Jaguar halts work at Birmingham as global car-makers wait for bailouts

Jaguar Land Rover's Solihull factory began another two weeks of downtime yesterday, just one week after the 3,500 staff returned to work from an extra-long Christmas break.

The Indian-owned firm has been hit by the recession battering automotive manufacturers worldwide. Around 1,800 staff are being cut from the 15,000-strong UK workforce and, in November, the company said it was facing "unprecedented trading conditions" as it posted Land Rover sales down nearly 12 per cent.

Solihull staff will receive basic pay and undertake training during the suspension of activity, the company said yesterday. The facility will also be readied to begin assembly of the latest Jaguar XF and XK models, unveiled at the Detroit Motor Show last week.

Of the cuts at Jaguar Land Rover so far, around 500 jobs are being lost through a voluntary process that will conclude at the end of this month. Another 850 were axed in November with the termination of agency contracts, mostly relating to engineers and IT staff. And last week, the company announced another 450 redundancies, of which 300 are from the management.

Suppliers at all points in the UK motor supply chain are suffering as consumer confidence decimates sales and credit restrictions cause problems for what buyers there are. Car production fell by a third in November alone, according to the Society of Motor Manufacturers and Traders, and the industry is in protracted talks with the Government about a rescue package similar to that being offered to the banks.

Tony Woodley, the joint general secretary of the Unite trade union, said: "Hundreds of billions [of pounds] of taxpayers' money has been poured into the failed banks. Until we hear from Government that they are getting behind our manufacturers with a strategic plan to retain skills and capacity through this downturn, I fear no car industry job is safe."

There are similar talks under way across the world and the French government is expected to announce plans to bail out its automotive sector later today. Luc Chatel, the country's Industry Minister, hinted yesterday at a plan for the government to take an equity stake in Renault and Peugeot Citroën, in return for financial help, ahead of a key meeting this afternoon. But other possibilities include loans at favourable rates, lending guarantees and convertible bonds.

Peugeot Citroë*admitted last week that the company sold nearly five per cent fewer cars in 2008 than 2007. Nicolas Sarkozy, the President, responded with the explicit statement that the government would put "a lot of money" into the automotive sector, which employs around 10 per cent of the entire workforce.

The US government has already poured $14bn (£9.7bn) into a rescue packagefor General Motors, Chrysler and Ford. And there were reports yesterday that Chrysler is in talks with Fiat about a partnership agreement that could see the Italian group take an equity stake in its US counterpart. Fiat's chief executive said in December that his company needed a partner to survive the recession, and the company sells only its Ferrari and Maserati marques in the US. Fiat declined to comment on the allegations yesterday.