In the late 1980s, Ford strategists took a good look at the booming luxury-car market and realized they needed a global luxury brand to rival BMW and Mercedes-Benz. So they went shopping.
First on the list was Alfa Romeo. But Ford lost Alfa Romeo when Fiat intervened, with a little help from the Italian government. Fiat didn't really want Alfa, but didn't want Ford getting it either.
Next came Saab and Jaguar. Ford was negotiating to buy both luxury-car companies at the same time. But Harold "Red" Poling, then Ford chairman, decided Ford couldn't manage two acquisitions at once, so Ford backed out of the Saab talks.
That left Ford to pay $2.5 billion for Jaguar, a legendary brand that had limped along through the 1980s as an independent after being mismanaged nearly to extinction by British Leyland. Jaguar had only two cars, and nothing in development but an ill-conceived sports car called F-type.
And Jaguar was being wooed by other manufacturers at the time, most notably General Motors. John Egan, the Jaguar chairman who engineered the sale of Jaguar to Ford, said Jaguer and GM had been working together on plans for a joint car at the time Ford started buying shares.
"Ford's initial aggressive takeover was premature in that we were talking to other companies," said Egan. "When Ford contacted us we realized the game was up. We wanted to be sure we got a good price for shareholders. We came to the conclusion that of all companies interested, Ford was best."
With its antiquated factory and shoddy quality, it was something of a miracle Jaguar had survived the decade. That it did was a tribute to the power of the Jaguar name and the memory of the great cars from its past.
"Even though the company wasn't in good shape, the brand was still in good shape," said Bruce Blythe, then Ford's chief European strategist and co-negotiator of the Jaguar deal.
Had Ford planners realized how bad things were at Jaguar the company, they might have had second thoughts about taking on Jaguar the brand.
"It wasn't that Jaguar's quality was bad, it was horrendous," said Bill Hayden, the tough east London manufacturing man Ford sent in as first Jaguar chairman in the new era.
"It was a terrible organization making terrible cars," he added.
A matter of faith
Hayden had built a fearsome reputation at Ford as a very demanding taskmaster managing Ford's European manufacturing operations. His first job was to make Jaguar people believe Ford could help them save themselves.
"My concern was that, with the exception of a few people, most of the Jaguar people - their belief about Ford Motor Co. was pretty poor," said Hayden.
"Second, they didn't really seem to understand what a mess they were in. They seemed to think just being Jaguar, somehow they would survive. Somehow I had to get their attention."
Hayden got their attention by making a comment that became a legend around Jaguar's base in Coventry, England. Hayden said the only factory he had ever seen that was worse than Browns Lane was the Gorky car plant in the old Soviet Union. At Gorky, Hayden had seen workers actually applying paint over bird crap deposited on the roofs of cars by pigeons flying around inside the plant. The Gorky comment hurt workers badly, but it also woke them up.
Hayden realized there were some good people within Jaguar willing to help turn the company around. Among them were engineers Trevor Crisp and David Szczupak, manufacturing boss Mike Beasley and stylist Geoff Lawson.
Lawson quickly developed a close friendship with William Clay Ford Sr., father of William Clay Ford Jr., Ford's current chairman. Ford, who had driven Jaguars since he was in college, acted as a protector for Jaguar in Dearborn.
"Bill Ford (senior) was an absolute brick," said Hayden.
Hayden was followed in the Jaguar chairman's job by another veteran British Ford executive, Nick Scheele, who had come up through the purchasing organization and done tours in Europe, the USA and Mexico.
Scheele arrived at Jaguar in 1992, when the automotive world was in the midst of a recession that had hit Jaguar particularly hard.
"The market drop-off in the 1991-1992 period was a major hit for Jaguar," said Scheele in a 1999 interview. "Volumes dropped from 49,000 in 1988 to 20,000 in 1992. And sterling went up against the dollar. The combination was just devastating to profits. By that stage it had become clear there were some problems with XJ40 that absolutely needed fixing. We had to tackle the quality problem and had to get some costs out of the business to survive. That delayed the third program.
"In hindsight," Scheele added, "that was great because had we tried to launch a third car line as soon as the acquisition had taken place, it could not have succeeded. Those were terrible, terrible years. We started losing money at the rate of more than $1 million a day. We were losing better than 25 to 30 percent on turnover. We were losing our shirt. The real issue was, could we ever get the thing turned around?"
A couple of key events occurred. Jaguar got approval for a new engine (Jaguar's first production V-8) and for the X300, the fifth generation of the flagship XJ sedan. If the car could be engineered for quality, it could win back some of the reputation Jaguar had lost during the dark years.
"We really bet the whole company on that sedan being a home run from day one," Scheele said. "Jim Padilla [loaned by Ford to Jaguar as director of engineering and manufacturing] pored over the X300 and worked with the engineers and manufacturing guys to make sure it was designed for quality, designed for manufacture. He had driven that together with Mike Beasley and [chief engineer] Clive Ennos."
During the 1990s, Scheele presided over a period of unprecedented growth at Jaguar. What had been a boutique British carmaker now took aim at BMW and Mercedes-Benz on the global luxury stage. In 1996, Jaguar replaced the ancient XJS with the XK8. Then Jaguar used Ford resources to produce S-type, built on the same rear-wheel-drive platform as Lincoln LS. In 1998, Jaguar opened its second plant - Castle Bromwich - to build the S-type.
Birth of a baby
The staff at Jaguar's Whitley Engineering Center then applied their skills to design a new small Jaguar called the X400, which became known as X-type. Ford turned its Escort plant at Halewood factory in Merseyside over to Jaguar for the new "baby Jaguar," which shared many components with the Ford Mondeo.
Just as the X-type was being launched, Ford CEO Jac Nasser made news around the world by creating Premier Automotive Group and putting ex-BMW executive Wolfgang Reitzle in charge. Included in the new group were Aston Martin, Jaguar, Lincoln and Volvo. Since then Ford added Land Rover and took Lincoln out.
As part of Premier, Jaguar set its sights on regaining the technology leadership it was famous for when the legendary E-types ruled the road in the 1960s. To emphasize that, Jaguar joined the Formula One racing circuit. Engineers at Whitley conceived the new XJ. It was launched this year, as an aluminum car with a monocoque body built borrowing techniques from the aerospace industry that had never been used in the auto industry.
The explosive growth under Ford's stewardship hasn't been entirely smooth for Jaguar, which lost $500 million in 2002 while trying to get the aluminum process right. An all-new _F-type sports car, conceived during Reitzle's tenure, was canceled. And Jaguar failed to spot the European trend toward diesel-powered cars that was sweeping Europe, losing sales to rivals such as BMW and Mercedes-Benz as a result.
But Jaguar has been completely transformed by Ford ownership. In the future there will be Jaguar station wagons and diesel-powered cars. Jaguar has moved from the bottom to near the top in quality.
After more than a decade of growing pains, Jaguar is now ready to consolidate its gains. In the end, the two companies have been right for each other. Ford had the foresight to let Jaguar be Jaguar, only a lot more so.