Credit: JLR

Jaguar Land Rover's plans to outsource might not be so bad for Britain

The car maker has agreed a deal for some of its models to be produced in Austria.

by Jack Torrance
Last Updated: 02 Jul 2015

Though it’s no-longer British-owned, Jaguar Land-Rover (JLR) is often held up as perhaps the best example of what the country’s manufacturing sector is capable of. The company employs around 25,000 UK staff and is Britain’s largest automotive business.

So imagine the disappointment it must have created today when it announced plans to outsource the production of certain future cars to a factory in Austria. JLR didn’t say which of its new models would be built at Canadian company Magnay Steyr’s plant in Graz, but chief executive Ralf Speth sought to allay fears about the future of its British operations.

‘The UK remains at the centre of our design, engineering and manufacturing capabilities,’ he said. ‘Partnerships such as this will complement our UK operations and engineering.’

In a way the move is a consequence of JLR’s storming success. In the past five year’s the company has doubled the size of its workforce and its annual sales volumes to 35,000 and 462,000 respectively. It says that making some cars in Graz is necessary to keep up with its plans for growth, as its UK facilities are reaching their full capacity.

In some respects you might argue that is something Britain should celebrate – that the country has supported a company that’s grown so fast it can no longer confine its production to the UK (plus a few factories in emerging markets).

But it also begs the question of why JLR didn’t feel it could continue to expand its capacity at home. That could be for a number of negative reasons: Britain’s much-maligned engineering skills shortage or the high cost of property, for instance. But it’s also possible that this is very much a temporary arrangement.  

‘Doing this gives JLR flexibility while it gets its act together building new plants of its own,’ Phil Harrold, an automotive specialist at PwC told The Telegraph. ‘It can put a certain number of vehicles through the contractor and then move on, it is not necessarily tied into a long-term deal.’

So while some might bemoan JLR’s decision, it’s ultimately the result of British success, and it could result in more production moving to the UK in the future.

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