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Coronavirus: Jaguar Land Rover to slash up to 1,100 contract jobs in UK

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·Finance and news reporter
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A logo is pictured outside a Jaguar Land Rover new car show room in Tonbridge, south east England, on May 24, 2020. - Jaguar Land Rover (JLR), owned by India's Tata Motors, was on Sunday said to be in talks with Britain's government in the hope of to securing a loan following a drop in sales due to the COVID-19 coronavirus pandemic. (Photo by Ben STANSALL / AFP) (Photo by BEN STANSALL/AFP via Getty Images)
The cuts come on top of 5,000 jobs that JLR axed last year. (Ben Stansall/AFP via Getty Images)

Jaguar Land Rover (JLR) confirmed on Monday that up to 1,100 contract and agency workers in the UK could lose their jobs as the carmaker scales up its cost-cutting measures in response to the coronavirus crisis.

“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,” the company said in a statement.

Workers on temporary service contracts at locations including Solihull, Castle Bromwich, and Halewood in Liverpool are likely to be affected by the measures.

The cuts, which come on top of the 5,000 jobs that JLR axed last year, follow a dire fourth quarter for the carmaker.

In the three months to the end of March, retail unit sales plunged almost 31%, pushing it to a pre-tax loss of £501m ($628m) in the period. Across the full year, JLR made a pre-tax loss of £422m on revenues of £23bn.

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Though the figures represent an improvement from last year’s pre-tax loss of £3.6bn, the carmaker’s results were dented in 2019 by a huge £3.1bn impairment charge related to a devaluation of its investments.

The company, which is owned by India’s Tata Motors (TTM), on Monday increased the savings target from its cost-cutting programme to £5bn by the end of March 2021, noting that it has already delivered savings of £3.5bn.

The company had previously noted that it had “returned to profitability” in the second and third quarters of its most recent financial year, largely due to double-digit sales growth in China.

But the coronavirus pandemic severely dented demand and forced the closure of its factories. Earlier in June, the company was forced to borrow 5bn yuan (£560m) from five Chinese banks. Its poor investment rating meant it did not qualify for supports in the UK.

READ MORE: UK economy will not recover from crisis until 2023, forecasters warn

While its Castle Bromwich facility remains closed, JLR has begun reopening some factories in the UK and Europe at a reduced capacity.

“Jaguar Land Rover’s early action to transform its business meant that as a company we were on track to meet our full-year expectations and operational and financial targets before the pandemic hit in the fourth quarter,” said Ralf Speth, the chief executive of Jaguar Land Rover.

“We also reacted quickly to the disruption caused by COVID-19. Our immediate priority has been the health and wellbeing of our people — and this remains the case as we have now begun the gradual, safe restart of our operations,” he said.

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