Mandelson pledges Jaguar Land Rover will not fall
Jan 15 2009 By Jonathan Walker
Business Secretary Peter Mandelson has promised that Jaguar Land Rover will not be allowed to collapse, as the Midlands carmaker announced it was axing 450 jobs due to the banking crisis and plummeting sales.
Lord Mandelson praised the business for investing in environmentally-friendly technology, adding: “It wouldn’t be right for anyone to stand by and see this sort of investment go to the wind.”
But the firm, which employs 16,000 in the West Midlands and Merseyside, was excluded from a new government scheme to help small and medium-sized firms by guaranteeing up to £20 billion in loans. Ministers confirmed the guarantees would only apply to businesses with turnovers below £500 million.
Jaguar Land Rover is to eliminate 300 management positions and cut salaried agency personnel by 150, the business announced. Chief executive David Smith said the cuts were caused by “the unavoidable impact of the credit crunch and a severe reduction in demand”.
It came as almost 3,000 job losses were announced in one day. Banking giant Barclays cut 2,100 jobs at its retail and commercial banking business while administrators for music, DVD and games retailer Zavvi closed another 18 UK stores with the loss of 353 posts.
Jaguar Land Rover has asked the government to provide loans or loan guarantees, allowing banks to provide credit, to help with cashflow. The money would not be a bail-out and would be repaid at commercial rates.
But, quizzed by MPs, Lord Mandelson admitted Ministers were still deciding whether to provide support. The government had received “a number of competing requests from the motor industry” and had choices to make. He indicated that Jaguar Land Rover’s investment in research and technology could tip the balance, saying: “We are talking about £480 million spent on research and development by the company, investing heavily in low carbon technology.”
Low-carbon and environmentally-friendly technology would play a huge role in Britain’s economic success, he said. “We are talking maybe millions of jobs. We should not be prepared to see the downturn we are experiencing setting back or jeopardising our ability to convert to a low-carbon economy.”
Business leaders warned that job cuts at Jaguar Land Rover exposed the urgent need for government action. Jerry Blackett, chief executive of Birmingham Chamber of Commerce, said: “This help is not only for those who work directly for Jaguar Land Rover, but the many more whose livelihoods depend on supplying and making parts for the company.”
Meriden MP Caroline Spelman, the Conservative Party chair, said: “By failing to include the larger company in the scheme, they are putting the future of not only the 17,500 jobs at risk, but also the many small and medium-sized businesses which will fail if Jaguar Land Rover’s situation does not improve.”