On the news that Jaguar Land Rover will be cutting 4,000 jobs, David Bailey, professor of business economics at the Birmingham Business School, writes that JLR’s latest round of job cuts should be treated as much more than another round of corporate restructuring.
It is a warning that Britain’s automotive industry is being hit by a near-perfect storm, and the consequences will extend far beyond JLR.
Demand is weak and uncertain
Demand is weak and uncertain. Chinese manufacturers are becoming increasingly formidable competitors. Trade tensions and tariffs are reshaping global supply chains.
UK industrial electricity prices remain exceptionally high. Manufacturers face enormous investment requirements to move towards electric vehicles. And the wider global trading environment is becoming more difficult and unpredictable.
So, it is too easy, and ultimately too superficial, to portray the difficulties facing JLR simply as the consequence of the cyber-attack or poor management decisions.
Of course, management matters. JLR has made its own decisions about products, markets, brands, investment and electrification. The jury is out, for example, on the Jaguar luxury EV re-launch.
Governments also make choices
But governments also make choices. The UK cannot simultaneously demand rapid electrification, impose increasingly challenging zero-emission vehicle targets, have some of the highest industrial electricity costs among major economies, and also expect manufacturers to continue investing billions of pounds in British factories and supply chains as though these pressures do not matter.
Something has to give.
This is where the stakes become much bigger than JLR. Automotive manufacturing generates far more than jobs on the factory floor. It anchors research and development, engineering expertise, component suppliers, logistics, universities, technical skills and regional economies. A major vehicle plant creates an industrial ecosystem around it.
A strategic industrial emergency
The government should treat the current situation as a strategic industrial emergency. The alternative is deeply uncomfortable.
Britain could find itself pursuing decarbonisation while simultaneously losing the industrial capacity needed to deliver it. We could reduce emissions from cars made in Britain while importing an increasing proportion of the cars, batteries and technologies from overseas.
That is not a successful industrial transition; it is deindustrialisation. JLR’s job cuts should therefore be seen as a warning shot. The question is whether Westminster hears it and acts.
Author: David Bailey is professor of business economics at the Birmingham Business School and a senior fellow of the ESRC’s UK in a Changing Europe programme, exploring the impacts of Brexit on UK automotive and manufacturing.
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