UK markets closed

JCB to cut UK factory production over coronavirus supply issues

Edmund Heaphy
Finance and news reporter
JCB's factory in Rocester, Staffordshire — one factory where workers' hours will be cut. (Reuters)

Construction equipment manufacturer JCB on Thursday said that it would cut production and working hours at its UK factories due to coronavirus-related supply chain issues.

The decision to reduce the working weeks of around 4,000 of its employees marks the first time that the virus has dented the UK-based operations of a major company.

JCB, known for its yellow diggers, said that more than 25% of its Chinese suppliers remained shut, and that even those that had reopened were working at a reduced capacity and struggling to make shipments.

“It is therefore clear that the inbound supply of certain components from Chinese partners will be disrupted in the coming weeks as they seek to replenish their stocks,” JCB said on Thursday.

Read more: Euro close to three-year lows as EU warns coronavirus is 'mounting concern'

“This inevitably means we will not have the required amount of parts needed to build our forecast number of machines in the short term.”

Employees will work 34-hour weeks instead of 39-hour weeks. JCB said that workers would be paid their full wage, and that the extra hours would be banked for them to work later in 2020.

About 60,000 people have now been infected with the coronavirus, forcing many factories in China, a key supplier of parts to manufacturers globally, to shut.

The Staffordshire-based company said that the factories would work at a reduced pace until further notice, giving no timeline for when it expected normal production to resume.

It said that it would continue to review the situation.

Read more: Markets sink again as coronavirus death toll leaps

“The disruption to the component supply chain in the UK comes at a time when demand for JCB products is very strong, so while this course of action is very unfortunate, it is absolutely necessary to protect the business and our skill base,” said JCB chief operating officer Mark Turner.

Other companies have warned that their own production could be impacted similarly by supply chain issues.

Fiat Chrysler (FCAU) said last week that it may be forced to halt production at one of its European factories due to coronavirus-related issues.