Jaguar Land Rover (JLR), on Thursday announced that the company is to reduce its global workforce by 4,500. This will be part of a cost-cutting strategy to reduce costs by £2.5 billion ($3.2 billion). This rightsizing of the workforce, however, is in addition to the 1,500 employees who left the company last year.
The Tata Motors (TTM) owned company has been under pressure especially since car sales in major markets like China 2018 slumped for the first time in the last two decades. JLR sales in China (which is its strongest market) went down by 42% in December and 22% in 2018. Furthermore, the uncertainty surrounding Brexit and a steep fall in sales of diesel vehicles following Volkswagen's (VLKAF) emissions scandal has aggravated the downward sales spiral even more. September 2018 saw hundreds of JLR workers at one of its UK plants being put on a three-day workweek.
CEO, Ralf Speth, went on record stating, "We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry,"
Regarding the Brexit ambiguity the company is of the opinion that pulling out of the European Union without maintaining smooth alliances with the bloc would lead to a dip of £1.2 billion ($1.5 billion) in its annual profit numbers. According to Speth, the "wrong outcome" would endanger company plans to spend £80 billion ($102 billion) in the United Kingdom over the course of the next five years.
Downsizing aside, JLR is also working on investing in a new UK assembly center for batteries that will be used to make electric vehicles at an existing engine plant. This is with the view to offer electric options on all JLR models by 2020.
This trend of going lean due to the uncertain current environment seems to be affecting JLR’s American rival Ford as well who are also planning on ridding themselves of thousands of jobs in Europe. The automobile industry seems to have been driven up the wall and is desperate to get sales up as soon as possible. This, however, is at the cost of unemployment, angst and job insecurity.