Jaguar Land Rover (JLR) will today announce it is cutting up to 5,000 jobs from its 40,000 employees in the UK.
Management, marketing and administrative roles are expected to be hardest hit, but a portion of production staff may also be dismissed.
The layoffs are part of a £2.5bn cost-cutting plan amid what industry insiders have called a “perfect storm”. Brexit has given opportunistic employers a perfect opportunity to cost cut and restructure the organisation, by moving some jobs to cheaper areas abroad.
Cutting Management positions in the UK and replacing them overseas, can reduce the cost of employment for alike for like position by as much as 50%. So the incentive is there for companies to use this opportunity to increase profits.
Meanwhile, Jaguar has been increasing headcount elsewhere in the world. In China, JLR has hired 4,000 workers since 2014.
Recently it announced it would move all production of the Land Rover Discovery to a new plant in Slovakia with plans to hire up to 3,000 workers.
Since 2010 JLR’s profits have been increasing each year and the forecast for 2020 suggests JLR will hit £29bn, for the first time in the companies history.
Some genuine reasons for cost-cutting do exit, for example, JLR cites a downturn in Chinese sales, a drop in diesel sales and concerns about UK competitiveness post-Brexit.
Jaguar and Land Rover cars are particularly exposed to the first two of these factors. As well as producing inferior diesel products to their German counterparts.
China is the company’s biggest and most profitable market for high-end luxury motors, especially for JLR. But sales in China have fallen nearly 50% in recent months as cautious Chinese consumers have been holding back on big-ticket purchases and tougher competition from new 4 x4 brands like Lamborghini, Bently, Porsche. who have all entered the luxury 4×4 market with new vehicles.
The relationship between JLR and its Chinese sales network have also been strained as dealers demand better terms and promotional incentives.
Last year, JLR echoed similar sentiments to other companies and suggested it needed more certainty around Brexit in order to continue investing in its UK operations.
Most large companies have issues warnings that a “no-deal” Brexit would cost their companies billions in profit each year.
Business specialist have speculated that the chance of a ‘no-deal Brexit’ have increased with the governor of the Bank of England recently describing the probability as “uncomfortably high”.
This probability was increased by yesterdays second Brexit defeat for the Prime Minister.
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