Up to one in six UK motor industry workers face being made redundant in the wake of the coronavirus pandemic, car makers have warned as they’ve called on the government to provide taxpayer help to keep their businesses afloat and staff in employment.
The sector cull is on top off the 6,000 jobs already axed in June – including 1,100 agency jobs at Jaguar Land Rover and 250 temporary staff at Nissan Sunderland – as the Covid-19 lockdown saw factories and dealers forced to close, says the Society of Motor Manufacturers and Traders (SMMT).
The critical point and ‘harsh reality’ will come in November when the Government’s furlough scheme comes to an end, the trade body warned.
Support package for motor industry: Sector bosses have called for a taxpayer-backed fund to help retain one in six jobs that are at risk following the Covid-19 crisis
Currently a third of a third of the automotive workforce is still on furlough as car and light commercial vehicle production volumes are set to crash by a third to just 920,000 this year.
Car bosses urged the Government to help with a dedicated ‘restart package’ to save jobs and ‘pave the way for recovery’.
Published to coincide with the motor industry’s annual Summit, a report by the SMMT concluded that ‘up to one in six jobs are at risk of redundancy’ as ‘the harsh reality of the Covid crisis for the UK’s £18.6 billion automotive sector is laid bare.’
A ‘hard Brexit’ without a tariff-free free-trade deal could exacerbate problems, the body added.
‘With a third of automotive workers still furloughed, the end of the government’s job retention lifeline in November highlights the critical need for a dedicated restart support package to safeguard these jobs,’ it warned.
‘More than 6,000 UK automotive job cuts have been announced in June, a result of global lockdowns, closed markets and shuttered plants.’
Already in June, Jaguar Land Rover has announced it will cut 1,100 UK agency jobs
Nissan has also confirmed it will not be extending the contracts of temporary staff at the Sunderland plant this month
Showrooms in England and Wales are now re-opening and production lines restarting, but car chiefs say reduced demand and social distancing are slowing productivity.
The SMMT is calling on government to address this with a support package for the entire sector to help drive demand and ease cash flow for an industry supporting 168,000 high-skilled and high-paid manufacturing jobs across the UK.
Measures sought include ‘unfettered ‘access to emergency funding, permanent short-time working, business rate holidays, and VAT cuts.
It said policies that boost consumer confidence ‘would accelerate a sustainable restart for the market and manufacturing’.
This would be ‘a pre-requisite to the recovery phase’ and to unlocking the investment needed to drive a green future for the UK.
The impact of the pandemic on manufacturing is expected to cut annual car and light commercial vehicle production volumes by a third to just 920,000 units this year as part of recalculations already made by SMMT analysts.
It said that even with a tariff-free Free Trade Agreement in place, full recovery ‘is expected to take up to five years’ with output reaching pre-crisis levels of 1.35 million units by 2025.
But car-makers also warned that no deal could ‘severely damage these prospects’ and could see volumes falling below 850,000 by 2025.
The industry has been sucker-punched by the coronavirus pandemic, which forced dealerships to close from 23 March to 31 May
SMMT chief executive Mike Hawes said: ‘UK Automotive is fundamentally strong. However, the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid. A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy.’
He added: ‘Government’s intervention has been unprecedented. But the job isn’t done yet.
‘Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth.’
Pushing the argument for help from the government and the taxpayer, he concluded: ‘Support delivered now is an investment in the future of one of Britain’s most valuable assets… investment that we will repay many times over.’
Showrooms are starting to sell cars again but demand is expected to remain below pre-lockdown levels while consumers get their finances back in order following the pandemic
The critical point and ‘harsh reality’ for those working in the sector will come in November when the Government’s furlough scheme comes to an end, the SMMT has warned
The call coincided with the SMMT publishing a new motor industry report – ‘UK Automotive Trade in a post-Covid World’ – highlighting the importance of the UK’s £100 billion auto trade ‘hub’ to boosting Britain’s future growth and prosperity.
The SMMT also called for ‘turbocharged’ Brexit negotiations to deliver ‘a comprehensive zero-tariff Free Trade Agreement’ to avoid what it predicted would be a ‘crippling’ £40bn in production losses by 2025.
It said: ‘A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953. This would mean a £40 billion cut in revenues, on top of the £33.5 billion cost of Covid-19 production losses over the period.’
At risk was the UK’s status as the world’s 10th largest exporter of goods.
Mr Hawes said: ‘Covid has consumed every inch of capability and capacity and the industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit.
‘That’s why we do need to ‘turbo charge’ the negotiations to secure a comprehensive Free Trade Agreement with the EU that maintains tariff and quota free trade. With such a deal, a strong recovery is possible, we can safeguard the industry and our reputation as an attractive destination for foreign investment and a major trade player.’
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