Ford Motor Company said yesterday it was reviewing its position on Jaguar and Land Rover, and union officials pressed for more information amid reports that the two brands were up for sale.
John Gardiner, a spokesman for Ford's Premier Automotive Group, said Ford had been reviewing all of its operations for a year.
"We are working with our financial advisers on the best options for Jaguar and Land Rover, and nothing is ruled out," Gardiner said. He added that there was no time frame for making a decision.
Prime Minister Tony Blair's office said it was in touch with Ford about the review.
"We still believe that both Land Rover and Jaguar are highly successful companies and will have a highly successful future," said the Prime Minister's official spokesman said.
British lawmaker Lorely Burt, who represents Solihull, home to Land Rover's assembly plant, said legislators were told Monday night that Ford was "looking at all the options which may or may not include a sale."
"We are very concerned to hear these reports and we are seeking an urgent meeting with Jaguar/Land Rover," said Dave Osborne, national officer of the Unite union.
"We find it difficult to understand why Ford would want to sell a successful, growing and environmentally improving brand like Land Rover, and a marque like Jaguar, which is a significant player in the luxury market and one that Ford has invested heavily in."
Land Rover and Jaguar are part of Ford's Premier Auto Group, which also includes Volvo. Ford sold Aston Martin, another part of the group, for US$848 million in March, with some analysts saying the luxury brand did not fit into Ford's long-term survival plan for cost savings from developing multiple models worldwide on the same underpinnings.
Ford, which is struggling to be profitable in the face of fierce competition from Asian automakers, posted a sharply narrower first-quarter net loss in April of US$282 million. The PremierAutomotive Group reported a record pretax profit of US$402 million for the quarter due largely to Volvo.
Ford bought Jaguar in 1989 and Land Rover in 2000. The two businesses have about 19,000 employees in Britain, the AP reports.
The cost to insure Ford's debt fell on Monday on reports the company was looking to sell the two units, though it retraced its gains on Tuesday to around 505 basis points, or $505,000 per year for five years to insure $10 million in debt.
A sale of the units could send Ford's spreads at least 40 to 50 basis points narrower, Rubin said. Ford's debt may also benefit if the automaker can significantly reduce its retiree health care liability, or transfer it to the United Auto Workers union, he said.
"That would be a high positive for Ford and allow them to be potentially competitive once again," he said.
The UAW's current contract with U.S. automakers expires on September 14, and analysts say the UAW faces intense pressure to offer givebacks on health care benefits that the automakers estimate add $1,000 to the cost of an American-made car.
"We view a potential sale of any or all PAG assets as positive, given that Ford does not have a competitive advantage in premium luxury products. A sale of any or all PAG assets would enable Ford to direct greater focus on its core brands," analysts at Barclays Capital said on Tuesday in a report.
"Moreover, a sale of any or all units would enhance liquidity ahead of its restructuring activity," they added. Barclays has a "buy" recommendation on Ford's debt.
Ford is in a four-year turnaround plan announced in 2006 that aims to cut 16 plants and up to 45,000 jobs, Reuters reports.
Prepared by Alexander Timoshik