In a bid to consolidate its UK operations, Tata Motors, is planning to merge two of its three Jaguar Land Rover (JLR) plants in the Midlands over the next five years.

The move would not affect any jobs, JLR says, but create 800 new jobs at the Halewood plant producing the new baby Range Rover model.

JLR said yesterday that it will merge its two West Midlands factories, one at Castle Bromwich in Birmingham, which makes Jaguars and the other in Solihull that makes Range Rovers, into one by 2014.

Production and work will be transferred in a phased manner from 2010 until 2014 between the sites, which are located only eight miles apart.

The carmaker said that it has not yet decided which of the two plants will be merged,  but will take a decision by the first half of 2010 after reviewing the costs, productivity and talks with the union.

The merger would lead to the creation of up to 800 extra jobs at its Halewood plant in Liverpool, which will be producing the low-carbon and more efficient car, the 'baby Land Rover.'

Last month, Tata said it no longer needed UK guarantees on loans for its JLR unit as it had secured private funding and was close to finding a commercial backer for a European Investment Bank (EIB) loan.
 
The company said that it will close the employees' final salary pension to new workers from April and restructure the pension scheme for existing members. It will save costs from the back office operations and pay lower wages to new employees.

JLR said that it would pay new workers 20 per cent less then what is given to current employees. The company contends that its employment costs are high and the terms and conditions given by JLR to its employees are generous even by the UK automotive industry standards.

More than 14,000 workers are employed at JLR's five British sites, which include three manufacturing plants.

But union leaders were angry and an official for the GMG - Britain's General Union said, ''We will be opposing everything we have heard so far. We will fight the company on this, of that I have no doubt."

UK Business Secretary Lord Mandelson said he welcomed "the commitment that Tata is showing in the highly-skilled workforce employed by Jaguar Land Rover in the West Midlands and Merseyside, as well as the top-class models it produces."
 
''I know that trading conditions are difficult for the car industry as a whole. It is inevitable that we will see further re-structuring across the industry.'' he said and added, "There is global over-capacity and car manufacturers recognise that they have to take some of this capacity out and cut back on their costs. There are opportunities and that's why we must continue to innovate and lead the way,'' he added.

With the onset of the recession last year, the UK car industry has been the worst hit in the country's manufacturing sector and JLR, which employs around 14,500 people in the UK, was forced to cut approximately 2,500 jobs, freeze pay, cancel bonuses, cut production by 100,000 units and reduce employees working hours.

In July, JLR reported a combined pre-tax loss was £673.4 million in 2008, compared to a combined pre-tax profit of £660.5 million in 2007. Jaguar's turnover plunged to £2,104.9 million compared to £4,149 million in 2007, while Land Rover turnover dropped to £4,557.1 million, against £5,460.6 million in 2007. (See: As the UK government fiddles, JLR swings to £673.4 million loss)

Land Rover sales in 2008 fell to 186,500 vehicles from 226,000 in 2007, while sales of Jaguars dipped to 60,500 cars from 65,500 over the same period.

Tata Motors has so far pumped more than £1 billion into JLR since the beginning of the global financial crisis, whose survival has been threatened by banks in the UK shying away from lending money for its day-to-day operations, despite the UK government having pumped billions of pounds into almost all major banks.
 

Although having a multi-year cost cutting agreement with workers in place, after losing over $1 billion last year, Tata Motors had roped in consulting firms KPMG and German firm Roland Berger to solve Jaguar Land Rover's problems. (See: Tata hires KPMG, Roland Berger to help solve JLR problem)

The key mandate given to these firms was to come up with ideas and new proposals which will look at reducing costs, breakeven volumes, and also increasing the efficiency of JLR's overall operations.

It was then decided that JLR had to consolidate its operations, come up with new models as well as invest in green technology vehicles, if both the iconic brands have to stay afloat.

JLR'S green plan
In March 2009, Land Rover's project to make green cars on a budget of £400 million received a boost with the UK government granting £27 million to build an all new mini-4x4 'green' car, based on the Land Rover's LRX Concept. (See: Land Rover gets £27-million grant to develop green vehicles) 

The company announced yesterday that a production version of its LRX concept car, the baby Land Rover will be built at the multi award-winning plant in Halewood.  The new car will be the smallest, lightest and most fuel efficient vehicle the company has ever produced and will roll out in 2011.

Designed and engineered at the at Land Rover's state of the art Gaydon facility, the green technology car is based on the popular LRX concept first unveiled at the 2008 Detroit Motor Show.

Jaguar has pioneered the use of light weight aluminium with the result the XJ and XK are the lightest in their class, with the XJ being voted the greenest luxury vehicle for two years running.