Investing for growth

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For Jaguar Land Rover, 2011 proved to be a landmark year. The company delivered strong profits, invested over £1.5 billion in innovation and new products, created 3,000 jobs and breakthrough products such as the Range Rover Evoque.

In terms of numbers, sales were up almost 18%, with 80% of our volume coming from 177 export markets. And we ended the year with a strong showing, with over £500 million in profits and 37% increase in volumes in the fourth quarter alone.

Yet this remarkable turnaround since 2008 isn't due to investment from our parent, Tata Motors. The reality is that it's down to JLR's own investment in R&D and new products. Tata Motors is a long-term, strategic owner determined for us to be financially independent and sustainable business.

We're going stand or fall on our own, and that's why simply keeping pace with the competition isn't good enough to guarantee continued success.

JLR need to keep moving faster. We need to invest more in design, innovation and engineering. We need to keep developing new products.

From concept to final production, each Jaguar and Land Rover is made in the UK. Consequently, we're investing in the UK because it provides a natural launching point for our future growth and expansion.

Our two state-of the art R&D facilities in the UK are designing and developing 40 new products and variants. We're investing in our three UK manufacturing plants to handle a significant ramp up in volumes. And economies of scale mean we can grow in the UK, while helping to keep our costs base under control.

Looking at specific investments, this year we will begin construction on a £350 million state-of-the-art engine facility near Wolverhampton. We're also investing £100 million in an advanced research facility at Warwick Manufacturing Group to accelerate innovation. And since we can't innovate in isolation we've got TSB-backed projects on hybrid and plug-in hybrid technology.

As a large, profitable company we realise we're in a unique position to invest heavily in R&D and new products. We also successfully raised a £1 billion corporate bond last year and were fortunate to receive some government support - including through Regional Growth Funds - for our expansion.

But our investment in the UK poses a critical challenge: can our UK supply chain expand fast enough? About 50% of our materials budget goes to UK suppliers. But the UK auto supply chain is already at capacity, meaning further growth must come from new investment. OEMs like being near supplies that with high logistics costs or a critical business impact. So improving supply chain finance is vital to our continued success in the UK.

We know the world has changed. Our competition doesn't just come from Stuttgart, Sindelfingen and Inglestadt, but from Singapore, Shanghai and Sao Paolo as well.

And, while a key element of our global growth plan will be overseas expansion, we want this expansion to build off our investments in a bigger and stronger UK presence.

-- Jeegar Kakkad is UK Government Affairs Manager at Jaguar Land Rover

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