Jaguar Land Rover is finalising a deal to lend its suppliers millions of pounds as the tax-payer backed rescue of the carmaker hit a wall.
Bosses are putting the final touches to a sweeping lifeline that would see up to £500m be injected into its supply chain, which is at a standstill.
The privately funded initiative, which was first reported in The Sunday Times, is separate to the £1.5bn rescue package unveiled by ministers last week, as the deal is still yet to be signed off multiple sources said.
JLR declined to comment to The Sunday Times.
Plunged into crisis
Britain’s largest car maker was plunged into a crisis last month, after hackers breached the company’s IT system.
The group claiming responsibility for the hack are also behind a string of high-profile attacks earlier this year, including Marks and Spencer and Co-Op.
Global production has been at a halt since the attack, although a phased restart is scheduled to begin on Monday.
However, it is widely believed JLR will be unlikely to be fully up and running before Christmas.
Business secretary, Peter Kyle, and Chancellor, Rachel Reeves announced the £1.5bn guarantee last Saturday, to allow the company, which employs over 34,000 people, to quickly unlock financing from commercial banks.
Reeves hailed the initiative as evidence of the government ‘protecting thousands of jobs’.
Yet, the deal has not been signed, and questions are being raised over if it will provide a framework for the money to be channelled to suppliers who are in need of support.
JLR supports 120,000 employees in its UK supply chain.
West Midlands fears
In particular, the West Midlands is voicing concerns over the problems facing JLR, with the carmaker operating multiple significant facilities in Wolverhampton and Solihull, which are crucial to the local economy.
The heads of Greater Birmingham, Coventry and Warwickshire and Black Country Chambers of Commerce told industry minister Chris McDonald in a letter this weekend: “Many firms are telling us they are running out of cash and have no guarantee of future sales.”
“Whilst we will continue to raise awareness of HMRC’s time to pay scheme, if the situation worsens and the loan guarantee doesn’t flow to suppliers, further measures may be necessary,”
The letter went on to urge the government to “review the lessons” learnt from the Carillion crisis in 2018 and MG Rover crisis in 2005, and the impact they had on “supply chains in the West Midlands and beyond”.
