Jaguar mulls summer shutdown while GM saga rolls on

Struggling Jaguar may have to shut plants this summer; future of Vauxhall and Opel remains uncertain.

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Last Updated: 06 Nov 2012

Jaguar Land Rover, the UK’s largest automotive employer with 15,000 workers in its three Midlands factories, has so far avoided long-term shut downs. But continuing economic strife in the motor industry may force the firm to consider a full close down over the summer.  Such a move would very likely be accompanied by another round of job cuts. 

JLR, now owned by Tata of India, has been particularly badly hit by the collapse in the global car business, and its sales have fallen by around a third since last year.  Parent group Tata Motors blamed JLR’s travails for its first annual loss - £322m - in seven years recently, although it seems likely that costs associated with the introduction of Tata’s new Indian microcar, the Nano, may also have had something to do with it.

Whatever the reasons, JLR has been warned to expect cost cutting by Tata, and it is further hampered by continuing delays in obtaining a £340m loan from the European Investment Bank. Agreed in principle some time ago, the EIB won’t pony up the dosh until the UK government agrees to guarantee the loan. It all looks a bit grim for JLR, despite the launch of its swanky new XJ model last week.

Meanwhile, Europe’s other big motor industry story, the fate of what remains of GM Europe - Vauxhall here in Blighty and Opel in Germany - continues. It had looked like the deal with Canada’s Magna was more or less done and dusted, after a memorandum of understanding was signed with the German government back in May.

But a lot can change in two months: not only has parent company GM emerged form Chapter 11 in the US, a further two potential bidders have emerged. Chinese car maker BAIC and Belgian industrial conglomerate RJH. Now it seems that the US Government wants all three to present their plans to the official Automotive Task Force in August.

Talks with Magna have apparently hit trouble over the question of IP rights, and whether GM technologies could be used in non-Vauxhall/Opel applications. So all bets may now be off, although the Germans still clearly favour Magna, which has committed to save German jobs.

Our own business secretary Lord Mandelson remains firmly on the fence, which may prove to have been a wise if uncomfortable position to adopt. All he has said is that he is prepared to commit money to Vauxhall’s new owner (whichever firm it may be in the end) to preserve jobs at the Luton plant.

Although as the case of JLR’s stalled EIB loan demonstrates, its one thing for the government to say it will spend money, quite another to get them to actually do so. It’s going to be a long, hot and sweaty summer for the 20,000 employees of JLR and Vauxhall, for sure.

 

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