Business secretary Lord Mandelson has confirmed that the government is considering a bail-out for struggling automotive giant Jaguar Land Rover.
The firm, which employs 15,000 here in the UK, was bought by the Indian firm Tata for £1.7 billion in June.
But the two brands have both struggled since and, in the face of a dire new-car consumer market, announced last month that it has had to relieve 850 agency staff of their duties.
After a syndicate of Chrysler, Ford and General Motors (owners of Vauxhall in the UK) failed in a bid for a $14 billion bail-out from the US government last week, Mandelson and his colleagues now have a difficult decision to make over whether state-aid here is the only option to avoid the demise of two iconic British motoring brands and with it a further 15,000 resigned to the classifieds.
Mandelson has warned that there will not be “a great long list of industrial bail-outs” but told Sky News the Jaguar Land Rover request is under consideration.
“I’m talking to the car manufacturers,” he said. “We are analysing very carefully what is going on in the sector and we will make good judgments in good time if it is appropriate for the Government to take any action or if it is possible for us to do so. We are looking at the sector as a whole. I have had discussions with the owners and management of Jaguar Land Rover in particular, because they argue that they are under particular strain.
“But they have owners who are well-resourced, who have the first responsibility for sustaining the companies that they own in existence and in production for the future.
“If we judge that it is not just short-term difficulties but longer-term pressures that are operating in that sector, or in relation to that particular company, then we will consider what measure, what intervention we can appropriately make. But the time for that decision has not been reached.”
Almost all vehicle manufacturers here in the UK have affected lock-downs at their plants or have announced proposals to do so. In November, The SMMT reports, vehicle production was down by a third with a 2.7 per cent decline for the year-to-date.
“The UK motor industry is facing unprecedented challenges and urgent action is now required. The sector has seen falls in demand, extended plant closures and the first signs of redundancies in the supply chain,” said Paul Everitt, SMMT chief executive.
“Without swift action and the ability to access credit and finance, significant damage will be done to the nation’s industrial capability – leaving the UK poorly equipped to take advantage of any global growth when it returns.”
It is thought Jaguar-Land Rover are looking for around a £1 billion cash injection from the public purse.