Coronavirus impact: JLR to put about 20k employees in UK on furlough

Mumbai: Jaguar Land Rover has put about half of its 40,000 employees in the UK on furlough and its chief executive Ralf Speth and his senior management team have taken a 10-30% pay cut for one quarter, as the Covid-19 pandemic and lockdowns globally have crippled business.

The Tata Motors-owned luxury-vehicle maker is seeking to utilise a UK government wage bill scheme for the furloughed employees. Under the ‘Coronavirus Job Retention Scheme’, the British government will pay 80% of workers’ wages, up to 2,500 pounds per month, if they are put on leave. This facility is being used by many businesses in the UK to save jobs.

A Tata Motors spokesperson said the UK subsidiary had furloughed all roles that were not critical. The JLR CEO has also confirmed that he and the executive leadership team will defer salary payments for the next three months, the spokesperson said.


FY19 Wage Bill 11.6% of Revenues

“At this stage, this affects around 50% of our UK workforce. For those on furlough, we are topping up wages to protect 100% base salary during April and continue to monitor the situation. Sir Ralf will take a 30% reduction, the board of management a 20% reduction and executive leadership team a 10% reduction,” added the spokesperson.

As of March 2019, JLR had 44,101 employees globally. It paid £2.82 billion, or 11.6% of revenue, in wages in fiscal 2019, including payments towards social security and pension, according to the company’s annual report. The average salary was £63,944. It also paid £3.19 million to directors.

In the first nine months of fiscal 2020, JLR spent £1.94 billion, or 11% of revenue, towards wages. With continuing shutdowns in the UK and elsewhere adding to worries over volumes that were already contracting, the savings from the furlough and salary cut for top executives will only offer a marginal help in containing cost.

The retail volume of the JLR, excluding its joint venture in China, fell 30% in the fourth fiscal quarter ended March 31, 2020. The fall was 42.6% for the Jaguar brand while for Land Rover, it was 25.6%. All JLR manufacturing facilities, except for in China, are currently closed. In China, it restarted production in February, after the Covid-19 crisis came under control in that country.

With the lower production in the fourth quarter, the company is unlikely to attain its cost saving target of 400 million pounds under the ‘Project Charge Plus’. Jaguar Land Rover had also guided for a capital expenditure of up to 4 billion pounds in FY21. Given the steep fall in sales and uncertainty about the future, it may now have to relook at the plans.

The Tata Motors spokesperson said the British subsidiary was working towards an orderly return to production as soon as conditions permitted and was tightly managing all costs and investments, as well as working capital.

The company had cash of £3.9 billion on its books and undrawn revolving credit facility of £1.9 billion at the end of December 2019. It had debt of £6.07 billion, with repayment of £481 million scheduled for 2020.

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