribution to Jaguar’s survival was real and unquestionable. Without his efforts, Jaguar simply could not have been revived. During the boom years of the mid-1980’s, Egan and his finance director, John Edwardes wisely invested Jaguar’s profits; the policy of forward-buying US currency providing a vital buffer against the volatility of the money markets. It also provided them with massive profits, bolstering the business and his reputation for fiscal prudence.
But global economics and government policy conspired against him at the worst possible time. Had he found a safe berth before the government left him out to dry, things might have ended differently. However, it must also be argued that he never truly got a grip on manufacturing and failed to modernise Jaguar’s archaic Browns Lane plant.
Meanwhile, the close of 1990 saw another another giant leave the stage. Margaret Thatcher, the UK Prime Minister who presided over the economic conditions for Jaguar’s success, was ousted by elements within the Tory party fed up with her arrogance and dogmatism. As the the cameras flashed and the tearful iron lady clambered into the official car that would carry her into the history books, it was perhaps appropriate that her chariot of exile should be an XJ40. It was after all, ‘Maggie’s motor‘…
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