Retrain or retain?

There’s been much talk lately of retraining people so that they can get re-employed after they’ve lost their jobs.

It seems to be Gordon’s latest ‘big idea’ but, to this financial layman, it seems rather futile when you start to ask, ‘Re-employed as what?’

It would be great to wave a proverbial magic wand and create new careers and opportunities but after all the available money for real job creation has been loaned to the banks, who seem to just like sitting on it and not lending it to businesses who could then retain their employees, there isn’t a lot left in the pot.

Even better would be if people could just keep their existing jobs – hence all the talk of ‘bail outs’ – but that takes money too.

It does look, however, as if there will be financial assistance for some businesses and the latest talk seems to be about some form of state aid deal for Jaguar Land Rover – a twinning of true blue British marques if ever there was one.

But wait – although the name seems as British as roast beef and Yorkshire pudding, the Changing of the Guard and 15 cans of Stella on a Saturday night the company isn’t.

Well, not any more.

Sure, 15 000 people in the UK are employed by the firm, but it’s owned by the Indian company Tata Motors – the biggest car maker in the world and just one division of a vast conglomerate.

Let’s look at Tata a little more closely.

Over the last few years the company has been on a bit of a shopping spree – it bought Corus, an Anglo-Dutch steel producer, for just over £4 billion two years ago without guaranteeing British jobs would not be lost and a mere 9 months ago bought Jaguar Land Rover for £1.3 billion – considered a real snip at the time.

Now, given that most financial analysts could see the current global economic downturn coming before Tata wrote their shopping list – early indications in 2006 hinted that all was not well with the US subprime mortgage market and August 2007 saw the first major bank admit it had liquidity problems – Tata went ahead anyway.

Now, Tata wants the UK government to lend it £1 billion so that it can continue to keep the Jaguar Land Rover plant open here.

It looks like it’ll get it, too.

Now, here’s where I stick my neck out and – with zero qualifications or experience of the world of global finance – suggest a solution to this latest problem.

Tata wants a £1 billion loan to rescue a company it bought just 9 months ago for £1.3 billion. So, instead of lending it the money we offer to buy Jaguar Land Rover for $1 billion. We then nationalise the company thus keeping the 15 000 jobs safe and gaining the profits from the firm. I’m assuming here that if Tata is trying to keep the company running then it must view it as profitable.

Hell, maybe we could even beat the offer to Tata down!

After all, if Tata is making out that things are so bad that a company which makes billions in profits needs a £1 billion loan it ought to bite our hand off for an offer which protects its interests and reduces risk.

Financially it makes sense to me – the £400 billion total for all bail outs so far by the UK government might as well increase by an extra lousy billion, instead of waiting for years to get back a £1 billion loan in trickles we get the profits from the company, the jobs are safe, we don’t have to pay to ‘retrain’ 15 000 people or pay them benefits and Tata cuts its losses.

It’s a win win situation.

Of course, we can’t do this with every company that looks as if it’s going to go to the wall, but surely we can try and preserve some sectors of the manufacturing businesses that we’ve allowed to be sold off over the past 30 years or so?

Let’s face it, the service industries that have flourished at the same time as manufacturing has declined rely on people having disposable income and that’s dwindling as people either tighten their belts or lose their jobs. Furthermore Jaguar and Land Rover are supplying a prestige niche market in which prospective buyers are less likely to  be affected by the current downturn – a certain proportion of people will always have money for the premium and luxury brands.

We have a chance to re-establish some sort of manufacturing base in this country starting with Jaguar Land Rover so that when the economic upturn comes – and we have to assume that’s going to happen or we might as well give up now – we’re a producer again and the taxes and profits from our revitalised manufacturing sector can help defray the massive debts we’re running up.

Comments, please!

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