Jaguar poised to shut for the summer

Executives at Jaguar Land Rover, the Midlands carmaker, are drawing up plans for an extended shutdown of its UK plants and a new round of staff layoffs as it struggles to cope with the slump in the world car market.

Preparation for the closures comes just days after the company released its new flagship, the latest version of the Jaguar XJ beloved by prime ministers and top British executives.

The car was launched at a glitzy party in London’s Saatchi Gallery on Thursday, to critical acclaim. Management at the group and its owner, India’s Tata Motors, are hoping the new car, which goes on sale in Britain early next year, will breathe some life into sales that have been struggling since last autumn.

Last month Tata Motors revealed that mounting losses at the UK carmaker had pushed it into its first annual loss of $522m (£322m) in seven years, and warned drastic cost-cutting should be expected. It said sales at its British subsidiary had fallen by about one third.

Jaguar Land Rover, which employs some 15,000 people in the UK, has so far avoided the lengthy shutdowns that some other carmakers have used to save money and run down stock. Honda, for example, closed its plant at Swindon for three months.

Instead, the Midlands group has taken other measures, such as extending its Christmas break to two weeks, moving to a four-day week and laying off around 2,000 temporary staff.

It is understood, however, that one option now under consideration is an extended closure of the three UK plants over the summer, accompanied by another round of job cuts.

Yesterday the company explained that there was no concrete plan. “We have always said there may be a need in the future to take further action, but there are no plans at present,” a spokesman said.

Jaguar Land Rover is still trying to convince the government to provide a loan guarantee that would unlock a £340m advance from the European Investment Bank. The EIB gave the green light two months ago, but cannot dispense the cash until Britain agrees to repay it if Jaguar Land Rover goes under.

The Sunday Times revealed in May that the EIB advance was being considered as part of a larger £800m package, a portion of which the government would guarantee. The talks then revolved round how Jaguar Land Rover could provide sufficient security — through its factories, plant and stock of cars — to allow the government and a group of banks, probably led by Lloyds and Royal Bank of Scotland, to take part.

The former directors of MG Rover are pressing the government to release the results of an inquiry by the Financial Reporting Review Panel into the accounts of the collapsed carmaker.

The report was completed in 2005, but its publication was stopped while a separate government inquiry into MG Rover went ahead. As The Sunday Times revealed last week, publication of that report has now been stopped while the Serious Fraud Office investigates.

The directors will put their case at a Freedom of Information Tribunal to be held in Manchester next month.

From The Times Online