The chair of Coventry-based Evtec may preside over a business with 900 highly skilled employees, multiple sites and precision machinery, but the outlook for the manufacturer appears tricky. Evtec is a “tier one” supplier to Jaguar Land Rover, also headquartered in Coventry, which this week announced 4,000 job cuts over two years even as the chancellor, John Healey, attempted to talk up Britain’s growth prospects in his first big speech, just down the road. The cuts have stoked fears for the estimated tens of thousands of people across the UK who are employed in the supply chain to Britain’s biggest carmaker, particularly in the West Midlands.
JLR made the cuts in the face of intense competition from Chinese carmakers, Donald Trump’s tariff wars and the fallout from a cyber-attack. Roberts warns the automotive demand will “contract inexorably over the next five years” without significant support and changes in government policy. The JLR chief executive, PB Balaji, hopes to save £1.7bn through the cuts which will mainly affect employees at its head office.
He said the automotive industry “faces significant challenges, with technological change amid intense competition and ongoing geopolitical uncertainty”. The decision marks the latest in a string of worrying signs of decline for the industry, threatening Andy Burnham’s ambition to “safeguard sovereign manufacturing” and reindustralise Britain. Corin Crane, the group chief executive of the Chamber of Commerce in Coventry and Warwickshire, believes 140,000-180,000 people are employed in supply chain businesses connected to JLR.
The importance of JLR to the local and UK-wide economy was underscored last year when the devastating hack left suppliers struggling and hit UK GDP. JLR scrambled to set up a help desk for its supply chain, including more than 700 companies making the 30,000 parts that can make up a luxury car. The hack paused production for four weeks, leaving factory workers stuck at home, and costing the manufacturer £200m.
It was one of several factors contributing to JLR posting a profit before tax of just £14m – down from £2.5bn the year before. This time, white-collar managers and research and development staff are in the crosshairs, with the cuts expected to be largely found through UK voluntary redundancies in those areas. However, there are concerns over a ripple effect if JLR’s struggles persist.
Evtec’s Roberts has united a loose collective of about 15 business that supply JLR, making up £2bn of revenue and with 12,000-14,000 employees, in order to speak with a “common voice” about the issues they are facing. He describes JLR as the “kingpin” of the UK’s automotive industry and warns that challenges facing the manufacturer had knock-on effects on suppliers and smaller car manufacturers including McLaren, Aston Martin, Bentley and Rolls-Royce. We’ll just be a very small volume player,” he says.
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