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Jag and LR Employees Support TATA

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Ford Labor Representatives Support
Tata's Bid for Jaguar, Land Rover


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By STEPHEN POWER
November 21, 2007 3:27 p.m.




Labor representatives at Ford Motor Co.'s Jaguar and Land Rover units have moved to support a bid by India's Tata Motors Ltd. to acquire the brands, should Ford decide to sell them, according to people familiar with the matter.

During a meeting Wednesday at Land Rover's factory in Solihull, England, about 60 senior shop stewards who represent workers at both brands voted in favor of a resolution supporting Tata's bid, should Ford follow through on its stated intention of selling the brands.

The union leaders' move isn't binding on Ford. But it could give a small political boost to Tata's pursuit of the brands. While labor unions in Britain are not as politically powerful as they once were, they continue to command influence with the country's governing Labor party, which is eager to stem the loss of manufacturing jobs. Jaguar and Land Rover together employ around 16,000 people directly in the United Kingdom, and labor leaders there are demanding that a sale of the brands not lead to job losses or factory closures.

The labor representatives' vote occurred a day after meetings in London between top officials from Unite -- the U.K.'s largest manufacturing union -- and representatives of Tata and two rival bidders: One Equity Partners, a unit of J.P. Morgan Chase & Co., and fellow Indian auto maker Mahindra & Mahindra Ltd.

The union continues to officially oppose a sale of Jaguar and Land Rover. But representatives concluded after the meetings that Tata is "the only company" among the final bidders "with enough money, clout and experience in our industry" to successfully manage the brands, according to a labor official who attended the meetings. Tata Motors' parent, the Tata Group, already owns former British stalwarts Tetley Tea and steel company Corus Group PLC.

The person who attended Tuesday's meetings with the bidders added that Ravi Kant, managing director of Tata Motors, gave the group assurances that the company had no intention of outsourcing certain U.K.-based jobs to India, and would allow both brands' top executives to stay on, should they wish to do so.

"They convinced us they're willing to spend the money necessary to bring Jaguar into profitability," the person said. "We sat back and said 'they were very impressive.'"

Spokespersons for Unite declined to comment.

Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000. The company has put them up for sale as it seeks to re-focus on its core Ford brand and its troubled North American business. Ford posted losses of $12.6 billion last year, and has seen its sales tumble this year amid a broader downturn in auto sales.

With Jaguar and Land Rover burdened by unfavorable exchange rates, a relatively high cost base in the U.K. and potentially expensive new environmental regulations, some analysts are skeptical of Ford's ability to command a hefty price for them. Merrill Lynch & Co. estimated earlier this year that the combined sale of the Jaguar and Land Rover brands would raise $1.3 billion to $1.5 billion. The person who attended Tuesday's meetings with the bidders said that none specified how much they were prepared to pay for the brands.

In vying for two of Britain's most storied automotive icons, Tata and Mahindra are hoping to gain access to the know-how and sales networks they would need to expand their presence abroad, as well as to upgrade the vehicles they offer in their booming home market.

In Tata's case, the acquisition also would fit its plans to become one of India's first global brands and diversify its businesses overseas. The steel-to-software Tata Group is one of India's largest and most respected conglomerates. Its 96 companies employ about 200,000 people and have annual sales of more than $20 billion.

In an interview with The Wall Street Journal in September, Tata's Mr. Kant declined to comment on the company's bid for Land Rover and Jaguar, but said that Tata aims to grow "both organically and inorganically outside of India."

Write to Stephen Power at stephen.power@wsj.com
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