Jaguar Land Rover To Cut 4,000 Jobs; UK Government Rules Out Bailout

The UK government signaled it won't provide financial support to limit job losses expected to be announced at Jaguar Land Rover Automotive Plc this week, as the region's automakers grapple with intensifying competition from China.

JLR is set to cut 4,000 positions - or roughly 10% of its global workforce - over the next two years as the UK's largest carmaker confronts soaring costs, plummeting sales and the effects of US tariffs, the Times reported on Saturday.

Asked by the BBC if the government might offer financial support to JLR, UK Business Secretary Jonathan Reynolds said on Sunday: "I don't intervene and run businesses. They need to know what the right footprint for them going forward is." 

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JLR's planned reductions highlight the competitive pressures affecting automakers in Europe, where Chinese rivals led by BYD Co. and Chery Automobile Co. expand with affordable electric and hybrid models. The likes of BMW AG and Volkswagen AG are also cutting costs, with the Audi and Porsche owner last week securing supervisory board backing for a plan that calls for 50,000 additional job reductions.

JLR's move may signal a shift away from the UK as a major production hub, with the maker of Range Rover sport utility vehicles planning to grow in the US, its largest market. Staff were warned to expect the announcement of the redundancy program on Monday, according to the Times.

Reynolds said he has spoken to JLR's CEO as well as trade union Unite's general secretary and plans to meet with them early this week. But the government won't take measures to "bail people out," he added.

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"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," Reynolds said. "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."

JLR said in a statement it's starting a voluntary redundancy program as it targets about 1.7 billion pounds ($2.3 billion) in savings over two years. JLR wants to lower its break-even point to 300,000 vehicles and simplify its business in response to global market conditions, according to the statement. It didn't mention the number of job cuts planned.

Any staff cuts will come as a blow to Prime Minister Andy Burnham, who entered Downing Street this summer on a promise to re-industrialize the country and boost job opportunities.  

The UK used to boast the world's second-biggest auto manufacturing base in the 1950s. It's since dropped out of the Top 10, behind the likes of Canada and Slovakia, with setbacks including the country's exit from the European Union and the failure of local EV battery startup Britishvolt.

JLR, which employs about 33,000 people in the UK and roughly 40,000 globally, is owned by India's Tata Motors Passenger Vehicles Ltd. The carmaker's revenue fell nearly 10% in the most recent quarter, with pretax profit dropping 69% to £109 million.

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Meanwhile, the wider Tata Group faces uncertainty over its capital spending plans after Chairman Natarajan Chandrasekaran resigned last month.

In the past two years, JLR has been hit by flooding at a key supplier and a cyberattack that halted production at its facilities around the world. When the disruption spread through JLR's supply chain, the UK government stepped in, agreeing to guarantee a 1.5-billion-pound emergency loan so the company could pay its suppliers.

In May, JLR struck a deal with Stellantis NV to jointly develop cars in the US, which could pave the way for it to eventually gain access to factories there.

The company's first electric Range Rover went on sale earlier this month for 154,070 pounds, one of the most expensive electric SUVs on the market and nearly 50,000 pounds more than JLR's combustion-engine equivalent. The high price sets it further apart from cheaper SUVs coming out of China that are taking the UK by storm.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)