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Why the removal of Tata's boss matters to the UK economy Why the removal of Tata's boss matters to the UK economy
(35 minutes later)
The ousting of Cyrus Mistry as boss of Tata is a shock and could have serious implications for the UK.The ousting of Cyrus Mistry as boss of Tata is a shock and could have serious implications for the UK.
Tata matters to the UK. It owns Jaguar Land Rover, which employs more than 35,000 people in Britain, Tata Steel (11,000 jobs) and other brands including Tetley Tea.Tata matters to the UK. It owns Jaguar Land Rover, which employs more than 35,000 people in Britain, Tata Steel (11,000 jobs) and other brands including Tetley Tea.
Theresa May is keen to draw up an industrial strategy for the country. One of the key people the prime minister needs to talk to for that is the boss of Tata. In fact, one of the first people Greg Clark met after becoming business secretary was Mistry in Mumbai.Theresa May is keen to draw up an industrial strategy for the country. One of the key people the prime minister needs to talk to for that is the boss of Tata. In fact, one of the first people Greg Clark met after becoming business secretary was Mistry in Mumbai.
The end of Mistry’s four-year tenure was revealed in a remarkably terse statement by the Indian conglomerate. “The decision was taken at a board meeting held here today,” Tata said. Sources say there was discontent on the board and among shareholders about the financial performance of the group.The end of Mistry’s four-year tenure was revealed in a remarkably terse statement by the Indian conglomerate. “The decision was taken at a board meeting held here today,” Tata said. Sources say there was discontent on the board and among shareholders about the financial performance of the group.
The change at the top of Tata has created a storm in India, where it is arguably the country’s most famous corporate group. The news of Mistry’s exit was leading Indian news websites on Monday. To put it into context, Ratan Tata, who is replacing Mistry on an interim basis, wrote to prime minister Narendra Modi to inform him of the news. The change at the top of Tata has created a storm in India, where it is arguably the country’s most famous corporate group. Mistry’s exit was the lead story on Indian news sites on Monday. To put it into context, Ratan Tata, who is replacing Mistry on an interim basis, wrote to prime minister Narendra Modi to inform him of the news.
Tata has become renowned for its stability, privacy, and long-term perspective. Mistry only gave his first interview as Tata boss a few weeks ago, and that was to the group website. Tata’s overseas expansion, particularly into Britain, created much pride in India.Tata has become renowned for its stability, privacy, and long-term perspective. Mistry only gave his first interview as Tata boss a few weeks ago, and that was to the group website. Tata’s overseas expansion, particularly into Britain, created much pride in India.
So this brutal switch at the top is extraordinary. Ratan Tata was chairman for 21 years before stepping aside for Mistry in 2012 when he turned 75. Now he is back as chairman, at least for the next four months as a committee looks for a permanent replacement. So this brutal switch at the top is extraordinary. Ratan Tata was chairman for 21 years before stepping aside for Mistry in 2012 after turning 75. Now he is back as chairman, at least for the next four months as a committee looks for a permanent replacement.
Ironically, one the biggest criticisms from analysts and investors about Tata under Mistry has been the slow speed at which he has tackled the problems facing the conglomerate.Ironically, one the biggest criticisms from analysts and investors about Tata under Mistry has been the slow speed at which he has tackled the problems facing the conglomerate.
Although Ratan Tata expanded the company around the world, some of the businesses he bought now look overpriced and in need of restructuring – perhaps none more so than Tata Steel. Tata paid £6.2bn for the Corus steel business in 2007, which in hindsight was the top of the commodities and financial cycle.Although Ratan Tata expanded the company around the world, some of the businesses he bought now look overpriced and in need of restructuring – perhaps none more so than Tata Steel. Tata paid £6.2bn for the Corus steel business in 2007, which in hindsight was the top of the commodities and financial cycle.
If only Tata had acted as decisively with its UK steel business as it has with axing Mistry. If only Tata had acted as decisively with its UK steel business as it has with axing Mistry. The Indian company announced it was reviewing the future of its UK business in March, but this remains unresolved.
