Like anyone suddenly confronted with the mainstream media’s take on a subject they’re fairly well-versed in, I’ve been somewhat bemused and irritated by some of the uninformed, crass and plain bizarre opinions I’ve read in papers and on the web, not that the regional newspapers who have been campaigning on the issue have got much wrong.

There’s a cornucopia of ill-informed comments after Robert Peston’s blog that are indicative of how keen people are to shoot their mouths off about things they know nothing about.

So, I thought I’d put the record straight as I see it because, well because this is my blog and I can.

Although I’ve read a lot about JLR being ‘troubled’, I don’t really think that’s the case. Since it was sold by Ford to Tata last year for a fairly pitiful £1.15bn, Jag has brought out the fantastic sports saloon XF, is in the process of quietly retiring the underwhelming X-Type, revamped the XK coupe and roadster and has a revamped XJ in the pipeline.

As a result of this strong product line-up, the Big Cat was one of the very few manufacturers to actually increase sales in the UK last year.

Land Rover, which has admittedly seen sales plummet by around 50 per cent in the UK over 2008, has the Freelander, Discovery, Range Rover and Rangey Sport and the hybrid LRX to come. Frankly, all of Land Rover’s models are the best in class. The company has a formidable line-up of models and is making significant strides towards greening its products.

The trouble that JLR appears to be in seems to be down to parent-company Tata’s unwillingness to commit cash to its prize acquisition.

Black Swan

Like most manufacturers, Jaguar Land Rover has been caught out by a Perfect Storm (or Black Swan event if you prefer your metaphors more melodramatic) of rising fuel prices, environmental and political pressure to reduce CO2 emissions, wildly fluctuating exchange rates and, of course, what’s being called the worst economic crisis since the ’30s. As a premium manufacturer JLR is right at the sharp end of the car industry’s woes.

As a result JLR is widely thought to be seeking around £1bn from the British government, on top of an injection of around £600m from parent company Tata. Some commentators have suggested that such a significant injection of cash amounts to a de facto nationalisation of the company, as that’s not far off the asking price Tata paid for JLR twelve months ago, since when the value of the company has likely tumbled. Some have even advocated this idea. (Curiously Wales Online has chosen not to publish my comment explaining why this won’t happen.)

I don’t think there’s much likelihood of the government not providing what JLR insists is purely and squarely a loan (you can read a fairly vague but likely indication in one of Mandelson’s boring speeches here), although there are likely to be some stiff conditions to prevent other manufacturers going cap-in-hand to business secretary Peter Mandelson.

I don’t have a lot of time for Mandelson, he was without doubt the most unpleasant man I ever interviewed, and I found his re-re-entry in the government astonishing given his record – but he’s no chump.

Mandy will stump up the cash for JLR, but there are some important questions to be asked first regarding why a multi-media conglomerate like Tata can’t find any cash to plough into its most recent significant acquisition, especially at a time when Tata has decided that the time is right to enter Formula One as a sponsor, a notorious money pit for manufacturers.

Lessons from MG Rover

Unlike 2005, when the government allowed MG Rover to go under in a set of circumstances that can only be described as murky, the government has woken up to the reality than JLR is one of the few remaining bastions of British manufacturing and design ingenuity and vital R&D – and therefore worth preserving.

The fallout of Rover’s collapse continues to pose problems in the West Midlands relating to its former staff – most of whom are highly-skilled – and their search for skilled employment. And it should be remembered that when a car manufacturer goes bust it takes out a whole supply chain and raft of dealerships too.

In the current economic conditions the government has often chosen to intervene in such situations; saving jobs, skills and taxes, so I don’t believe a fate similar to Rover’s is likely to befall JLR.

Nor do I think the government has any intention of taking control of JLR. Seeing Jag and Landie through the 12-18 months should make economic sense. The government gets its money back and JLR’s product line-up starts to sell strongly on a global scale. At that point, assuming the global economy has picked up, Tata will need to plough billions into JLR in order to maintain the company’s competitive advantage. The government should get in as quickly as possible, and get out again as soon as conditions allow.

Why we should not bail out JLR

So we’re all agreed – the government saves two British institutions and everyone’s happy. Even the Tories have absurdly tried to align themselves with the public mood, despite vociferously decrying the government’s decision to save Northern Rock and Bradford & Bingley.

But if Ford could not make a success of Jaguar over the last 20 years and after investing billions of dollars, runs a popular argument, how can Tata make anything of it?

And haven’t we been through all of this before, with BMC and British Leyland? The short answer is no –
the circumstances behind this crisis are a world apart and if the government stumps up the cash it won’t get its hands dirty.

