Vol.16 : David Blume, O.B.E. (Jaguar and Land Rover Japan)

June 13, 2007

Confidence in economy boosts long-term rates

A world of stuff at your thumb tips

Party manifestos unveiled ahead of poll

Pricier food, services squeezing consumers

Expanded coverage: Tokyoites take to urban farming

David Blume, O.B.E. (Jaguar and Land Rover Japan)

synergies：相乗効果
leverage：活用する
tripolar：三極化
convergence：収斂

（ D: David, P: Peter ）

P :	When did Land Rover become part of the Jaguar Group?

D :	Well, both Jaguar and Land Rover were actually a part of what's called Premier Automotive Group, which is a cluster of brands owned by Ford Motor Company.

P :

Yup.

D :	And it includes Volvo as well and until recently it included Aston Martin, but in fact that particular company was sold literally within about a week ago.

P :

Really?

D :	So, these three brands are the sort of premium brands owned by Ford Motor Company.

P :	I didn't realize Volvo was part of the same group.

D :	Yes, it is.

P :	How interesting.

D :	Since around about 2000 or '99, somewhere around about that time.

P :	But operating completely independent here in Japan.

D :

Each of the companies operates as an independent entity within The Ford Group of Companies in the Ford World, but independent in the sense of brand.

So, maintaining brand identity, maintaining a business as that brand, but from the point of view of enterprise efficiency, we look for all of the possible synergies that we can look for in terms of sharing technology or investment or know-how and it's a very investment-intensive business, and is a very knowledge-intensive business.

So, these days to be competitive, you have to be able to dip into a really big resource pond and that's why you see so many of what used to be smaller manufacturers now being a part of bigger groups and owned by bigger companies because to survive in today's world there is so much that you have invest in terms of knowledge that small companies really can't keep up with that anymore.

P :	And is that true for every company in the car industry, including the ones that are not premium brands?

D :	Pretty much so, I mean just to meet the legislative requirements these days for safety, fuel consumption, emissions, all of these things that you're obliged to do just as to get into the start line, price of entry if you like...

P :	Okay, all right.

D :

...the know-how that's required to be able to deliver those things gets more and more and more difficult, requires more and more and more investment and know-how.

So, smaller companies inevitably, they get squeezed economically by this and then as this happened in the last decade, they become acquired by larger companies that see some value in the brand, and so the merit for the smaller companies that it becomes able to access this kind of pool of information or to leverage the purchasing power, for example, of the big company.

These kind of things change the equation then for that small company and make it a smaller brand, make it possible to continue in business and be healthy as part of a bigger entity.

P :

Right.

D :	But at the same time, of course, when you're talking about brands the whole point is that it represents something differentiated, so a Jaguar is not the same as a Volvo is not the same as a Land Rover.

P :	Absolutely, yes.

D :	And so you have to work hard to maintain those distinctions and I mean people often say, "Well, cars look all the same these days, don't they?" And actually yes they do...

P :	A lot of them do, yeah.

D :	...they do and it's not that manufacturers want them to all look the same, but in a sense we get legislated into a fairly tight framework and in terms of what we are required to do technically for vehicles, safety particularly.

P :	Surely those regulations must differ a lot from country to country, don't they?

D :	Well, they do differ, not so much country to country these days, more block to block, what do I mean? Take Europe as one legislative block...

P :	Sure. Sure.

D :

That's one of the benefits of being European community. USA is another sort of legislative block. Japan is different and then you have some other countries, which are kind of trying to figure out where they are in the firmament, as it were.

Are they going to attach themselves to this pattern or that pattern? It's a sort of tripolar situation really at the moment. There is a lot of interest, I think, in increasing the convergence, moving closer and closer together.

P :

Right.

D :	Certainly, manufacturers would wish this because then you don't have to find three variations of the same answer to solve, you know, legislated versions of the same problem.

P :	Right, right.

D :

So, we would like to go that way. And generally the governments and, you know, the people thinking about and formulating the legislation in these major markets are all kind of going in the same direction. They want to protect their citizens in terms of safety, they want to, you know, pollute the planet less, they want to use less carbon fuels and they all are going in the same direction.

P :

Sure.

D :

But trying to get everything going at the same speed, trying to get everybody to actually say, "Well, we can all agree on this," is not that easy.

And some of that's political because of the local pressures and some of it may be concerned with the specific conditions in one market so that when you take a country like Japan, geographically small, big population, high metropolitan population densities and density of cars, okay, Japan will say, "Well, we have special problems. We want to do all of the things everyone else wants to do, but we've got kind of special problems. So, we want to do it with a twist."

And it's the with a twist bit that causes, you know, every manufacturer to go, "Okay, you are right, with a twist," and then America has a different set of, you know, local political things that it needs to negotiate and there's a twist there. So, it's those sort of with a twist things that give the manufacturers fits, but the general tendencies are all going the same way, everybody is trying to make cars that are safer, cleaner, and less fuel consuming.

alternative fuels：代替燃料
ethanol：エタノール
hype：誇大広告
endgame：最終段階
ample：豊富な
arable land：耕作に適した土地
sunk cost：埋没費用 (支出済みで回収できないコスト)
down the road：今後
interim：暫定的な
screw around：時間を無駄遣いする

（ D: David, P: Peter ）

P :	Are we going to be seeing Jaguars and Land Rovers that run on alternative fuels?

