JCB Cites Lack of Bank Credit for Further Job Cuts

JCB last week announced a further 684 redundancies in the United Kingdom, citing the lack of credit available from banks to fund machine purchases and continuing low confidence as the primary reasons.

Production in the U.K. in the first three months of 2009 will be around 75-percent lower than at the same time last year, and an anticipated upturn in the second quarter now shows no sign of materializing.

“Back in November we forecast a moderate second quarter recovery in 2009 based on the fact that governments around the world had pumped a huge amount of money into recapitalizing financial institutions and had committed to stimulus packages, which included significant spending on public construction projects,” said JCB chief executive Matthew Taylor.

“Two months later, despite the recapitalization, customers are still struggling to buy machines because of a lack of available credit. And with government-funded construction projects not moving forward quickly enough, this means the anticipated second-quarter recovery simply won’t happen.

“The ongoing reluctance of the banks to provide credit is aggravating an economic downturn which is now becoming much steeper than we could have ever envisaged,” Taylor continued. “This unprecedented situation needs to be addressed with some urgency so that confidence and stability can return; otherwise irreparable damage will be caused to the U.K.’s manufacturing industry.”

JCB’s Staffordshire plants affected by the redundancies are: the World HQ, Rocester; JCB Heavy Products, Uttoxeter; JCB Compact Products, JCB Earthmovers and JCB Cecilly Mills Operations, Cheadle and JCB Cab Systems, Rugeley. JCB Transmissions, Wrexham and JCB Power Systems, Derbyshire are also affected.

In October GMB, Britain’s general trade union, members voted for a shorter, 34-hour working week, a move that continues to protect a further 332 shop-floor jobs. Earlier this month — when there was no production at JCB — the company undertook its biggest-ever training initiative in its history, with more than 2,000 employees completing a program that will result in achievement of NVQ and City and Guilds qualifications.

The latest job losses affect 593 shop floor and 91 staff positions and are in addition to 1,000 redundancies announced since July. JCB employs around 7,900 globally, with around 4,800 in the U.K. JCB has more than 4,300 employees in Staffordshire, U.K.

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