Media reports in the UK say that Tata-owned Jaguar Land Rover is about to announce major output and job cuts reflecting lower orders on Brexit and diesel uncertainties. A formal announcement is expected on Monday (April 16).

Reuters - citing an anonymous source - reported that output will be cut at JLR's Solihull and Castle Bromwich plants, affecting some 1,000 agency workers.

JLR is reportedly not renewing the contracts of a number of agency staff and will be informing staff on Monday of its plans for the 2018-19 financial year.

The Solihull factory employs 10,000 workers, including 2,000 contract staff. 

"In light of the continuing headwinds impacting the car industry, we are making some adjustments to our production schedules and the level of agency staff," the company said in a statement.

Dom Tribe, automotive sector specialist at management consultancy, Vendigital, said: "This decision by Jaguar Land Rover (JLR) is a further sign of ongoing uncertainty in the automotive industry. As an industry in which investment is heavily reliant on forward planning, industry bodies have been lobbying extensively for greater clarity around a Brexit trade deal. 

"With JLR's UK production facilities exporting around 75 per cent of its vehicles and importing many parts from the EU, this action is in part an effort to help mitigate potentially costly tariffs, which could significantly damage its bottom line.

"The downturn in demand for diesel-powered vehicles will have also played a key role in this decision. Diesel cars make up around 90 per cent of JLR's production output in the UK and the company is behind the curve with regards to bringing hybrid and all-electric alternatives to market. 

"In the highly unionised automotive industry, contractors are a flexible employment resource for VMs - allowing them to reduce labour costs as and when needed. It is therefore no surprise that these job losses concern contractors rather than full-time workers. With government continuing to make slow progress over a Brexit trade deal, we may see more automotive manufacturers following suit in order to mitigate risk, reduce overheads and protect their profitability."

In January, the firm said it would temporarily reduce production at Halewood in the second quarter in response to weakening demand due to Brexit and tax hikes on diesel cars but did not detail any job losses.

It said then that the Q2 reduction would be temporary and designed to rebalance the supply of Discovery Sport and Range Rover Evoque models given market conditions and demand.

See also: Jaguar Land Rover cuts planned production for Q2