February 22nd 2018
Darkest Hour, the name given to the movie about Churchill’s leadership of a nation facing an existential threat, could also be the title of a story about Jaguar. In the place of Sir Winston Churchill, the starring role would belong to Sir John Egan - and with Sir John now confirmed as a guest of honour at this June’s XK70 Jaguar Festival, it’s worth reflecting how he saved the marque from extinction. Here are eight good reasons why Sir John so richly deserves his knighthood.
1) Egan inherited a basket case
When John Egan started as chief executive of Jaguar in April 1980 the company was part of BL Cars, where MG and Triumph had been swallowed whole and rudely excreted. Jaguar, which made a loss of £50 million on sales of £150 million in 1980, was in very real danger of being dumped the same way.
2) Egan exorcised non-believers
The first day John Egan reported for duty at the body and paint plant in Castle Bromwich, he witnessed one of Jaguar’s biggest problems for himself. The workers, far from working, were standing around idly on another of their frequent strikes. Speaking to union shop stewards and shop floor employees, Egan spelled-out a stark truth: Jaguar faced a life-or-death struggle which there was no chance of winning unless workers and managers pulled together. Gradually Egan won the trust of the workforce, reducing the number of days lost to strikes, and by offering voluntary redundancy payments for a limited period only he exorcised the company of troublemaking non-believers.
3) Egan faced up to the paint-shop of horrors
Rival Mercedes-Benz was making almost five times as many cars per employee as Jaguar in 1980 and this couldn’t entirely be blamed on Jaguar’s strikes. The paint-shop BL had added at the Castle Bromwich plant was, in fact, a little shop of horrors. BL’s low-cost TPA (Thermo-Plastic Acrylic) paint process could only colour cars red, yellow, or white, and resulted in such a poor finish that every car body arriving at the Browns Lane factory had to be repainted. Egan boldly halted production until, for the first time, this problem was properly addressed.
4) Egan slayed the Prince of Darkness
Industry insiders jokingly referred to Lucas, the maker of many of BL’s electrical components, as the Prince of Darkness, because if your car headlights depended on Lucas you had to get home before dark. This was funny only in the manner of gallows humour: unacceptably high levels of mechanical failures, warranty claims and customer dissatisfaction put Jaguar in mortal danger. Analysis by Egan’s team showed that the majority of faults related to defects in suppliers’ components. At least one supplier’s business model appeared to be based on parts being short-lived so that it could make money by selling replacements over and over again. But by imposing financial penalties on suppliers for failure rates beyond specified levels, Egan’s Jaguar effected a culture change. Egan also instigated a retrofit of troublesome components on cars built before the 1982 model year, an expensive step but one which brought Jaguar’s reputation a little further back from the brink. The reliability of the XJ6 would improve so much that eventually the model entered the top five in the JD Power customer-satisfaction index.
5) Egan wooed the Americans
Egan calculated that half of the people in the world who could afford to buy a Jaguar lived in the United States. In 1981 he suggested North American dealers be brought to the UK, treated like royalty, and shown how, by making big improvements in product quality and workforce relations, Jaguar was here to stay. What Egan hadn’t told his guests was that this was once more an hour of need - which is why he then tapped into the go-getting American attitude by persuading US dealers to agree to aim for a 50 percent sales increase the following year, from 6,000 to 9,000 units. Now Egan had the independently-verified forecast of 22,000 sales worldwide that the BL board insisted on seeing before agreeing Jaguar should be allowed to continue. In fact Jaguar sold 9,700 cars in the US in ’82 and 22,500 worldwide.
6) Egan believed in ‘win on Sunday, sell on Monday’
In rebuilding the Jaguar brand in the 1980s, Egan remembered how Sir William Lyons had first built the company’s international reputation three decades earlier by repeatedly winning the Le Mans 24 Hours race. Achieving this just once would be a tough and costly challenge when up against the well-resourced racing experts at Porsche - but with Tom Walkinshaw Racing running the racing programme and part-funding from the Silk Cut tobacco brand, Jaguar succeeded in winning Le Mans in 1988, then again in 1990. Jaguar also won eight out of ten races in the 1987 World Sports Car Championship. The brand’s image was back on track.
7) Egan replaced the aged XK
Jaguar’s XK engine, though a standard-setter at the time of its introduction in 1948 and greatly improved over time, was undeniably long in the tooth when Egan arrived at the firm. So too was the XJ6 saloon, which was launched in 1968. A full-size clay styling model for an XJ6 replacement had first been created in 1973, but it took Egan’s leadership and a £100m loan from Margaret Thatcher’s government to fulfil plans for a new car and engine. The XJ6 replacement, known internally as the XJ40 and first shown in October 1986, and its all-new AJ6 aluminium six-cylinder engine, brought Jaguar up to date.
8) Egan steered a loss-maker to profit
Jaguar returned to profit in September 1981 and, under Egan’s guardianship, never made a loss again. Helped by the dollar/sterling exchange rate falling from $2 to $1.50, Jaguar went from losing £50m in 1980 to confidently forecasting a profit of £50m for ’83 and £100m for ’84. By ’86, the year Egan was knighted, Jaguar was making £120m profit annually, had £150m of cash in the bank, and had secured borrowing facilities to access a further £250m.