Jaguar Land Rover (JLR) has announced that production at its factories will be suspended until at least October 1st. This marks the first time since the cyber-attack that the Business Secretary and Industry Minister are set to visit JLR to speak with the company and its beleaguered supply chain.
Since the September attack, which forced JLR to shut down its IT networks, the company has been unable to produce vehicles. There are growing fears that some of its suppliers may go out of business without government assistance. JLR confirmed that its UK facilities in Solihull, Halewood, and Wolverhampton would not reopen for production before October.
In a statement announcing the extended shutdown, JLR said, “Our focus remains on helping our customers, suppliers, colleagues, and our stores that remain open. We fully acknowledge that this is a difficult time for those connected with JLR, and we thank you for your continued support and patience.”
Sources had previously told the BBC that the disruption could last into November. Industry Minister Chris McDonald confirmed he would be visiting JLR with Business Secretary Peter Kyle to "host companies in the supply chain" and "listen to employees and hear how we can help them get production back online."
In a tweet, he added, "We have two goals: helping Jaguar Land Rover get back up and running as soon as possible, as well as the long-term stability of the supply chain. We are acutely aware of the difficulties that this stoppage is causing for those suppliers and their employees, many of whom are already suffering a financial hardship by no fault of their own. The government is trying to reassure them that we support their interests."
A "Cry for Help" From Suppliers
The shutdown is expected to cost JLR at least £50 million per week. Politicians and union representatives have warned of potentially devastating consequences for some companies in the supply chain, especially smaller ones.
According to Johnathan Dudley, a partner at accounting and consulting firm Crowe UK, suppliers are desperate to be heard. "They're obviously being extremely cautious because they don't want to cause panic, and, in the same way, they don’t want to be seen criticizing people further up the chain," he said on BBC Radio 4's Today show. "It's not a blame game, but it is a cry for help because there are companies now seeing people not paying [staff]."
Professor David Bailey, a professor of business economics at the University of Birmingham, said the government would "suffer one way or another" from the shutdown, whether through a furlough scheme, loans, or an increased welfare bill if employees are laid off. "If portions of the supply chain go under, it's going to make a restart at JLR much more difficult," he told BBC Radio WM. He warned that some of JLR's suppliers are small businesses that could "actually run out of money" if the shutdown continues.
Steve Whitmarsh, who runs Solihull-based Run Your Fleet, a company that provides breakdown assistance and corporate vehicle rentals, told BBC Radio WM that government intervention was "inevitable" because "the consequences would be too severe." He added, "We're not going to get it back if we lose the supply chain. The effects on the economy and the taxpayer will be much greater than short-term assistance."
Calls for Government Support
JLR's UK plants directly employ about 30,000 people, with a further 100,000 in its supply chain and 60,000 who depend on the company's funding. JLR is reportedly now taking the lead in supporting its own supply chain, rather than relying on state intervention.
However, MPs from both the West Midlands and Merseyside, where JLR has plants, have urged the Business Secretary to consider loans similar to those offered during the Covid-19 lockdown. Saqib Bhatti, a Conservative MP whose constituency is home to a JLR plant, said a "failure to help the carmaker's suppliers could have catastrophic consequences."
Additionally, Unite, one of the country's largest trade unions, has called for a furlough scheme for JLR workers after some employees were reportedly encouraged to apply for Universal Credit. Following the hack, Unite reported that workers were being laid off with "reduced or zero compensation."
