Some 850 agency workers at Jaguar Land Rover's West Midlands operations were told they would lose their jobs yesterday, just hours before car industry bosses pleaded for government help for the beleaguered sector.
The cuts take the luxury car maker's total job losses to 1,450 this year as it battles with the economic problems dragging down the auto industry across the world. They were announced just as the UK's major car manufacturers prepared to ask government ministers for support in the face of plunging sales caused by collapsing consumer confidence and restricted access to credit.
Jaguar Land Rover said engineering and IT staff were the worse affected by the latest cuts. The company, which employs 15,000 people in the UK, already has a 600-strong voluntary redundancy programme for permanent staff under way and also has a schedule of non-production days and weekly shutdowns across its UK facilities.
"It is a difficult decision but it is part of us taking responsible and rapid actions for the future of the business," a spokesman said. "The car industry globally is probably the sector most severely affected by the current economic climate, and the premium end we are in is even more so."
Some of Jaguar Land Rover's biggest markets are the worst affected by the fallout from the banking crisis. In the UK alone, combined sales of the two brands dropped by 4.7 per cent in the nine months to September and the company does not anticipate any improvement in market conditions in the immediate future. "The US and the UK are our two main markets and we have been adjusting production volumes in response to changing demand over the last few months," the spokesman said.
Jaguar Land Rover was one of the manufacturers that met Lord Mandelson, the Business Secretary, yesterday to plead for a rescue package for the UK's £51bn-a-year industry. The meeting, brokered by the Society of Motor Manufacturers and Traders (SMMT) and attended by 17 senior representatives from the industry, was to discuss a package – worth several billions of pounds – to support the troubled sector. Measures proposed at the meeting include fast access to credit, support for a European Investment Bank (EIB) loan package and special liquidity arrangements for vehicle manufacture finance companies.
But, although sources who took part in the discussions said there is no doubt that the Government "gets it", the official response was non-committal. "The meeting provided an opportunity for the Government to listen directly to how the industry has been affected by the current economic situation," the statement issued after the meeting said. "The government will study the details of key issues they have identified."
It is clear that the sector is suffering. There has been little but bad news this autumn. As well as Jaguar Land Rover's cuts, Honda is stopping production at its Swindon factory for two months next spring, BMW is closing four plants for a month over Christmas, and Nissan, Mini and Bentley have all announced reduced production schedules. What Paul Everitt, the SMMT chief executive, describes as "a set of unprecedented market conditions" has pushed car production down by 25 per cent in the last month alone.
The problems are affecting manufacturers across the world. Japanese giants Toyota, Honda, Mazda and Nissan have all announced production cuts and staff lay-offs. German regional governments are considering assistance for Opel. And in the US, the three titans – Ford, Chrysler and General Motors – have gone cap in hand to Congress and have until next week to come up with a recovery plan that merits the proposed $25bn (£16bn) rescue package. "This is one of the most challenging periods the sector has ever seen, and it is an industry that has already gone through severe restructuring in the 1980s and again in the 1990s," Mr Everitt said.
Fiscal stimulus measures announced by the Government this week, including the VAT cut and the request that the EIB double its support for green vehicle technology to €4bn (£3.3bn) over the next two years, will help. But they may take several months to yield the much-needed cash. "We have welcomed the broad measures in the pre-Budget report but we need things that will have an effect more immediately," Mr Everitt said. "What we have agreed to do is work collaboratively with the Government looking at a range of solutions with a timetable that reflects the urgency of the situation."
It is not only the car makers themselves who are at risk, but the wider industry including component makers, dealerships and outfits offering servicing and maintenance. Without swift action, the industry faces more job cuts and production shutdowns, insiders warn. "There is a vicious chain reaction we can't get out of," one manufacturer participating in yesterday's talks said. "Customers can't raise the credit to buy the car, the dealers can't raise the credit to finance the supply, and that hits the liquidity of the manufacturers."
More finance is needed not just to ease the strain of daily operations. Funding is also required to ensure that dev-elopment programmes remain on track, thereby safeguarding the future of the industry. "Product development is the key to the future of the industry," another manufacturer said. "We've got to think of the future of the industry."Reuse content