Sunday, 18 August 2013

Supply Wars

Are we on the edge of a return to the dark days of the 70s when the UK was held hostage by trade unions, and a determined Prime Minister decided they would not be coerced, but instead apply political might, with the result that UK car manufacturing collapsed and UK jobs were lost?

This isn’t the workers strike of the 70’s but instead supply chain disruption.

While I am a Tata Group employee, I work in an entirely different part of the organisation and have no engagement whatsoever with JLRs procurement.  However, it does appear to me that JLR are unlikely to be held hostage to Unite and the DHL threat,

The gamble of the 70s was whether or not Thatcher would give way to unions. The gamble of today is at least two-fold.  JLR could drop DHL from its supply chain and find an alternative source, either in the short or long-term.  Tata, JLR’s owners, could also take a more political and strategic option, threatening to completely relocate their manufacturing beyond UK shores – there are no shortage of countries which would welcome that investment. If a relocation threat were made, would we see David Cameron and the coalition decide it is essential they intervene in the negotiations? DHL employee 1,800 on the JLR logistics, while JLR employee 24,000 and had pre-tax profits of £1.7bn. Then again, from the UK Government’s point of view, Tata Group are a major UK employer as owners of Tata Steel, Tetley Tea, etc..

The stakes are high in this supply chain game – it will be interesting to see, with the benefit of hindsight, the lessons learnt.

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