Government Weighs Support for Jaguar Land Rover Suppliers
A second suggestion is to offer government-backed loans to struggling firms, but again, most of the suppliers are not willing to burden themselves
Experts warn that inaction would bring about catastrophic ripple effects within the supply chain, supporting more than 100,000 individuals, as well as JLR's own 30,000 direct staff. Photo/ Courtesy
By Juliet Jerotich
The British government is thinking about possible measures to protect suppliers linked to Jaguar Land Rover (JLR) after the carmaker suspended its operations in the wake of a huge cyber-attack. The measure is aimed at offsetting losses for the smaller firms in JLR’s supply chain, which live only through its activities.
Shutdown of Production and Growing Concerns
JLR’s factories were shut down towards the end of August when hackers attacked its IT. The shutdown, which came to light on 1 September, has left all three of its factories in Solihull, Wolverhampton, and Halewood shut. JLR would typically roll out more than 1,000 cars a day, but now employees have been sent home without any clear-cut end date.
The shutdown has already cost JLR a projected £50 million weekly, and the suppliers face bankruptcy if production does not resume earlier. Experts warn that inaction would bring about catastrophic ripple effects within the supply chain, supporting more than 100,000 individuals, as well as JLR’s own 30,000 direct staff.
Options Under Consideration
Among the suggestions made is for the government to purchase and store components made by vendors until production can start up again. This would tide businesses over during JLR’s IT collapse. The downside is that it does entail some gargantuan logistical challenges, since JLR’s production process relies on very accurate, just-in-time supply of components.
A second suggestion is to offer government-backed loans to struggling firms, but again, most of the suppliers are not willing to burden themselves with additional debt. The unions had been pushing for a furlough-style scheme similar to what was used in the Covid-19 period, but ministers have ruled it out because it would be too costly.
Political and Security Implications
The Business and Trade Select Committee will sit on Thursday to hear evidence from firms affected by the disruption. Their evidence will be heard by ministers in order to advise the government’s reaction.
Senior government figures are also worried about the broader trend of cyber-attacks against UK institutions and enterprises. A group using the handle Scattered Lapsus$ Hunters claimed to have carried out not only the JLR hack but also recent hacks of Marks & Spencer, the Co-op, and the British Library.
Government Engagement
Earlier this week, the industry minister and Business Secretary made a visit to the West Midlands in person to meet JLR executives and suppliers personally. The visit, according to the Department for Business and Trade, was focused on “the impact of the cyber incident and how JLR can work together towards restarting production.”
As negotiations are ongoing, the government is being pushed to act swiftly to save jobs and shore up one of Britain’s most critical motor industry supply lines.
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