Another train of thought goes that the government will set a precedent of bailing out struggling firms if it provides the cash for JLR, a concern Lib Dem leader Nick Clegg has voiced. While that may be true, a loan for JLR is very different from bailing out Woolies, for example.

Without putting too fine a point on it JLR has a strong product and its workforce highly-skilled on a global level, while the decline of the UK’s car industry would likely be a final nail in the coffin for British manufacturing and a big blow to R&D work in the UK. JLR says it spends £400m on R&D annually.

The third objection I’ve seen is that instead of a loan for JLR the UK should plough money into green technology, a pretty woolly argument that ignores the fact that car manufacturers are best-placed to develop such technology and already spend billions on R&D in this area. Throw the car-makers on the scrap-heap and you wave goodbye to all of that shared and concentrated knowledge.

The JLR loan does have its pitfalls: an extended recession will see off a good many otherwise-healthy manufacturers. Fiat boss Sergio Marchionne recently predicted a massively-consolidated and contracted car industry in the hands on half a dozen mega-companies within five years’ time – and high-end manufacturers are likely to feel the pinch most. If that happens JLR may struggle, government loans or not.

Further, there’s absolutely nothing to prevent Tata shifting production to India, even after a £1bn government loan. Indeed, the threat may be implicit that if Mandelson does not stump up the cash Tata will simply asset-strip the company and lay off all workers.

Lastly, the rest of the UK’s car industry will be watching closely. If parent-company GM, itself receiving billions from the US government in a last-gasp bailout, goes under UK manufacturer Vauxhall will be left with no choice but to go cap-in-hand to Mandelson. Add in Volkswagen-owned Bentley, BMW-owned Rolls-Royce and Mini, Proton-owned Lotus and privately-owned Aston Martin as ‘British’ brands and the JLR precedent may start to look worrying.

All of that ignores the fact that Toyota, Nissan and Honda all design and build cars in the UK too. If Indian-owned JLR, US-owned Vauxhall, German-owned Bentley, Rolls and Mini, Malaysian-owned Lotus and Middle-Eastern sheik-owned Aston get cash, why not them?

It’s a tricky conundrum that’s based on the supposed British-ness of foreign-owned manufacturers, despite the fact that the likes of Vauxhall hasn’t been in British hands for nearly 100 years and the likes of the Toyota Avensis is British-designed and British-built.

But more than that it begs again the question as to exactly why Tata is unable to find the money itself. Might the Indian conglomerate simply to prefer to use government-backed loans at cheaper rates than hard-to-come-by commercial loans from banks?

Why we should bail out JLR

There’s no meaningful catch-all answer to those questions, and Mandelson must know it. But he must also know that, despite the potential ramifications, he must not allow JLR to go to the wall. The feelgood factor of saving a company that a suddenly-nostalgic public is swinging behind will make for a rare ray of light amid the financial gloom. Not to mention key constituencies in the Midlands that Labour will need to win at the next election.

But most of all, stripped of the hysteria, the headline-grabbing campaigns and the false nostalgia is the fact that saving JLR makes good financial sense. For the devastation a ravaged manufacturing base can bring Mandelson must only look to the Welsh Valleys, Midlands, North-East or Scotland – or Detroit for that matter.

The company made a sizeable £300m operating profit as recently as the first two quarters of 2008, has a strong and desirable model range and some of the best automotive minds in the world at its disposal. Land Rover has largely been in profit for some years, though Ford never released actual figures.

Jag has not, due to the FoMoCo’s woeful mismanagement of the brand in an attempt to make successful synergies from its various brands. The results were the naffly-retro S-Type and Mondeo-based X-Type, the latter of which made a mockery of Jag’s supposedly upmarket image. With both of those models going or gone, the symbol of a resurgent Jag is the XF, which was won industry plaudits and sold strongly.

Partly as a result combined UK JLR sales in 2008 were higher than those of volume manufacturers Hyundai, Kia, Mazda, Mini, Seat and Skoda and comfortably ahead of executive/sports/luxury manufacturers Alfa Romeo, Aston Martin, Bentley, Cadillac, Jeep, Lexus, Porsche, Rolls-Royce and Saab combined, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

The bottom line is that, before the credit crunch, JLR was a viable business and the likelihood is that it will be again – assuming the company make it through the next 12-18 months of economic turmoil.

With Tata unable, or possibly unwilling, to seek funds elsewhere to plough into JLR whether it does is down to Peter Mandelson. Where the Labour government once stood back as a British manufacturer went bust it must now intervene, despite the risks.

• While more cynical commentators than me may question the motives behind various media campaigns, there’s a Facebook group on saving JLR and a Downing Street petition.