The reasons behind the JLR job losses

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What are the reasons behind today's job losses at Jaguar Land Rover? They're not selling enough cars. Why?

There are three reasons - China, Diesel and Brexit. The firm describes them as "headwinds".


  • JLR did well in China, selling lots of cars - and top of the range cars like the Range Rover Sport. The company did so well it built a factory there. But the Chinese bubble has burst pretty rapidly. At the end of last year sales of JLR cars in China were dropping spectacularly - by as much as 46 per cent.


  • Diesel sales have dropped. You may have heard a phrase the "Demonisation of Diesel". The message from the government is diesels are dirty, too polluting, and drivers are taxed accordingly - the higher the emissions the higher the tax. But hold on, is that true? The Society of Motor Manufacturers and Traders says diesel engines emit 20 per cent less CO2 than an equivalent petrol engine. The current Euro 6 compliant engine is the cleanest in history. Yet the government message that diesels are dirty has driven diesel sales down for Jaguar Land Rover. The government believes we should be driving electrics. All well and good, but mass market Jaguar Land Rover electric cars are about two years down the line. They have the iPace - which has received much praise, and they say all their models will have an electric engine option by 2020 - but that's too long to wait while diesel sales drop.


  • The firm says uncertainty over Brexit is stopping people making big ticket purchases - individuals and fleet buyers. Privately, the firm has always been against leaving the EU. Publicly it began by saying it wanted to maintain tariff-free access to Europe. It doesn't want to pay tariffs on parts made in Europe and shipped to the factories in the UK, and it doesn't want the cars it makes in the UK to have a tariff slapped on it when it goes abroad. But the language has changed - that preference for tariff free access became "essential". Then CEO Dr Ralf Speth said livelihoods will be at risk with a bad Brexit deal and will wipe £1.2bn profits from the bottom line. These are profits which the firm ploughs back into the company to design and build new cars to grow the business.

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It all adds up to the firm needing to save £2.5bn to keep going and keep growing.

When JLR said that it needed to cut that much towards the end of last year it was not question of if they would axe jobs but when they would and how many.

The biggest expense for any business is the wage bill so it was inevitable that many jobs could be lost.

A thousand plus went last year - individual tragedies for each and every one of the men and women involved. But really, that was just tinkering at the edges.

If - after those 1,000 jobs had gone - the China market had picked up and Brexit uncertainty had gone - JLR could have continued without further cuts, possibly. But no replacement for diesels was a perfect storm too far for them.

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Can JLR be criticised for perhaps expanding too quickly?

I don't think so. It made hay while the sun shone. While people around the world were buying cars - they made them in great numbers.

They modernised the factories at Solihull and Castle Bromwich and built an engine plant at Wolverhampton to keep up with the demand.

They make cars in Austria and Slovakia too. But now that demand has dropped off because of this perfect Chinese, Brexit, Diesel storm. Headwinds which are blowing JLR off course.

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But JLR's rise has been stellar?

Consider this - when Indian conglomerate, Tata, bought JLR in 2008 there were about 10,000 employees.

That grew to over 43,000 and profits soared. Sadly, some of those 43,000 people are expected to be told today they are losing their jobs.

They'll need to weather their own storms as they try to find new jobs.

And think about those in the UK who make parts for Jaguar Land Rover. It's thought that for every one job at JLR there are 7 in the supply chain.

Some supply chain jobs have already started vanishing

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What needs to change for JLR?

Chinese people need to buy more cars again. Easier said than done - especially with a US China trade war is putting up prices of raw materials, pushing up the Chinese cost of living.

Electric cars - a full range of electric Jaguar Land Rovers is well in development but two years off at least. The government easing up on diesels? That's unlikely.

Brexit - if we see tariffs, make no mistake, this will hit Jaguar Land Rover hard and despite its constant assurances that it wants to stay in the UK it surely must look at where it produces cars to avoid tariffs.

The headwinds have not eased. They need to change direction and get behind JLR - unquestionably one of the greatest business success stories the Midlands has ever seen - and get it back on course.