Britain’s largest automotive firm lost £500m in three months as pandemic wiped out profits
Jaguar Land Rover was on target to return to profitability after a record loss last year until the coronavirus outbreak.
Photograph: Ben Stansall/AFP/Getty
Jaguar Land Rover is to cut more than 1,000 UK agency staff after losing £500m in three months due to the coronavirus pandemic.
The UK’s largest automotive company was on course to return to profit after last year’s record £3.6bn loss until the crisis took hold, wiping out its 2020 earnings in a matter of weeks.
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Major job cuts announced so far
The coronavirus lockdown has virtually halted international travel and tourism, hitting airlines and other travel companies, aerospace and auto manufacturers and oil companies hard.
As these businesses adjust to dramatically reduced revenue projections, job losses are starting to mount alarmingly. More than 40,000 redundancies have already been announced across these sectors, with more than 10,000 likely to be in the UK.
Rolls-Royce
The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in the UK. Rolls-Royce will make the first round of redundancies through a voluntary programme, with about 1,500 posts being lost at its headquarters in Derby, as well as 700 redundancies in Inchinnan, near Glasgow, another 200 at its Barnoldswick site in Lancashire and 175 in Solihull, Warwickshire.
Bentley
The luxury carmaker intends to shrink its workforce by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme. The majority of Bentley’s 4,200 workers are based in Crewe, Cheshire.
Aston Martin Lagonda
The Warwickshire-based luxury car manufacturer has also announced 500 redundancies.
BP
The oil company plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK, by the end of the year. The BP chief executive, Bernard Looney, said the majority of people affected would be those in office-based jobs, including at the most senior levels. BP said it would reduce the number of group leaders by a third, and protect the “frontline” of the company, in its operations.
British Airways
The UK flag carrier is holding consultations to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline. BA intends to cut roles among its cabin crew, pilots and ground staff, while significantly reducing its operations at Gatwick airport.
Virgin Atlantic
Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.
EasyJet
The airline has announced plans to cut 4,500 employees, or 30% of its workforce.
Ryanair
The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.
P&O Ferries
The shipping firm intends to cut more than a quarter of its workforce, a loss of 1,100 jobs. The company, which operates passenger ferries between Dover and Calais, and across the Irish Sea, as well as Hull to Rotterdam and Zeebrugge, will initially offer employees voluntary redundancy.
Centrica
The owner of British Gas is to slash 5,000 jobs, saying it was looking to cut costs by simplifying its business structure. The company is removing three layers of management, with more than half of the job losses falling on leadership roles, including half its 40-strong senior team.
Johnson Matthey
A major supplier of material for catalytic converters in cars, Johnson Matthey announced plans to make 2,500 redundancies worldwide, or 17% of its total workforce. The group said it was the result of the pandemic and the uncertain outlook for the car industry.
Heathrow Airport
Voluntary redundancy has been offered to all of its 7,000 direct employees after coronavirus wiped out its passenger traffic.
The carmaker is now preparing to slash more than 1,000 contractors, potentially affecting factories at Halewood on Merseyside and Solihull and Castle Bromwich in the West Midlands. The decision came after JLR reported a loss of £501m before tax in its final quarter to the end of March, dragging it £422m into the red for the year as a whole.
Quarterly sales figures indicated the severity of the impact of the pandemic on global sales. JLR sold 509,000 cars during the year, 70,000 fewer than it did the year before.
Of the shortfall, 49,000 came in the fourth quarter as Covid-19 hit China, one of JLR’s most important markets, before spreading throughout the world. The result was that annual revenues came in £1.2bn lower at just under £23bn, with the fourth-quarter decline of £1.7bn reversing an improved performance in the first nine months.
JLR, owned by the Indian company Tata Motors, was already retrenching in the face of slumping sales of diesel vehicles and its own over-reliance on a Chinese market that had been sluggish even before the Covid-19 outbreak. It announced plans to shed 5,000 jobs last year after its record loss and set a cost-cutting target of £1bn by 2021.
In the light of Covid-19, it said on Monday that another 1,100 contract workers at its manufacturing plants would go and increased its savings goal to £5bn.
“Through its ongoing transformation programme, Jaguar Land Rover is taking action to optimise performance and achieve further operational efficiencies to enable sustainable growth and safeguard the long-term success of our business,” the company said in a statement.
“Against the backdrop of the Covid-19 pandemic, the company has taken the difficult decision to reduce the number of contract-agency employees in its manufacturing plants over the coming months.”
Des Quinn, national officer for trade union Unite, said: “It is another devastating blow for our auto sector and the communities that rely on them for jobs.
“We urge the government to get on with delivering the urgently needed sector support package, as other countries such as France and Germany have done, so that we can stem the tide of redundancies.”
But the company’s chief executive, Professor Sir Ralf Speth, said there was some cause for optimism in a nascent recovery in sales seen in China, as customers returned to showrooms. “Our operational fitness gives me confidence that we can weather this storm,” he said.
JLR said it was planning for a “gradual recovery” and pointed to spring sales in China, which were down a mere 3% in April and 4% up on last year’s May performance, with sales of Range Rovers particularly encouraging.
The company borrowed 5bn yuan (£560m) from five Chinese banks this month after failing to qualify for loans from the Treasury and Bank of England because of its “junk” investment rating.
After shutting down its car plants worldwide, it has resumed production at sites including Halewood and Solihull, although Castle Bromwich remains closed.