A special focus on the UK’s largest industrial employer.
“Britain doesn’t own any of its industry anymore.”
The negative connotations behind this commonly voiced complaint are clear.
As we lose control of our brands and the power to make decisions about investment, we lose control of our fate and industrial decline is inevitable.
Or is it? Tata, Indian by origin but now marketing itself as a fully globalised firm, says ‘no’.
Which is a relief, given that an Oxford Economics report in 2010 showed that Tata is now the UK’s biggest manufacturing employer and most prolific foreign investor.
Via its 19 companies operating in the UK, Tata supports over 50,000 British jobs and, since 2000 it has invested £19.4bn in making its businesses here – both those it has acquired and those which have grown organically – more competitive.
A global firm
Impressions from ’s trip to India with Tata in December 2013.
The manufacturing sector in Tata’s homeland of India is going through a distinct rough patch.
In August last year the HSBC purchasing managers index for India showed the nation’s manufacturing in contraction for the first time in over four years of growth.
The index, which measures output and order figures, returned a result of 48.5. Any measurement of 50 and above marks sector growth.
Since this low point, Indian manufacturing has managed to grapple its way back up above the 50 mark. But the environment remains challenging.
The domestic market for consumer goods – particularly cars – remains sluggish thanks to wider economic woes which have seen India’s growth projections drop below 5% for the first time in a decade.
But despite this environment, Tata Group is going through an exciting period of change and is hotly pursuing global ambitions.
The new zest is partly the result of the appointment of Cyrus P Mistry as Tata Group chairman in December 2012.
This change of leadership tends to be a generational event for Tata which has only had six chairmen in its 100+ year history.
The recent switch has created a logical moment to take stock and refresh medium term strategic targets.
As TM toured with Tata in India, several of the companies we visited were in the processes of formalising new five year missions.
While details were not revealed, it became clear the growth outside India was a common theme.
In many cases, global growth will not immediately or necessarily raise the profile of Tata companies in Europe.
Tata Motors, for instance, is focused on exploiting the potential of emerging economies in Asia and Africa first and foremost – though it was notable on touring the crash test facilities in Pune that Tata Motors is taking care to ensure all of its cars meet the requirements of Europe, not just those needed for less demanding markets.
But other Tata companies less well-known in Europe, might soon make an impact.
Titan, which makes watches, spectacles and jewellery among other products, acquired Swiss watch maker Favre-Lueba in 2011 and plans to use the brand to springboard some of its own products into Europe – previous attempts have been dogged by perceptions of low quality in Indian manufacturing according to Titan’s management.
It’s two of Titan’s subsidiaries which are likely to garner the most attention from British industry however.
Titan Automation Solutions and Titan Precision Engineering both have remarkable growth stories to tell and big global ambitions.
Both divisions were established on the back of employee suggestions that Titan’s skills in creating precision engineered watch parts, to tolerances of less than one micron, and developing bespoke automation solutions like its one of a kind diamond sorting machine, could be commercialised.
The ventures have both made very promising starts and provide a cage rattling challenge to the idea that niche, employee-led innovation is the preserve of Western engineering firms.
Since 2005, Titan Precision Engineering has experienced 30% year on year growth and now achieves around $40m in annual revenues.
It has targeted supply to the aerospace industry and worked with big global partners like Pratt and Whitney to get up to speed on the sector’s demanding compliance regime.
The division now employs around 600 people, 80% of whom are engineers, and it is unequivocal about its desire to become a leading supplier of engine accessories to big global players – it already works with Rolls Royce in the UK.
Titan Automation Solutions is equally determined to make a name for itself outside India. A company representative in India told “We plan to be a global leader in factory automation.”
Watch this space.
A long term presence
But Tata’s commitment to the UK has far deeper foundations than those laid down in its recent investments and acquisitions.
Tata Ltd was first registered in the UK in 1907 as a means for developing the British interests of Tata Sons (est. 1868), the Indian firm which is still the holding company for the larger global group.
Over the years, Tata Ltd has also become responsible for representing an expanding portfolio of European companies and supporting their local development.
The ability to bring benefits to communities through its businesses is central to the Tata Group strategy – and looking at the long list of contributions Tata has made, not only to UK industrial infrastructure and job creation, but also to education, skills and public health, it is clear that this does not just mean taking benefits home for its Indian dependents.
The first endowment to a UK university by Tata was made in 1912 by the group’s founding father Jamsetji Tata who funded research at the London School of Economics into the causes of poverty.
His generosity led to the foundation of the Sir Ratan Tata Department, now known as the Department for Social Sciences. Later, investments to support important areas of industrial research also gained momentum – often because Tata recognised the UK as a global centre of learning where it could develop expertise and source talent.
