JCB has announced up to 290 job cuts in a move that leaves more than 10% of the workforce at one of Britain’s biggest manufacturers facing redundancy.
The construction equipment company, known for its yellow diggers, blamed a rapid slowdown in machine orders worldwide, with the cuts taking place across JCB’s eight Staffordshire factories and in Wrexham.
JCB, chaired by the Conservative peer Lord Bamford, had already announced up to 400 job cuts in September from its UK headcount of 6,000. The company is consulting with workers over those cuts and has launched a fresh consultation with the GMB trade union over the latest round of redundancies.
Graeme Macdonald, JCB’s chief executive, said: “Manufacturers in the construction equipment industry are currently facing very tough trading conditions and we have to react to the current market reality to protect the long-term future of the business. Regrettably, this means taking the very difficult decision to reduce the number of shop-floor positions by up to 290 across the UK.”
The last time JCB was forced to cut jobs on this scale was in 2009 during the depths of the global financial crisis. Macdonald, who runs JCB for the billionaire Bamford family, said the global economy shows no sign of improving and that the outlook is challenging.
JCB said demand had plunged in Russia and Brazil – big markets for the company that have been hit by falling oil and commodity prices – and in China. Previously sturdy growth in the UK and the US weakened over the summer, it added.
The job cuts will be a blow to George Osborne because JCB is a star of the manufacturing sector, which the chancellor has championed but is suffering as the global economy slows. The plunge in the price of oil, welcomed by Osborne for bringing increased household spending power, is causing export markets to weaken, hitting UK business.
Fears are growing that declining world trade will cause a spate of factory closures in the UK, dashing hopes of an export revival. More than 5,000 steelworkers are facing redundancy in England and Scotland, and 860 jobs will go when Michelin closes its tyre factory in Ballymena, Northern Ireland, announced on Tuesday.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Manufacturing has been in recession for the last three quarters and job losses at JCB fit into that story. The UK’s economic recovery is going to slow quite sharply over the next six months or so and weakness in emerging markets and the strong pound will be the key drivers in that slowdown.”
JCB is the third biggest maker of construction equipment in the world and exports 75% of its machines to about 140 countries. It contributes £1.4bn a year to British GDP and each of its jobs supports another three in the supply chain, independent analysis has shown.
Bamford is also a big Tory donor, contributing more than £2.5m to the party in recent years, and he wrote a report on manufacturing for the government in 2012.
Lee Hopley, chief economist at EEF, the manufacturers’ lobby group, said: “The climate is tough for manufacturers. There are concerns about emerging markets, sluggish demand in Europe and the plummet in the oil price has hit manufacturing supply chains.”
JCB is privately owned and takes pride in making decisions for the long run instead of to meet City-imposed targets. It said weakness in countries that depend on oil and commodity exports had affected wider business confidence.
Gordon Richardson, the GMB’s JCB convenor, said: “This news is obviously very disappointing but it has been apparent now for some time that global markets have been declining. Our job as a trade union is to now work hard to formulate a plan to mitigate the impact of the proposed redundancies.”
