Breaking through the pound barrier

Bringing a new sports car into production for just £10m is no mean achievement. A ‘de-skilled’ manufacturing process means the reborn Jensen should also be profitable.

There were plenty of sceptics when the reborn Jensen Motors proudly displayed a prototype of its proposed S-V8 roadster at the 1998 motor show in Birmingham.

The car looked the part, but critical questions about financial backing and theexistence of a factory in which to make it remained unanswered.

Three years later, the first production cars are about to be delivered to their new owners – a remarkable achievement. Jensen has engineered the car, sourced the components, recruited and trained a small workforce, and rented an industrial unit at Speke, Liverpool, in which to make them.

For Jensen, that required tremendous vision, energy and determination on the part of the two entrepreneurs behind the project, Keith Rauer and Robin Bowyer. With careers spent in the motor industry’s component and supply sectors, they knew how to get the job done technically. The real hurdle they faced was finance.

As with any start-up, cash flows only one way until revenue from sales begins to come in. That produced some tense times. The company displayed the prototype at the motor show in order to make contact with potential dealers, customers and financiers.

‘We took 60 deposits, and thought we’d arrived,’ explains Rauer. ‘In business, though, you experience highs and lows, with sometimes only two minutes in between.’

Rauer says Jensen was turned down by a dozen finance companies in two months, in spite of the fact that the business plan requires sales of only 145 cars a year to break even and the company anticipates sales of 600 a year.

At that point, Rauer asked Graham Morris, the former Rolls-Royce Motors chief executive, to join as non-executive chairman. Morris persuaded 11 UK car dealers to invest. Other investments came from a number of wealthy individuals and from the Department of Trade and Industry, Liverpool City Council, Merseyside Special Investment Fund and Speke Garston Development Company. HSBC in Liverpool arranged overdraft facilities.

That was still not enough. Cashflow concerns began to hamper development of the car late last year, pushing back the original launch date. Finally, at the start of thisyear, Jensen persuaded the Brown Trusts of Warrington – set up by the estate of the late David Brown – to re-finance the company. As a result, the Brown Trusts now own just over 50% of Jensen, with the directors and the dealer group each holding around 20%.

As these investments were largely in the form of equity rather than loans, Jensen’s debt is negligible. Lee Noble, the finance director, says: ‘That means, as of this month, we are cash positive and profitable.’

So, in three years, Jensen has gone from concept to launch for under £10m – an unimaginably tiny sum by today’s motor industry standards.

The company is convinced it has the right product and manufacturing formula as well. It involves outsourcing major components, removing specialist skill requirements from the assembly process, having low labour overheads and using leases for the factory and paint shop. It all points to a low-cost operation.

The S-V8 was designed by two former Jaguar people, Howard Guy and Gary Doy, who established their own consultancy, Design Q, in Worcestershire to complete theproject. Power comes from Ford’s all-alloy, 32-valve 4.6 litre Cobra V8.

The all-wishbone suspension, partly made in aluminium, is assembled in-house. The chassis is a deep, box-section perimeter frame made of steel. Its floor pan isstiffened by the transmission tunnel, a rugged bulkhead and rear cross members to produce what Jensen says is an extremely stiff structure. The exterior panel work is of light aluminium alloy.

The use of an integral steel chassis and aluminium bodywork is unique at these volumes, where tubular space frames and glass fibre bodies are the norm. Jensen calculated that a full set of conventional cast iron tools and dies for the S-V8 would have cost up to £40m, impossible to raise or pay back.

Instead, the pressed metal parts were made possible through the use of ‘soft’ resin tooling devised by Elgin Technologies, the Oswestry-based firm run by Bowyer and Rauer. The resin-faced tools and dies, sufficiently hard for low production runs, are a clever blend of ‘hard’ and ‘soft’: the areas that clamp the edges of the blank are low-cost cast iron, while the complex panel shapes are formed by resin inserts.

Additional cost savings come with the use of tools that can press several small body components simultaneously.

The body and chassis are fabricated at Elgin’s Redditch plant before being de-greased and primed by Mayflower in Coventry. From there, they are transported to Speke for painting and final assembly.

The final assembly process was devised by operations manager Scott Farrell, ex-Royal Engineers. ‘I was appointed operations manager with the remit to de-skill the assembly of the production S-V8 while maintaining integrity of the buildquality,’ he says.

The starting point was to recruit, from 600 applicants, an initially 15-strong manufacturing team, none of whom had ever built a car before. ‘We wanted the people who make the car to have no preconceptions,’ says Farrell.

‘We didn’t want them to have to unlearn anything.’ There are now 30 on the assembly team and this will rise to 60 when a second shift is added next year.

After initial training the team turned to the key task: to map out the build process through endlessly trying out different procedures until the most efficient was found, which was then documented and designated the ‘standard operational procedure’.

‘We expect every team member to be able to do every single job on thetrack, from engine-fit to water ingress testing,’ says Farrell.

The assembly process is divided into seven assembly cells. When the unpainted body arrrives in the plant, sub-assembly work is started in areas adjacent to each cell.Each sub-assembly area is supplied with a clearly-defined kit of parts in trays specially designed to hold only those components and tools needed for each operation, to ensure standardisation. The method ensures only the parts needed for a given operation are supplied to the cell, on a just-in-time basis and in the right sequence, and all the parts have to be fitted to the vehicle before it moves on to the next cell.

‘Team members do not have to make any decision to choose the parts he or she thinks may be required for the process,’ says Farrell. ‘It’s the process that makes the decisions for the team and contributes to consistent quality.’

Though Farrell talks of de-skilling, the team went through weeks of assembling and dismantling the first prototype car, filming the build sequence and watching it, untileveryone was thoroughly trained to carry out each task in the allotted time.

The final product is a car capable of around 160mph and costing £42,650. The S-V8 will be complemented next summer by a C-V8 coupe. Exports to northern Europe will also start at that stage, doubling annual volumes to 600.

While Jensen has yet to prove a commercial success, it has surprised most industry people by getting as far as it has on such a tiny budget. Its example provides hope that – despite the hurdles – it is still possible to start a manufacturing venture from scratch in this country.