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Jaguar Land Rover fight to survive in current Chinese economy

10 January 2019

Just hours after Jaguar Land Rover said it may cut up to 5,000 jobs in its primarily United Kingdom -based workforce on Thursday, Ford (f) announced it will also eliminate thousands of jobs across Europe.

JLR chief executive Ralf Speth said a tidal wave of "unprecedented" challenges to the upmarket auto maker meant it was slashing about a tenth of its workforce - the bulk of which are in the United Kingdom - to "protect the future" of the business. The layoffs, representing roughly 10% the company's workforce, come on top of the 1,500 people who left in 2018, the company said Thursday in a statement.

The bad news for the sector was exacerbated by Ford revealing a radical overhaul of its loss-making European operations as it reduces the number of models sold.

The restructuring was announced on the same day that Ford said it would cut thousands of jobs in Europe.

Demand in China, which had once been one of its strongest countries but has since been hit by a slowdown, fell by 21.6 percent, the biggest drop of any of its markets. "Falling sales in China due to global trade wars as well as changing consumer attitudes to diesel vehicles have been damaging".

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JLR employed more than 43,000 people during the 2018 financial year.

Steven Armstrong, Ford's European group vice president, said the company was taking "decisive action" to transform its European business.

"We want to be a net contributor of capital and not a net detractor", Armstrong told journalists on a later call, referring to Europe's financial contribution to USA parent Ford Motor.

Ford lost $245 million in Europe in the third quarter as sales slumped in Turkey and Russian Federation.

JLR lost 354 million pounds ($452 million) between April and September.

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The automaker also said it will begin producing electric drive units at its Wolverhampton engine plant in England and will create a new battery assembly center at Hams Hall near Birmingham as it develops a greener range of cars.

"Britain's vehicle workers have been caught in the crosshairs of the Government's botched handling of Brexit, mounting economic uncertainty and ministers' demonisation of diesel, which along with the threat of a no-deal Brexit, is damaging consumer confidence".

"In smaller vehicles the diesel decline is accelerating".

The carmaker has already moved to ensure it will still have a plant inside the European Union after Britain's planned departure from the bloc on March 29. "If Brexit went in the wrong direction we would have to have another look, to mitigate that", Armstrong said.

"Given the difficulties that they're going through.to add further costs and further disruption from a no-deal Brexit, it's clear why they've been so clear that this would be against their interests", said business minister Greg Clark.

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Fellow vehicle makers Mini, Rolls-Royce and Honda have said they would temporarily close plants in April after Brexit to avoid any disruption.

Jaguar Land Rover fight to survive in current Chinese economy