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September 24, 2009

UK: Union claims JLR reneged on pension deal

The key union representing Jaguar Land Rover (JLR) workers has accused the Tata Motors-owned automaker of not upholding an earlier agreement over the final salary pension scheme in its new business plan announced on Thursday and blamed management for the company's present financial state.

The key union representing Jaguar Land Rover (JLR) workers has accused the Tata Motors-owned automaker of not upholding an earlier agreement over the final salary pension scheme in its new business plan announced on Thursday and blamed management for the company’s present financial state.

JLR said it had taken “aggressive actions over the past year” including reducing production by over 100,000 units, employment by 2,500 workers plus freezing pay and cancelling bonuses.

It will merge its two West Midlands assembly plants into one by 2014 and further reduce costs through pension restructuring, lower employment costs for new recruits and a focus on IT and business simplification.

Unite union national secretary for the automotive sector, Dave Osborne said: “Earlier this year, this company and our union agreed a framework agreement intended to support JLR through this tough economic period. Our members said then that JLR could not be trusted to uphold that agreement. Today this has proven to be true.

“While Unite welcomes moves to ‘green’ the JLR product range, [the union] is deeply concerned that an agreement struck barely six months ago will not now be upheld and that the company is seeking to close the final salary pension scheme.”

Osborne added: “In April our members agreed to changes to terms and conditions of their employment in order to give the company financial security but, like Oliver Twist, they are coming back for more. It appears that the company is making our members pay for their failure to secure government funding.

“We recognise the difficult trading environment for JLR, which is why Unite and its members have done more to help JLR during this recession than we have with any other company. But while the company may say that the business cannot sustain further liabilities, the truth is by far the biggest liability is the company’s leadership team.

“Some of the problems the company faces today exist as a result of past management failures. These failures were at the hands of the same team who today want our members to lose their pensions. Well, Unite’s members will not be paying for management’s incompetence and we will not stand by while those responsible continue to wreck havoc on this business.”

JLR said its new plan was designed to increase its global competitiveness significantly, drive growth and sustained profitability, and respond to the challenges of climate change.

“The plan includes decisive actions to see through the next 12-18 months as markets recover and positions the company to grow and prosper in the future. It includes a new and expanded range of products and environmental technology, delivered through streamlined and competitive costs and a new manufacturing strategy,” the firm said in a statement.

Tata chairman Ratan Tata hired KPMG International and Roland Berger Strategy Consultants to advise on cost-cutting and last month said JLR needed “major cost reductions” after the luxury car and SUV maker’s losses dragged parent Tata Motors’ into loss this year.

However, it added that was “not enough to offset the full magnitude of the downturn and the company swung from profit in 2007 to significant losses over the past 12 months”.

Unite said it would meet with “colleague unions” as soon as possible to consider the Jaguar proposals in more detail.

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