The drive to make Jaguar Land Rover (JLR) leaner and cost-effective has gathered momentum under the new owner of the British iconic brands, Tata Motors. The company on Thursday said it plans to shut down one of the JLR plants in the West Midlands by 2014. JLR has two plants in the West Midlands region, one in Castle Bromwich and the other in Solihull. Currently, the company employs around 5,000 workers in Solihull and 2,000 in Castle Bromwich. JLR has another plant at Liverpool, and employs, in all, 14,500, including some 3,500 engineers at two product development centres in Whitley, Coventry, and Gaydon, Warwickshire.
The company said it will operate only one of the West Midlands plants, and will decide which one it will go ahead with by mid-2010. However, it clarified there would be no retrenching of staff, as they will be moved from the plant to be closed down to the one that will remaion operational. Moreover, 800 jobs will be created at its Halewood plant in Liverpool, which now has 1,800 employees.
Jaguar models including XF, XJ and XK are produced at Castle Bromwich plant, while at Solihull plant, the company produces Land Rover models including Defender, Discovery 3, Range Rover Sport and Range Rover models.
Globally, new car sales of various auto companies, including those of JLR, are down 25-30%. This has resulted in manufacturing capacity utilisation of less than 60% at JLR, which, combined with the credit crunch, has exposed fundamental weaknesses in the structure of its business, JLR said. JLR’s loss before tax for the first quarter ended June 30, 2009, stood at 62 million pounds (Rs 496 crore), and pulled down Tata Motors’ consolidated performance for the period to a net loss of Rs 328.78 crore.
Since acquiring JLR, Tata Motors has taken several steps to pare costs through production and job cuts. Among other things, JLR has slashed production by more than 100,000 units, cut costs and 2,500 jobs and cancelled bonuses. The company says all these are part of a plan to improve efficiency.
Thursday’s move is also part of the company?s overall new business plan designed to increase its global competitiveness significantly. The plan includes decisive actions–such as launching a new and expanded range of products, delivered through streamlined and competitive costs and a new manufacturing strategy–to see through the next 12-18 months as markets recover.
A Tata Motors spokesperson said the closure would be gradual. The company would be reviewing the two plants on the lines of cost, quality, efficiency and logistics. The move is expected to help the company save overhead costs on the plant.