5,000 jobs set to go at Jaguar Land Rover

Jaguar Land Rover (JLR) is set to announce 5,000 job cuts today as part of a £2.5bn cost-cutting plan as the company battles headwinds in China and uncertainty caused by Brexit.

It is thought that management, marketing and administrative roles are expected to be hardest hit while some production staff may also be affected.

One in eight jobs are under threat at the car giant, which had until recently been seen as the jewel in Midlands manufacturing.

However it has been struggling to maintain sales volumes this year, with monthly sales in its key China market dropping by as much as half, while longer-term trends are also unfavourable.

The shift away from diesel and the impact of Brexit on its UK manufacturing sites are among the major challenges for the automotive group.

Today’s job losses come on top of cuts made last year – in Solihull, 1,000 agency workers were laid off in 2017 and 1,000 staff at Castle Bromwich were put on a three day week for the last three months of 2018.

Meanwhile, has increased its workforce elsewhere in the world, hiring 4,000 workers in China since 2014.

In October, the manufacturer opened a £1bn manufacturing facility in Slovakia employing 1,5000 staff.

Last summer, the company said it needed more certainty around Brexit in order to continue investing in its UK operations.

Its chief executive Dr Ralf Speth, who has led JLR for eight years, warned that “10,000s of people are at risk” if Brexit causes disruption to its UK manufacturing operations.

Speth reiterated his warning that a hard Brexit will cost the manufacturer £1.2bn.

JLR uses around 25m parts to produce 3,000 vehicles a day in the UK, using its just-in-time process. It said any disruption which caused production to stop would cost the company £60m a day.

Christian Stadler, professor of strategic management at Warwick Business School and an expert on the car manufacturing industry, said the job cuts are not just bad news for JLR staff, they will be a “huge concern” for thousands more workers at UK companies that currently supply parts to the car manufacturer.

Stadler said the challenges facing JLR were a result of a “perfect storm”, with the most immediate concern being the drop in sales in China.

“That is JLR’s biggest market, but car buyers there are reluctant to make expensive purchases as the economy is growing at its slowest rate for a decade and the country is locked in a trade war with the US,” he said.

“At the same time Chinese dealers are demanding better terms, which JLR has resisted.

“Brexit is another factor, with businesses increasingly concerned about the prospect of a ‘no deal’ Brexit, which would mean tighter border controls.

“That would cause massive disruption as the UK car manufacturing industry is so closely integrated with Europe. The supply chain typically crosses The Channel six times before a car is finished.”

Stadler said a no-deal Brexit could also force JLR to put up their prices as tariffs increase, which could lead to sales falling even further.

“Long term the company needs to invest in electric vehicles. JLR has been slow to embrace electric cars, ninety per cent of its vehicles are still diesel powered and subject to higher taxes. The firm could really suffer if the Government brings forward the ban on new diesel and petrol cars.

“The move to electric is a problem for many of the big manufacturers, as it will see new competitors fighting for market share. There are many Chinese players backed by the Chinese Government, while US tech firms are looking at their own mobility solutions. If JLR is too slow to respond it faces a bumpy road ahead.”

Earlier this week, luxury car maker Aston Martin triggered its contingency plans as the threat of a no-deal Brexit looms.

The Gaydon-based sports car manufacturer has hired a supply chain chief and said it was considering flying in components to deal with the effects of Britain leaving the EU without a deal on March 29.

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