Press Report : JLR tight-lipped over reports of £1bn bail-out plea
Alun Thorne, Head of Business, Birmingham Post, 24th November, 2008
Jaguar Land Rover (JLR) has refused to be drawn on speculation that it is in secret talks over a Government bail-out but admitted it was facing some of its toughest ever trading conditions.
According to reports, the luxury car group – owned by Indian conglomerate Tata – had requested an emergency £1 billion loan to help it ride out the downturn in the global car market.
Figures out last month saw new car sales fall in UK to their lowest levels for more than 40 years with other developed countries experiencing a similar decline in sales as the global economic downturn saw consumers rein in their spending. The result has been almost universal cuts in output by the major car manufacturers with a number calling for central funding to help them through the recession.
In the UK, the Society of Motor Manufacturers and Trader (SMMT) is currently lobbying the Government over a £2-3 billion rescue package for the wider automotive industry and a spokesman for JLR said it was supporting this initiative but would not comment on any assistance it was specifically requesting on its own behalf.
He said: “Jaguar Land Rover supports both the UK (SMMT) and the European (ACEA) industry position that Government intervention is required to improve liquidity in the supply chain and support continued investment in carbon reduction technology as well as stimulating consumer demand. The French, German, US, Australian and Chinese are all considering industry support packages.
“The automotive industry is facing unprecedented trading conditions as a direct fall out of the banking crisis and turbulence in financial markets and we are, of course, keeping government appraised of the impact on our business. We are not going to comment on speculation on the content of confidential discussions with governnent.”
Lord Mandelson will be meeting representatives of the UK automotive and retail motor sector this week to discuss where Government action can help
A Business, Enterprise and Regulatory Reform (BERR) spokeswoman said she could not comment on individual cases.
“The Government clearly can see that these are unprecedented times for the global economy and for the global automotive sector,” she said. “Lord Mandelson will be meeting representatives of the UK automotive and retail motor sector this week to discuss where Government action can help.”
The success of the new XF model has seen Jaguar enjoy significant sales success over the past year, but Land Rover saw sales drop by more than half in October compared to the same month in 2007 – the most successful year in its 60-year history.
Over the past month, JLR has seen more than 600 of the firm’s 16,000 employees take voluntary redundancy with another 300 from Jaguar’s Castle Bromwich and Land Rover’s Solihull plants taking three months off for a 20 per cent cut in their salary.
Over the weekend JLR chief executive David Smith warned that large scale redundancies were a “probability” within the car industry and that they could be so severe that the UK economy could be permanently damaged.
He said: “For every job in the manufacturers, there are four or five in the supply base. It is important we don’t lose that supply base because it is still a dcent one, providing research and development and engineering jobs.”
Specifically about JLR, Mr Smith could not rule out further cuts. “I hope demand picks up so we don’t have to make any more,” he said.
[Source: Birmingham Post]