Blame China: Jaguar Land Rover Layoffs Won't Be Exclusive to Europe

On Thursday, Jaguar Land Rover was reported to be in the midst of a plan that would eventually lay off roughly 10 percent of its UK workforce — roughly 4,500 employees. Considering the company has been forced to endure waning demand for sedans and just about everything with a diesel engine, a bit of restructuring was inevitable. Especially since everyone else is doing it at the moment.

However, JLR’s layoffs won’t be exclusive to Europe, as initially presumed. Despite the vast majority of its workforce residing in the United Kingdom, a small portion of its American staff will likely feel the impact, too.

According to Automotive News, a company spokesman would not confirm the number of U.S. employees to be furloughed, but was willing to confirm global layoffs on Friday.

“The reduction does affect our global organization, though the largest impact will be in the U.K. as this is the location of the majority of our workforce,” he explained. “Details of the implementation in other countries outside the U.K. are being finalized. We can confirm there will be a position reduction in North America resulting in a modest number of employee separations.”

In addition to the woeful handling of Brexit causing serious problems for JLR, the company also saw a nearly 22-percent sales decline in China. America was much stronger, with Land Rover having a record year in 2018 (up 23 percent from 2017) while Jaguar languished due to lackluster sedan sales (dropping 23 percent).

Globally, JLR confirmed an overall drop across both brands of 4.6 percent compared with 2017. According to the automaker’s own sales statistics, only about 181,000 of the the 592,708 vehicles JLR sold last year were Jaguars. That was enough to push up Land Rover by 1.2 percent and drop Jag by 6.9 percent against last year’s figures.

From Automotive News:

The company, owned by India’s Tata Group, announced last year a turnaround plan that calls for savings of 2.5 billion [British] pounds in 18 months. Of that total, 1 billion pounds will come from cutting 500 million pounds each from its investment plans for the 2019 and 2020 financial years, the company has said.

“China has driven the sharp deterioration in profits. It’s the single biggest challenge,” JLR’s finance chief, Ken Gregor, told analysts on a financial results call in November. Gregor said that the firm’s Changshu plant in China “has basically been closed for most of October in order to allow the inventory of both our vehicles and dealer inventory to start to reduce.”

Diesel accounts for 90 percent of the automaker’s British sales and 45 percent of global demand, the company said last year. Diesel demand has plunged following new levies in the wake of the Volkswagen Group emissions-cheating scandal.

That trend has only been encouraged by the adoption of the Worldwide Harmonised Light Vehicle Test Procedure and most governments’ damnation of diesel. And yet JLR’s biggest problems are still ahead of it. The company cautioned there could be additional losses if the United Kingdom leaves the European Union with a poor trade deal or no deal at all. The EU has been playing hardball since the Brexit vote and it’s unclear if its vehicles would be subject to new tariffs.

While the brunt of its workforce resides in England, JLR has added employees in China and Slovakia via new factories. It’s presumed that those countries will gradually assume a larger share of production as the years roll on. By contrast, JLR only employs around 400 people in the United States.

[Image: Jaguar Land Rover]