D :	Well, we already have Jaguars and Land Rovers that run on alternative fuels, but it depends on...

P :	Oh, excuse me.

D :	...what alternatives we are talking about really.

P :	Well, I was talking about ethanol or whatever...

D :	Well, I mean at the moment we produce cars that basically run on gasoline and diesel.

P :

Yeah.

D :	And, yes, there will be products in the future that will run on something else, but, you know, then we get into the debate about what they should run on.

P :

Sure.

D :

And to be honest, I mean, there's a lot of hype at the moment about, you know, bio this and ethanol that and hybrids and so on and frankly there is no single horse to back here, that's going to be the almighty solution.

Probably, we are looking at a period in the next 5 or 10 years where manufacturers will start to offer everything, consumers may try everything and some solution may fit to a certain consumer or a certain market condition better than others. That solution may not be quite right for somewhere else.

To me anyway, none of these things is the endgame, I think it's all, you know, a little bit of shuffling that's going on and on, and I don't think hybrid's the at the moment, but it's developing a role. I don't think in reality the planet is going to grow what would otherwise be foodstuffs and then turn them into fuels, I don't see that happening, I don't think that's a politically survivable...

P :	I must say I hope not, yeah.

D :

...yeah, I just don't see that being really - you can do it on a - all of these things can be done on a small scale, but you start thinking about rarely replacing petroleum products, rarely replacing that volume, I don't see it coming off in that way, so you know a country like Brazil where they have ample supply of material that they can use, waste the material mostly that they can use to produce a kind of bio-fuel...

P :

Right.

D :

...fine, but the idea that somewhere like Japan starts growing bio-fuel, I don't think so. What are the economics of that, and then you should pay someone else in another country to turn their arable land from food production into fuel production, I don't buy that either. So, I think that there are some limits there, even though you can burn the stuff, it doesn't necessarily follow that everyone is going to end up doing that.

P :

Right.

D :

And if you think about the investment that's already out there in the car industry and the investment and it's out there in the oil industry, how do you distribute this magic fuel, because without distribution you don't have consumption, so it's one thing, you know, to discover this new sort of Holy Grail fuel, but it's another thing to distribute, those kind of challenges are not met yet.

Hydrogen, for example, wonderful idea, you can burn it in engines very much like today which is a great idea by the way because that means that all the sunk cost of the industry can still be used, but how do you store it, and how do you distribute it.

P :	Right, right.

D :	We don't have answers to that yet. That may be 10, 20, 30 years down the road, fuel sales 10, 20 years down the road, that's why I said, I think, this is a sort of interim period where we are going to see lots of different things kicked around and there will be a lot of...

P :	Experimentation.

D :

...political footballs involved in this before technology is moved as to something that really could be a rather more almighty solution.

...I came for a - I was very fortunate to be chosen for a program run by the European Commission called the Executive Training Program in Japan. We kind of short-handed to ETP, and I took part in ETP4. The program is still running. It's up now to the ETP20 something, I can't remember the number now, and that was in 1983. I came out for that program and it was an 18-month program. First year was language school...

P :	All right.

D :	...with daily language school from probably 9 till 3 everyday and then you go home and prepare vocabulary and you practice some Kanji and you...

P :	That's pretty intensive. You must be invaluable to head office in England because...

D :	Tell them, please.

P :	No, I mean really to be able to understand the thought processes behind the decisions made by your Japanese colleagues here is something that not all - I mean, not very many businessman, non-Japanese businessman here can do probably.

D :	I am not sure whether I do either, but I think I recognize the signs when I don't, which is perhaps just as important. I can't put myself in their place and I realize that.

P :

Right.

D :	That's one of the - I think that's after you have been here a while, I mean one of the clear things is that you are a non-Japanese and you never will be.

P :

Right.

D :	No matter how many hours you prepare to put into learning the language.

P :

Right.

D :

That's - you learn that and a bit more but that's it, but one of the important things that you acquire is the understanding of when you don't understand, and then you kind of have to let people have their run to the point where you understand again, kind of thing.

So, it's a little bit like skimming stones, you know when it touches the water and when it flies through the air. You don't - you are not necessarily in continuous touch with every single thing that's going on, part of it you understand intimately but another part of it you don't understand until it gets a bit further on and you see what the result is and you have, okay I understand how we got there now.

I think it can be uncomfortable at first because it's like, I don't know, it's like taking the hands off the wheels or something...

P :

Yeah.

D :

And riding a bike with no hands or something, you know, and you want to grab the handlebar, but you shouldn't - you kind of, I suppose, learn that you shouldn't interfere at that point, you have to let things run because the fact that you don't understand isn't a good enough reason or you don't completely understand isn't a good enough reason to screw around somebody who does understand.