Mini joins auto sector woe with 850 lay-offs

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The Mini became the latest car manufacturer to give in to the economic downturn yesterday as BMW, the brand's owner, announced 850 redundancies at the Cowley production plant in Oxfordshire.

The company is blaming "volatile market conditions" for the need to change from a three-shift to a two-shift pattern, which means closing production altogether at weekends.

All the staff to go will be agency workers, and any BMW employees working on the weekend shift will be redeployed.

Mini joins a growing list including Jaguar Land Rover, Nissan and Ford that have been forced to make job cuts by plummeting demand.

Mini – renowned worldwide since it starred alongside Michael Caine in The Italian Job in 1969 – has been a considerable success story for its German owner. The brand was bought by BMW in 1994 as part of the Rover group. And when BMW finally gave up the struggle and sold Rover off in 2000, Mini was the only part that was kept.

Since the launch of the new model in 2001, the marque has hit the big time worldwide. Where 5.3 million were sold across the globe between the launch in August 1959 and the closure of the Longbridge plant in 2000, more than a million Minis have been exported, to 80 countries, since the new style went into production at Cowley in 2001.

Despite the collapse in car sales in the second half of last year, 2008 was still a record year for Mini, with sales up 4.3 per cent worldwide. But in January sales of the classic small car were down by 35 per cent in the UK and by 34 per cent worldwide. "Mini has weathered the storm pretty well so far but it is not immune," a spokeswoman said yesterday.

The company says the introduction of a new convertible model in March, coinciding with the new licence plate registration, could lift sales. But experts on the motor industry say the decision to lay off a significant number of manufacturing staff is emblematic of the growing view that it will be several years before the market recovers.

"This is Mini battening down the hatches for a long haul," Professor Garel Rhys at Cardiff Business School's Centre for Automotive Industry Research, said. "It is yet another sign, this time from a very well-run operation, that customers are simply not going to be there for at least another two years."

The European car market is now predicted to total about 13 million vehicles this year, far below the 15.7 million seen in 2007. And with some economists putting the wider recovery as late as 2010, it could be into 2011 before the spending confidence trickles through to improved car sales, said Professor Rhys. "There is a reduction of about 20 per cent this year alone," he said. "It's like picking up the French car market and the British car market then throwing them into the Atlantic – that is the sort of problem we are facing."