Concerns that job losses at Tata’s steel operations could affect Jaguar Land Rover with demands UK steel used to make its cars
Jaguar Land Rover’s staff have questioned their Indian owner’s commitment to the UK, after the Tata conglomerate cut thousands of jobs at its British steel-making operation as a result of the crisis in the industry.
Car (HKSE: 0699-OL.HK – news ) workers have written to Cyrus Mistry, chairman of Tata, demanding an urgent meeting to seek assurances that further redundancies are not coming and that steel produced by the company will still be used to manufacture Jaguar and Land Rover cars.
The move follows Tata’s failed attempt to sell part of its steel business to Klesch Group last year and rumours swirl that another deal could be on the cards.
A letter to Mr Mistry signed by Ken Smite, who heads union Unite’s representation at JLR’s Halewood car plant, said: “We have watched with increasing concern as the news unfolds that Tata Steel UK intends to dispose of its Scunthorpe plant.
“These developments raise concerns for us about Tata’s plans within the UK as whole, as well as the immediate concern for our colleagues in the steel industry who are now facing an uncertain future.
“As automotive workers we know that this industry still relies heavily on steel to manufacture components and vehicles in the UK,” the letter adds. “The world’s best steel is produced by UK plants, by our Tata colleagues, and we are proud to use it in a number of the vehicles we produce.”
The workers call for Mr Mistry to “ensure that this relationship can endure” and that “steel automotive components used by JLR in the UK and the vehicles we make using steel here should use British-made steel.”
Tata UK plants are thought to be the largest suppliers of steel to JLR, though little of the output from the Scunthorpe operation is used in the automotive sector.
Tata’s ownership of some of Britain’s biggest companies began i n 2006 when it won a £6.2bn takeover battle for steel-maker Corus. immediately making the Indian business the world’s sixth-biggest steel maker as the deal bolstered its existing facilities.
However, falling demand in the wake of the financial crisis, global overcapacity in the sector and high energy costs in the UK have hit Tata’s British steel operations hard and it has been one of the most high-profile victims of the steel crisis, cutting more than 2,000 jobs so far this year and announcing the closure of two plants.
JLR has fared far better since Tata bought it from Ford for £1.3bn in 2008 at the height of the financial crisis.
The car company has had more than £11bn invested in it over the past five years, boosting the range and spurring the introduction of new models.
Annual revenues and profits have more than doubled to almost £22bn and £2.6bn respectively, driven by the success of vehicles such as the “baby” Range Rover Evoque, fuelling staff numbers to swell by 20,000 to more than 35,000.
JLR’s performance propped up weaker results from the parent company for several years but the car maker’s growth has stalled recently thanks to the slowdown in China, one of JLR’s largest markets. Last month JLR reported a £157m quarterly loss after taking a £245m charge for the almost 6,000 of its cars which were damaged in the Tianjin port (Shanghai: 600717.SS – news ) explosion.
Although both companies are owned by Tata Group, they each operate independently, making their own decisions on matters including purchasing.
A spokesman for JLR said: “We continue to use high performance, specialist steel supplied by Tata Steel (BSE: TATASTEEL.BO – news ) in the UK and that is not affected by the recent announcements. Like all other independent businesses, we make our own purchasing decisions based on the right commercial reasons.”
Tata Steel spokesman said: “We supply high performance automotive steels to Jaguar Land Rover which are manufactured at our UK plants. We value Jaguar Land Rover’s efforts to develop local supply chains (Other OTC: UBGXF – news ) .”