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| Q&A: Carl-Peter Foster, MD & CEO, Tata Motors | | 'We have to work on delivering excellent quality' |
| Business Standard / Aug 23, 2010, 00:12 IST |
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Soon after Carl-Peter Foster, former head of General Motors Europe, joined the 65-year-old Tata Motors, he asked for 100 days to come to grips with his job. He appeared to have gathered much more, as was evident from his body language in his first exhaustive interaction with the Indian media after being appointed as managing director and chief executive officer six months ago. He believes it has got what is needed to become a global automotive player. Edited excerpts:
It has been six months since you joined. What do you like to do differently?
It is our plan to take JLR (Jaguar Land Rover) forward. First thing at JLR we focused on was product plan. Our first job was to see what should be the future product portfolio. Next is how we can improve sales and marketing. We are brining new people in. We have to work on delivering excellent quality.
How do you see the joint venture with Fiat?
We see the association with Fiat as an important JV (joint venture). We see it as a great addition to our own brand. It is a good proposition for our dealer to do additional business. We want to make it a success. Yes, we are not satisfied exactly where we are right now in terms of volume, but we are taking a very strong stance and will improve that business.
Are there more opportunities with Fiat?
Yes, for example, we have to think with Fiat on what can we do to perhaps have more Fiat products in India. This is just one of the options - increase the product range and get more coverage. We are currently taking up the Tata dealership which could take up the Fiat brand of vehicles. There is more we can do in India.
What is the real issue regarding shortage of engines?
We have the issue on engines (supply) for JLR. Suppliers in Europe cut back their capacity rapidly to adjust to the demand of original equipment makers). A year ago, we had no idea when we would come out of the crisis, especially in Europe. The cutback was an amazing pace. But now that demand has picked up, they are in short supply. The downturn was faster but the upswing is even faster. We are working our partner, Ford, on how we can de-bottleneck. I have 15,000-20,000 customers who want a product but are not getting it. I have angry letters coming to me regarding this.
Is it true that the engine contract with Ford is till 2013?
It is not just one contract; it's multiple contracts and they have different times and it extends beyond 2013. We are currently giving Ford the volume (estimate) for 2013. Whenever the contract comes up for renewal, we will renew it.
Volumes of JLR have risen tremendously lately. Would you look to revisit your decision of closing one of the plants in the UK?
We have three plants in the UK, which could be combined into one plant, into 350,000 units. This will give us great flexibility and reduce cost. We continue to explain to the unions and the local politicians that it is a very sensible move, while not resorting to any job losses. It's not a plant closure but a merger of two plants 20 km apart.
What difference has Tata Motors brought to the manufacturing process at JLR?
If you look at the balance sheet and the cost structure, with a very simple calculation you will find that Tata Motors is working about half of where General Motors is. The percentage of fixed cost to total cost is significantly lower than at any of the major international auto companies. It is a company with a very different cost structure.
Which are the areas you have focused on for cost reduction?
Cost reduction has to continue, it is a permanent initiative. The typical way of doing it is to squeeze the suppliers but that is not a good strategy. The right way is to talk to your suppliers and find how do they reduce cost and in turn give us the best cost. We have learnt a lot of lessons on the Nano, which could be passed on.
Have you factored in the possibility of making Tata branded products out of the new merged plant?
Tata branded cars we will not manufacture out of the UK.
Does the company see a possibility of an IPO for JLR?
We have ambitious plans for JLR and Tata Motors and they need capital. We will work on all the options to get that capital on board. But no decision has been taken so far.
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