Jaguar Land Rover plans to lay off over a 1,000 contract employees in UK⁠

• The announcement came after parent Tata Motors posted a consolidated net loss of $1.3 billion for the three months ended March 2020
• The company will begin cutting jobs at the end of July and last through the year.
• Earlier in April, JLR decided to put about half of its 40,000 employees in the UK on furlough and cut senior management salaries by 10-30%.

Tata Motors-owned Jaguar Land Rover (JLR) plans to cut more than 1,000 contract-agency jobs in the UK as it tries to save another £1 billion to cope with the fallout from the coronavirus crisis.

This came after JLR parent company Tata Motors yesterday (June 15) clocked over $1.3 billion loss in loss as Jaguar Land Rover swung back into the red after two-quarters of profit. JLR’s revenue fell 5% between January and March 2020.

“Against the backdrop of the COVID-19 pandemic, the company has taken the difficult decision to reduce the number of contract-agency employees in its manufacturing plants over the coming months,” according to the company statement.

According to a report, JLR has 32,000 employees working across the UK, and it would lose up to 1,100 agency staff, or contractors, “in the coming months.”

The jobs are expected to be cut from across the business’ UK manufacturing sites, a process that will begin at the end of July and last through the year.

Currently, in the Pune division, JLR manufactures six vehicles that include Jaguar XE, Jaguar XF, Jaguar F-PACE under the Jaguar portfolio and the Range Rover Evoque, Range Rover Velar and Discovery Sport under the Land Rover portfolio.

Early signs of cost-cutting

Earlier in April, JLR decided to put about half of its 40,000 employees in the UK on furlough and also implemented 10-30% pay cut for one quarter in its senior management salaries.

The UK’s largest automaker earlier reported a 30.9% drop in sales due to the pandemic induced lockdown. The company said the cuts were part of its transformation programme to improve operational efficiencies.

The company, in its Q4 filing to the stock exchanges already warned about “actions” that will lead the group to become “sustainably cash positive from FY22.”

“Q1 FY21 is expected to be significantly weaker in both JLR and TML with the full impact of lockdowns being reflected in the results… Actions are underway to significantly deleverage the Tata Motors Group with JLR to become sustainably cash positive from FY22 while becoming future ready,” the company’s statement to the stock exchange said.

As per the recent quarterly statement, employee benefits is the biggest cost at the group level, at about 11%, after the cost of inputs needed to build an automobile, which make for over half of its total cost.

The company was already struggling due to the new BSVI norms, and the COVID-19 crisis only made it worse. Jaguar Land Rover, which accounts for a major portion of the car market in the UK and China, took a massive hit during the pandemic. JLR contributes the lion’s share of the company’s consolidated revenue.

The carmaker is now in talks with the British government to secure a loan of more than £1billion (₹95 billion), according to reports. Its china segment also raised $705 million (₹53 billion) from Chinese lenders, its first debt financing in China.

The group has begun reopening factories in the UK and Europe earlier this month, although many are running at low capacity. Still, due to the sluggish demand, the company decided to keep one of Jaguar Land Rover’s key British plants in Castle Bromwich closed until at least mid-August.

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