Jaguar Land Rover fight to survive in current Chinese economy

11 January, 2019, 08:25 | Author: Sheila Harris
  • The firm has factories in Halewood Solihull Castle Bromwich and Wolverhampton

Tata Motors-owned Jaguar Land Rover (JLR) is all set to announce job cuts in the thousands amid a crippling China demand slowdown.

Diesel accounts for 90 per cent of Jaguar Land Rover's British sales and 45 per cent of global demand, the company said past year, as demand tumbles following new levies in the wake of the Volkswagen scandal. The company has said that move will cost 1,200 jobs.

Auto giant Jaguar Land Rover is to reduce its 44,000 workforce by 4,500 under plans to make £2.5 billion of cost savings.

The company has sounded some of the most urgent warnings among United Kingdom manufacturers about the damage that Brexit uncertainty was doing to investment in the UK.

The company confirmed today its Wolverhampton engine factory will begin producing electric drive units (EDUs) from later this year.

"Decisive action will help deliver resilient long-term growth as Jaguar Land Rover implements cost and profit improvements", said CEO Ralf Speth in a written statement.

The company is facing several challenges, including uncertainty over Brexit, but has been particularly effected by a significant fall in sales in China, a previously booming market for the auto firm.

"Jaguar Land Rover and its owners have made clear they remain firmly committed to the United Kingdom, continuing to invest billions and employing tens of thousands of people".

The FT reported that Ford's job losses will come as it bids to cut $14bn globally. The company already cut 1,000 jobs previous year, but new plans to improve cash flow by £2.5 billion ($3.2 billion) include "substantial" cuts to employment that will run into the thousands, a source told Reuters, affecting managerial, research, sales and design staff, but not line workers.

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The cost-cutting plan was first unveiled in October past year and put down to losses created by Brexit uncertainty and slowing demand in China.

Ninety percent of its vehicles are diesel-powered, although it has been investing in new electric and hybrid vehicles.

Most commentators have concluded that the chance of a no-deal Brexit have increased with the governor of the Bank of England recently describing the probability as "uncomfortably high".

JLR has warned of further losses in the event of the United Kingdom leaving the European Union with a poor trade deal or no deal.

But sales there have fallen almost 50% in recent months as cautious Chinese consumers have been holding back on big ticket purchases.

China is the company's biggest and hitherto most profitable market.

Hundreds of Wolverhampton JLR workers were sent home on full pay in the run-up to Christmas, as production was slowed down in the wake of falling sales, while around 200 jobs were axed in Solihull.

It has hired 4,000 workers in China since 2014.

The company employs around 10,000 people in Solihull - its biggest factory - and around 3,200 at its Jaguar factory in Castle Bromwich, where a three-day week was introduced in the autumn.

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