But despite their longstanding, these kinds of investments in the UK have a relatively low public profile.
This is largely thanks to a rather reserved management culture at Tata.
“It’s a company than much prefers to ‘do’ rather than ‘say’” observes Dr David Landsman, recently appointed director of Tata in the UK (p40).
Such modesty is laudable, but has its drawbacks when it comes to quelling naysayers who continue to suggest it is only a matter of time before Jaguar Land Rover – famously acquired by Tata in 2008 – moves production wholesale to India.
Such mutterings are still made, despite billions of pounds of investment now anchoring JLR’s UK sites.
Does such doubt frustrate Tata’s central management?
During a visit to Tata’s global headquarters in Mumbai last year, posed this question to Dr Mukund Rajan, brand custodian and chief ethics officer at Tata as well as a member of the executive board.
“Tata has brought to Jaguar Land Rover [and its other companies in the UK] the same values that it brings to any group company – whether it is one we create, grow or acquire.
Dr Rajan clarifies, “This means ensuring a company is putting out excellent quality products and services that people across the world can buy. It means giving back to the local community in the same way that any Tata company in the world would do. It means creating jobs and being responsible in responding to national issues that the local government and industrial community say are important, from skills development to investment in industrial capacity, building the right supply chain,” the
list goes on.
“If a company is doing all of these things,” sums up Rajan, “what does it matter whether it is in British hands or not? It is a company that will be admired around the globe.”
JLR has become the crowning glory of Tata’s UK investments, but the celebrity it has gained as the hero of a resurgent automotive industry should not detract from Tata’s other UK businesses.
In terms of manufacturing, these include (in order of acquisition): Tetley Tea – part of Tata Global Beverages (TGB), Tata Chemicals and Tata Steel.
Other non-manufacturing, but engineering-relevant Tata companies working with UK partners include: Tata Technologies, Titan Precision Engineering and Titan Automation
Solutions (see Tata in India box).
Tetley was a landmark acquisition for Tata. It was the group’s first major brand acquisition in the UK and TGB’s first global strategic buy.
Today Tetley’s Eaglescliffe factory sets the benchmark for global best practice across TGB and demonstrates how investment in automation, alongside workforce upskilling, can make the production of low-unit-value consumer products in the UK, not only a viable option, but a competitive one. (Read more about the relationship between technology and training at Eaglescliffe at bit.ly/Competitivenesstoatea)
Tata’s experience in enabling Tetley’s growth is distinctive of its approach to all branded companies across the group.
While all group companies operate very independently, particular care is taken to preserve the heritage and character of acquired brands.
Harish Bhat, CEO and MD of TGB told, “Brands must be authentic to their origins. Tetley was born in Leeds and must remain true to this.”
A similar understanding of consumer love affairs with brands is clear in Tata’s management of Jaguar Land Rover where both sides of the business have maintained very distinct brand cultures.
But although Tata is not aggressive about associating its name and logo with all its branded companies, it is adamant that all Tata companies will adhere to a certain set of values. Dr Rajan explains:
“Tata has never been fussed about having its name or logo on every product it owns. As long as the Tata values are maintained in the way that each business operates and as long as it is recognised on some level that the Tata Group is behind the success of branded products, we are happy.”
Is this true in the UK? In India, the ‘feel’ of the Tata value system and communication of the principles it upholds are palpable and consistent.
Tata’s name is a potent presence on every street corner and, thanks to its economic and social contributions it has created a ‘Tata family’ ethos which has real integrity – quite simply, as Dr Bhat put it “in India, Tata is magic”.
Is there a desire to create a similar impression in the UK? Do UK workers, in branded and non-branded companies alike, feel that they are part of the global Tata family?
“It’s a good question,” ponders Tata’s UK director Dr Landsman.
“Clearly Tata is nowhere near as well known in the UK as it is in India and we would always want to remain true to the ‘Tata way’ which promotes the independence of its companies.
“But at the same time, if you ask people at Tetley and Jaguar Land Rover what they feel a part of, there is strong recognition that it is Tata which is making their success possible,” states Landsman.
Read more about TM’s trip to India with Tata
But of course, not every company has the fortune to be growing as strongly as Tetley and JLR.
Tata Chemicals and Tata Steel both have significant challenges in the UK.
Has the workforce embraced Tata ownership as firmly in these companies?
“I have been particularly struck when visiting Port Talbot, by the strength of belonging to Tata that is expressed there,” says Landsman.
“People at Tata Steel in the UK often get to meet and work with their colleagues in India. They are all steel people and they do feel that they belong to a family.”