Jaguar Land Rover is to close its Solihull plant for two weeks because of slumping sales in China, where trade tensions with the US are denting consumer confidence.
The plant, which employs 9,000 staff after 1,000 temporary workers were cut this year, will close for two weeks from 22 October. JLR took the decision after reporting a 46% slide in September sales to customers in China, the company’s largest market, accounting for nearly a quarter of global sales last year.
The shutdown is the latest in a string of setbacks this year for JLR, owned by the Indian conglomerate Tata. The company has been forced to reduce staff and put others on a three-day week as stagnant Chinese demand has been compounded by problems affecting the wider industry, including sliding diesel sales and Brexit uncertainty.
A spokesperson for JLR, which employs nearly 40,000 people in the UK, said workers would still be paid during the shutdown at Solihull, in the automotive industry’s West Midlands heartland.
“As part of the company’s continued strategy for profitable growth, Jaguar Land Rover is focused on achieving operational efficiencies and will align supply to reflect fluctuating demand globally as required,” the spokesperson said. “Customer orders in the system will not be impacted and employees affected will be paid for the duration of the shutdown.”
JLR had cited China among the key factors behind a £264m loss in the three months to the end of June, saying it believed consumers were delaying car purchases until after Beijing slashed import duties on vehicles. However, on Monday the company said the expected rebound in sales after the duty cut had not materialised, while demand was subdued by burgeoning trade tensions with President Trump’s US administration.
The chief commercial officer, Felix Bräutigam, said: “Customer demand in China in particular has struggled to recover following changes in import tariffs in July and intensifying competition on price, while ongoing global negotiations on potential trade agreements have dampened purchase considerations.”
The slump in China, as well as a decline of nearly 7% in North America, dragged overall sales for the month down 12.3% to 57,114 vehicles. It comes weeks after the firm announced it was moving to a three-day week at Castle Bromwich, its other large production facility, citing the diesel slump and Brexit.
The freeze at Solihull, where the production line makes Range Rovers and the Land Rover Discovery SUV, is not understood to be Brexit-related. However, the Labour MP Jack Dromey, whose constituency includes the Castle Bromwich plant, said JLR’s difficulties underscored the need for the automotive industry to be prioritised in the UK’s agreement with the EU.
“This is yet another worrying sign for the future of Britain’s automotive industry,” he said. “Brexit chaos and the government’s mishandling of the transition from diesel pose a growing threat to the jewel in the crown of British manufacturing and the government is running out of time to save it.
“[The JLR chief executive] Ralf Speth warned of the looming consequences of a no-deal Brexit and we were told by wide-eyed Brexiteers that he was ‘making it up’. It is imperative that the government sorts itself out and gets a deal from the EU that protects jobs and trade because tens of thousands of jobs depend on it.”
Speth has previously cited uncertainty over Brexit and confusion over government policy on diesel engines as factors in job losses at Solihull and the move to a three-day week at Castle Bromwich. He has also warned that tens of thousands of jobs in the automotive sector would be at risk if the UK crashed out of the EU without agreeing an exit deal with Brussels.
The company said it would have to reconsider £80bn of UK investment over five years in the event of a no-deal Brexit because a disorderly departure from the EU would hinder access to the single market and disrupt the flow of car parts into the UK.
