Business Secretary Jonathan Reynolds has ruled out a government bailout for Jaguar Land Rover (JLR) as the Midlands car giant prepares to brief staff on reported plans to cut 4,000 jobs. The company confirmed it is launching a voluntary redundancy scheme for salaried and management employees, with details expected to be shared with staff today.
JLR, which employs around 30,000 people across the UK, is expected to officially unveil a significant redundancy programme covering two years, according to The Times. The announcement comes as the company targets approximately £1.7 billion in savings over the next two years and aims to reduce its break-even point to 300,000 vehicles annually.
Government rules out bailout
Speaking on Laura Kuenssberg's BBC programme, Reynolds said he had held discussions with JLR chief executive PB Balaji and was due to meet the company's leadership team early this week. Asked whether financial assistance could be provided to safeguard jobs, he responded: "Not if it's to bail people out. If it's about long-term investment in the future, we do invest alongside industry on that."
Reynolds said: "A company the size of JLR, which is a huge British success story, at various times in its business cycle, the number of, directly, people it employs will change. If this is about making sure over time that the workforce is right to make the business as competitive as possible, that's the conversation we need to have. Of course you want to mitigate any job losses."
A Government spokesperson said: "We understand this will be an uncertain and concerning time for affected workers, their families and wider communities. We have taken significant action to back the UK automotive industry by lowering electricity bills for manufacturers, providing £4 billion of capital and R&D funding to manufacture zero-emission vehicles (ZEVs) and launching a £2 billion electric car grant to encourage people to buy EVs (electric vehicles)."
Company cites market conditions
A JLR spokesperson said: "Over the past three years, we have strengthened our House of Brands and transformed our product portfolio for the next generation. As we deliver the next phase of our strategy, we need to adapt to evolving global market conditions while targeting approximately £1.7 billion of savings over the next two years and reduce break-evens to 300,000 vehicles. To achieve this, we must further simplify our organisation, improve efficiency and build greater resilience."
The manufacturer said it had briefed staff and union representatives about the voluntary redundancy scheme, saying it would "share further information with our colleagues first". JLR produces the majority of its vehicles in British plants, including sites in Solihull, Castle Bromwich and Halewood, Merseyside.
Union demands action
Unite general secretary Sharon Graham said: "Death by a thousand cuts has been going on under the nose of successive governments. Years of under-investment, unsustainable ZEV mandates and high industrial energy costs are crippling the industry. There must be further action. There have been intensive Government discussions over the weekend to look at how to mitigate these job losses at JLR."
Graham added: "The business secretary, Jonny Reynolds and myself are meeting the CEO of JLR. Unite was pivotal in securing the £1.5 billion government facility for JLR after the cyber attack. Once again, we will leave no stone unturned to support these workers. It cannot be acceptable that workers again are made to pay the price."
Financial pressures mount
JLR disclosed last month that revenues dropped by 9.6 per cent year-on-year to £6 billion for the three-month period ending June 30, driven by a 9.2 per cent fall in car volumes. That followed significant disruption to production caused by a series of factors, amongst them a blaze at a supplier's factory.
JLR temporarily halted production of its Range Rover and Range Rover Sport models at its Solihull plant in March, after a fire broke out at a component manufacturer's facility in Norway. Vehicle sales figures also took a hit following Jaguar's move to end production of several diesel and petrol-powered models, including the F-Pace.
Jaguar is redirecting its efforts towards electric vehicles as part of a wider strategic shake-up aimed at revitalising the brand. JLR posted a pre-tax profit, excluding exceptional items, of £109 million for the quarter, a stark contrast to the £351 million profit recorded a year earlier. Profit margins took a hit from a one-off provision related to US fuel economy regulations, which partly counterbalanced reduced US-UK tariffs.
Earlier in the year, JLR announced plans to slash around £1.7 billion in costs in future years to bolster its recovery efforts. JLR remains in recovery mode following a significant cyberattack which forced it to suspend production last year.
