Inching a step closer to bagging top British automobile brands Jaguar and Land Rover, Indian car maker Tata Motors Ltd has agreed to all the demands of the trade unions after a meeting on Thursday, said a spokesperson for the unions of the overseas firms.
The unions had demanded that Tata Motors guarantee the unspecified pension liabilities of both the companies, cut no jobs and stick to the existing business plan that current owner Ford Motor Co. drew up for the two brands.
Tata has been in negotiations for months to buy the brands from Ford, which put them on the block last year to tide over its own record losses in 2006.
“With the exception of a different owner, there’s not much change,” said Roger Maddison, national officer for Unite, the trade union representing the employees of the two brands. “Everything went smoothly and they agreed to all our demands.” He said Tata and Ford are likely to sign a deal in early March.
Tata Motors spokesperson Debasis Ray declined to comment and a Ford spokesperson wasn’t immediately available for comment.
Ford hasn’t disclosed the pension liabilities at Land Rover and Jaguar. The British Midlands-based operations of both firms have at least 19,000 employees in five locations, Maddison said.
After a long drawn-out bidding process which involved private equity firms and India’s largest utility vehicle maker Mahindra and Mahindra Ltd, Ford shortlisted Tata Motors last month for further negotiations. India’s largest auto maker by revenues, which is also introducing the world’s cheapest car, the Nano, later this year, believes it can improve its global footprint with the acquisition of these brands. Not only will its product portfolio span from a price point of $2,500 to $170,000, its distribution network will grow more than four times to 2,700 outlets in 138 countries.
Ford bought Jaguar in 1989 for $2.5 billion and Land Rover in 2000 for $2.73 billion. While Land Rover returned to profitability in the second quarter of 2007, Jaguar has been making losses for the past five years and Ford assumed an impairment of $1.6 billion in 2005 and $1.3 billion in 2004 for the two firms, according to its annual report.
While Jaguar posted a 19% drop in sales in 2007, Land Rover sales rose 18%. Ford said recently that both brands were “solidly profitable” for all of 2007.
(Bill Koenig of Bloomberg contributed to this story.)