JLR announces surprise plant merger plan

Posted on 24 Sep 2009 by The Manufacturer

Jaguar Land Rover has announced it plans to close one of its factories in the Midlands but insists the cost savings exercise will not result in compulsory redundancies.

The company, owned by Indian firm Tata, says it will close either its Solihull or Castle Bromwich plant and move production from the redundant one to the remaining one. The plant chosen for the axe is not expected to close until 2014 though.

The firm did not rule out reducing its numbers when it combined the plants through natural attrition and voluntary redundancies but said up to 800 extra jobs will be made available at its other manufacturing site at Halewood on Merseyside to produce the LRX – a long touted new model dubbed the “baby Land Rover”. The low carbon, more efficient car should hit forecourts in 2011.

JLR will also try to save money by restructuring pensions and its back office and by paying new employees lower wages.

“This is a plan that recognises the impact the economic collapse has had on our business, and at the same time the opportunities that lie ahead for these two great brands,” said JLR chief executive David Smith. “We are confident that a new, more efficient and competitive structure combined with future investment will unlock the true potential of this business.”

Business Secretary Lord Mandelson said the announcement was a welcome one as it will safeguard jobs and also shows evidence that JLR is committed to a low carbon future.

“Confirmation that the LRX is to be built at Halewood will help to end the uncertainty at the plant with the added prospect of some new jobs in the pipeline,” he said. “It’s a testament to the workforce who have made the plant one of the most productive in Europe.”

Reiterating his apathy for JLR and the car industry as a whole over the conditions they face, Mandelson promised government will do “everything it can” to relieve some of the pressure and help companies exploit green opportunities. He was keen to remind that Whitehall pitched in £27m to the LRX development earlier this year.

However, “it is inevitable that we will see further re-structuring across the industry,” he said. “There is global over-capacity and car manufacturers recognise that they have to take some of this capacity out and cut back on their costs.”

Innovation and long term prospects should now form the focus for both industry and government, Mandelson said.

Not everybody thinks JLR’s plans are a good idea though. The GMB union said it “will be opposing everything we have heard so far.”

“We will fight the company on this,” said Bert Hill, GMB regional officer, “of that I have no doubt.”

A Tata spokesperson said that a decision will be made on which factory will close in the second half of next year.

JLR has already implemented various cost-cutting exercises this year, including reducing its headcount by 2,500 to 14,000, cutting production by 100,000 units and freezing employees’ pay.