Jaguar Land Rover has put 1,000 employees at certainly one of its UK crops on a three-day work week due to plummeting gross sales of diesel autos and fears over Brexit.
Britain’s greatest carmaker mentioned that employees on the plant exterior town of Birmingham would obtain full pay whereas on the lowered hours. A spokesperson mentioned the change from 5 days to 3 would assist keep away from job cuts and run via Christmas.
“In gentle of the persevering with headwinds impacting the automotive business, we’re making some momentary changes to our manufacturing schedules at Fortress Bromwich,” the carmaker mentioned in a press release.
Jaguar Land Rover is owned by India’s Tata Motors (. )
Gross sales of diesel autos have fallen off a cliff in the UK, the place fears about air pollution and a regulatory crackdown following Volkswagen’s ( emissions disaster have scared off patrons. Diesel gross sales dropped over 30% in 2017, based on business group SMMT. )
Uncertainty over Britain’s separation from the European Union has additionally prompted some shoppers to place main purchases on maintain and raised fears within the automotive business about large disruption to provide chains and job losses.
“We’re going through plenty of challenges, and Brexit is one,” mentioned a spokesperson at Jaguar Land Rover. “Nevertheless it’s not the one one.”
The gradual tempo of Brexit negotiations has heightened fears in latest months that Britain could go away the European Union in March with out agreeing a transition deal to maintain it briefly within the bloc’s single market and customs union.
Even when a deal is reached, the phrases of UK-EU commerce could stay unsure manner past that deadline.
‘Double whammy’ slams UK automotive business into reverse
David Bailey, a professor of business at Aston Enterprise College, mentioned that Jaguar Land Rover has been particularly laborious hit by the “double whammy” of fears over Brexit and diesel.
“You’ve got obtained a profitable business in the UK that had been rising shortly,” he mentioned. “That is been put into reverse due to Brexit and diesel.”
Jaguar Land Rover warned in July that if the UK leaves the European Union with out sustaining a clean buying and selling relationship with the bloc, it will wipe out greater than £1.2 billion ($1.6 billion) of the corporate’s revenue a yr.
Automobile producers, which depend on complicated worldwide provide chains, are nervous that Brexit will result in new commerce boundaries and delays on the borders. Jaguar Land Rover CEO Ralf Speth mentioned final week that provide bottlenecks would value his firm £60 million ($79 million) per day.
“That may be a big danger,” he advised Sky Information. “We rely on free, frictionless, seamless logistics.”
The Fortress Bromwich plant, which has just below 2,000 employees, is small by the requirements of at the moment’s auto business. And it largely produces saloon vehicles which have fallen out of trend.
Bailey fears the plant won’t survive a messy Brexit, with manufacturing probably shifting to Slovakia, an EU member. Jaguar Land Rover mentioned in a press release that it was dedicated to its UK crops.
CNNMoney (London) First printed September 17, 2018: 10:57 AM ET