The Indian company announced it was reviewing the future of its UK business in March, but this remains unresolved. The departure of Mistry as chairman could be good news for Tata Steel’s 11,000 UK workers because Ratan Tata is a renowned Anglophile who bought the business in the first place.
The departure of Mistry as Tata chairman could be good news for Tata Steel’s 11,000 UK workers because Ratan Tata is a renowned Anglophile who bought the business in the first place. But Mistry and Tata Steel had been making progress on a potential merger of its European steel operations with ThyssenKrupp and were close to a deal with the UK government about financial support and a restructuring of its pension scheme.
But Mistry and Tata Steel were making progress on a potential merger of its European steel operations with ThyssenKrupp and close to a deal with the UK government about financial support and a restructuring of its pension scheme.
There is now a new uncertainty hanging over this deal. After months of worrying about their future, workers at the Port Talbot steelworks owned by Tata Steel could do without this.There is now a new uncertainty hanging over this deal. After months of worrying about their future, workers at the Port Talbot steelworks owned by Tata Steel could do without this.
HeathrowHeathrow
The main argument about why Britain needs to expand its airport capacity in south-east England is to help economic growth and encourage trade links with emerging markets such as China.The main argument about why Britain needs to expand its airport capacity in south-east England is to help economic growth and encourage trade links with emerging markets such as China.
But on the eve of the government announcing whether to expand Heathrow, Gatwick or neither, British Airways has quietly put a spanner in that argument.But on the eve of the government announcing whether to expand Heathrow, Gatwick or neither, British Airways has quietly put a spanner in that argument.
With remarkable timing, BA has decided to drop its flights from Heathrow to Chengdu, the Chinese city that was cited by pro-expansion campaigners as a key destination. BA launched flights to Chengdu, its fourth Chinese destination, in late 2013. It had already trimmed the frequency of the service on the route.With remarkable timing, BA has decided to drop its flights from Heathrow to Chengdu, the Chinese city that was cited by pro-expansion campaigners as a key destination. BA launched flights to Chengdu, its fourth Chinese destination, in late 2013. It had already trimmed the frequency of the service on the route.
The success or failure of one route should not determine Britain’s transport strategy. Willie Walsh, the chief executive of BA’s parent company IAG, has previously blamed the problems getting a British visa for weak demand on flights to and from China. Nonetheless, it shows that some of the presumptions behind the arguments to expand Heathrow or Gatwick – such as the boost to Britain’s economy – are by no means guaranteed.The success or failure of one route should not determine Britain’s transport strategy. Willie Walsh, the chief executive of BA’s parent company IAG, has previously blamed the problems getting a British visa for weak demand on flights to and from China. Nonetheless, it shows that some of the presumptions behind the arguments to expand Heathrow or Gatwick – such as the boost to Britain’s economy – are by no means guaranteed.
BHSBHS
Away from the House of Commons and its raucous criticism of Sir Philip Green, the BHS scandal is far from over.Away from the House of Commons and its raucous criticism of Sir Philip Green, the BHS scandal is far from over.
The administrators to BHS, the Insolvency Service, and the Serious Fraud Office are still hard at work establishing why the company collapsed and trying to recover money owed to the department store chain. The department store chain’s administrators, the Insolvency Service, and the Serious Fraud Office are all still hard at work establishing why the company collapsed and trying to recover money owed to it.
As shown by the news at the weekend that the administrators to BHS are trying to wind up Retail Acquisitions, the company Dominic Chappell used to buy the retailer, there is still much work to do on this front.As shown by the news at the weekend that the administrators to BHS are trying to wind up Retail Acquisitions, the company Dominic Chappell used to buy the retailer, there is still much work to do on this front.
If Retail Acquisitions is wound up then Duff & Phelps, the administrators, will gain access to it books and potentially recover funds that it owes BHS. This could be vital in understanding what went on before the collapse of the retailer, which left more than £1bn of debts and led to 11,000 job losses. If Retail Acquisitions is wound up then Duff & Phelps, the administrators, will gain access to it books and potentially recover funds that it owes BHS. This could be vital in understanding what went on before the collapse, which left more than £1bn of debts and led to 11,000 job losses.