How 'streamlining' saved Jaguar Cars
If John Egan does nothing more as head of Jaguar Cars Ltd., he's earned his pay.
Now celebrating its 60th year as a motorcar manufacturer, the world-class Jaguar seemed doomed only two years ago. Too many workers were building too few cars, a situation that has long been endemic with the tottering British automobile industry.
Too, Jaguar was stuck with a growing image as a car with nagging and continuing problems - expensive to maintain, often unreliable, and a car that can spend as much time in the repair stall as on the road. At the same time, however, no one disputed the magnificent beauty of the vehicle itself.
In April 1980, Mr. Egan took over the driver's seat, shifted gears, and the company was on its way.
The crisp order from Sir Michael Edwardes, chairman of BL Ltd. (formerly British Leyland), of which Jaguar is a part, was to get the company off its treadmill - or it would be shut down. Thousands of jobs were at stake. Egan decided to slash the work force, demand higher productivity, and improve quality. Most of the workers agreed to cooperate, including the shop stewards, even though it meant fewer jobs.
The work force was cut 30 percent while, at the same time, production went up. In 1980, for example, the company had 10,500 workers, who built 14,000 cars. ''There were too many of everything,'' Egan now sighs.
A year later, in sharp contrast, the company built 23,000 cars with 7,200 workers.
At its low point the company was producing 3.3 cars per worker per year.
While Daimler-Benz AG of West Germany is figured to spend about 300 worker hours to put together a car, Jaguar was taking 700, Egan says. ''Now, it's about 350,'' he adds.
''Think small, think lean,'' the Jaguar chief asserts.
To boost quality, the company set up ''quality circles,'' made famous by the Japanese and now being introduced in Detroit, in which the workers themselves suggest ways to improve the quality of the final product.
''Now,'' Egan quips, ''we're getting too many ideas from the quality circles.''
As an example, owners used to chip the paint around the trunk when they slammed the lid. One worker suggested a small rubber bumper on the lid. ''Now there is no more chipped paint,'' Egan says. About 10 percent of the workers are involved in 60 quality circles.
''We hope to be able to delegate the running of the company to the quality circles, but not with the current type of management,'' the chairman says.
The Jaguar boss also put its suppliers on notice that shoddy components would be turned back.
To upgrade components, Jaguar has even moved into some of the supplier companies and shown them how to improve quality and operations.
Jaguar now has about 500 suppliers - ''which is far too many,'' Egan says. When he took over the company, 92 percent of a Jaguar was British-made; now it is 82 percent, and the figure will be cut much more.
''We're moving toward US and West German suppliers instead of British,'' Egan says.
''The US is a very good place for us to buy components,'' he adds, partly because of the size of the Jaguar market in the United States. More than 40 percent of all Jaguars are sold in the US, by far the company's biggest export market.
Now Egan is after the dealers as well.
''Some dealers don't meet our standards,'' he hammers, ''and we can't afford bad dealers.''
Last April, he reports, the company fired 10 percent of its British dealers, and it is now taking a hard look at its US dealership organization as well. Egan figures that at least one-third of the US dealers are not doing their job.
''You can't fiddle around with a customer,'' he declares. ''For $30,000 a customer expects a good car.''
The company was born Sept. 4, 1922, when William Lyons - Sir William since 1956 - turned 21 and could legally sign the papers that made the embryonic Swallow Sidecar Company a viable concern. From that point on, he guided the company - first as a manufacturer of motorcycle sidecars, then of special bodies for an array of other makers' cars, and finally, in 1931, to the first entire car built to his own specifications, the S.S.I.
During the five-year period before Egan took over, Jaguar had all but lost its identity within the corporate structure of BL Ltd. The name, Jaguar Cars Ltd., had, in fact, ceased to exist officially.
Like the defunct MG, it would have been a pity to lose the car.
Output is now running at 23,000 vehicles a year, but ''our target is around 50,000 in a few years,'' Egan says.
If the present trend continues, it looks as if it may stay on target.
At the same time, Jaguar Cars Ltd. is keeping on course with its future product plans, including a brand-new engine. Egan describes the plans as ''the most ambitious in the history of the company,'' saying that ''every bit of quality and reliability experience we have accrued over the past two years will be incorporated into our new products.''
US Jaguar sales in 1980 were 3,029, says Graham Whitehead, long-time head of BL in the US. In 1981, sales rose to 4,695 - a 50 percent increase; for 1982, the estimate is 9,000 - three times the number of cars sold only two years ago.
While the numbers are minuscule to most car builders in the world, to Jaguar Cars Ltd. they're huge indeed.
Already there is a five-month waiting list for the V-12 in Britain; and a lengthy waiting list in the US as well.
The British carmaker, in fact, has phased out all its other lines in the US, relying entirely on Jaguar - and it's putting money in the bank.