Pressure is growing for the UK Government to act to support Jaguar Land Rover (JLR) suppliers who are in deepening financial difficulties following the lengthy suspension of manufacturing at JLR plants after a cyber-attack at the end of August.
The Tata-owned company has now said that its factories will be shut until at least 1 October, which will mean the whole of September has seen zero manufacturing output of JLR vehicles or engines.
Media reports suggest that options are being considered for UK Government financial support for severely impacted suppliers. Options could include the UK Government stepping in to purchase parts for later supply to JLR or direct loans to companies. Labour unions such as Unite have called for a Covid-style 'furlough scheme', to pay workers at supplier companies while factories are idle.
Analysts say that government backed loans to inject liquidity to cash-starved firms might be more straightforward than direct government involvement in buying parts.
GlobalData analyst Justin Cox told Just Auto: “The UK Government stepping in to temporarily buy huge quantities of parts would also come with technical challenges involving supply chain logistics.
"Loans would be much easier to manage, with less complexity, to put in place quickly. Of course, much depends on what kind of progress is being made with the core causes of this crisis and when we are realistically likely to see JLR manufacturing resume.
“The production crisis is clearly getting to a point where otherwise healthy suppliers are getting into financial difficulty, so the case for some kind of special support while this temporary crisis lasts is undoubtedly a very strong one. However, the government will still be worried about an open-ended commitment – while this crisis sees no sign of ending - and setting precedents.”
Jaguar Land Rover itself is highly profitable and enjoys the support of its Tata Motors parent. This week, fears are growing for parts suppliers in the UK who are highly dependent on JLR business.
Earlier this week, UK Government ministers visited JLR and suppliers.
UK ministers acknowledged the severity of the situation which is impacting a key sector that supports thousands of skilled jobs which enables growth and innovation across the UK’s manufacturing sector.
Following a visit to JLR, the ministers also visited Webasto’s Sutton Coldfield site to engage with the impacted supply chain firm and learn about the supply chain’s resilience following the cyber incident.
Business and Trade Secretary Peter Kyle said: ”I know this is a deeply worrying time for all those affected by the ongoing cyber incident and that’s why I visited JLR to hear from the company, supply chain and workers.
“Getting JLR back online as soon as possible is my top priority, providing much needed certainty to workers and suppliers.
“This government is on the side of our world-leading automotive sector and by working closely with JLR and the Society of Motor Manufacturers & Traders (SMMT) we are doing everything we can to minimise the impact of this incident, as well as helping the sector thrive long into the future through our modern Industrial Strategy.”
A UK Government unit – the National Cyber Security Centre (NCSC) – is working with JLR to provide support in relation to the incident.
