Tata Motors-owned Jaguar Land Rover intends to grow its team of engineers and designers to over 5,500, up from approximately 5,000, by the end of this fiscal. This workforce will support the company’s product development programme as part of a strategy that involves expanding its global footprint into select locations.
New engine factory
JLR has also kicked off work on a new engine factory in South Staffordshire, UK. It has recently recruited approximately 1,000 new employees at each of its Halewood and Solihull sites and added a shift at each site as well. In addition, it will create 800 new jobs in Solihull to support the introduction of new model programmes.
These details have been spelt out in a document filed with the US Securities and Exchange Commission.
As a producer of ‘distinctive, premium products’, JLR believes it is well positioned to increase its revenues in emerging affluent countries with growing sales potential. It has outlined three specific aspects to its strategy of geographic expansion:
One, JLR aims to increase its marketing and dealer network in emerging markets, be it India or China. Two, it aims to establish new manufacturing facilities, assembly points and suppliers in select markets. For instance, Freelander and XF vehicles have been assembled in Tata Motors’ Pune facility since April 2011 and January 2013. JLR also sells vehicle kits for assembly in Kenya, Malaysia, Turkey and Pakistan.
Three, JLR aims to leverage its relationship with Tata Motors and the synergies that can be achieved in research and product development, supply sourcing, manufacturing and assembly.
The company has also earmarked a capital spend of £2.75 billion in fiscal 2014. This will be a substantial jump from this year’s projected sum of £2 bn, of which £1.1 bn has already been spent for the six months ended September 30, 2012.
JLR has reiterated its intent to invest in new products, technologies and capacity to meet customer demand in the premium automotive and SUV segments. It expects approximately 50 per cent of its capital spending to comprise R&D costs and the balance on facilities, tools and equipment.
China footprint
JLR will continue to accelerate capital spending to develop ‘exciting new products’ as well as invest in new powertrains and technologies. It also proposes to grow its footprint in China and explore opportunities in other markets.
The company will target funding most of its capital spending out of operating cash flow. Post-2014 when it will have spent the proposed £2.75 billion, free cash flow could be negative. JLR expects its strong balance sheet and liquidity, as well as ‘proven access to funding from capital markets and banks’, to support its investment plans.