The UK government is stepping in with financial support for Jaguar Land Rover, providing it with a hefty loan as it continues to battle the fallout from a cyberattack.
A government-backed loan to the tune of £1.5 billion ($2 billion) will be made available to the carmaker to support its recovery and the companies in its extensive supply chain struggling as JLR brings its invoicing systems back online.
Business secretary Peter Kyle said: “This cyberattack was not only an assault on an iconic British brand, but on our world-leading automotive sector and the men and women whose livelihoods depend on it.
“Following our decisive action, this loan guarantee will help support the supply chain and protect skilled jobs in the West Midlands, Merseyside, and throughout the UK.
“We’re backing our automotive sector for the long term through our modern Industrial Strategy and the landmark trade deals we’ve signed to boost exports, as part of our Plan for Change.”
The announcement follows Kyle and other politicians visiting JLR production plants and their suppliers last week, when potential government intervention was floated.
Labour MP Liam Byrne, chair of Parliament’s business and trade committee, said that the case to be made for government intervention was strong, and the urgency to resolve the matter was growing with each passing day.
“This is a huge cyber shockwave that’s rippled through the supply chain, and people are now losing their jobs through no fault of their own,” said Byrne.
“That’s bad for the automotive industry. We need those skills and those people kept attached to those firms. And we can’t just have a cyberattack take down one big manufacturer like Jaguar Land Rover, and the supply chain then go down because it’s incredibly difficult to put it back together again, once things are back up and running.”
JLR’s production plants have remained closed since August 31, and the impact on its suppliers – and local communities – is said to be severe.
Workers and their families fear for their jobs after seeing suppliers, many of which rely on their big JLR contracts, already initiate redundancy proceedings.
Then there are the smaller businesses that serve local communities. With JLR’s main production plants being based in Solihull and Halewood – employing roughly 9,000 and 3,000 workers respectively – businesses such as sandwich shops and cafes have seen a significant loss in revenue.
When these businesses lose out, so do their suppliers, such as bakers and butchers, meaning the impact of JLR’s attack extends far beyond what is typical for such cases.
These stories are what fueled the speculation around a potential government support package, which was initially led by Unite, a trade union whose membership includes those in the automotive industry.
“The government needs to defend jobs when our industries are under attack,” said Sharon Graham, general secretary at Unite, earlier this month.
“Many UK workers in small and medium automotive manufacturers are already facing insecurity because of the low volume crisis in the sector. Thousands of these workers in the JLR supply chain now find their jobs are under an immediate threat because of the cyberattack.”
It is estimated that the impact of the cyberattack threatens around 120,000 jobs at JLR and companies across its supply chain.
David Bailey, professor of business economics at the University of Birmingham, said JLR could be hemorrhaging between £5-10 million ($6-13 million) for every day that production remains halted.
He estimated that JLR could ultimately lose out on £2.2 billion ($2.9 billion) in revenue and £150 million ($202 million) in profit.
“It’s one of the worst crises the company has ever faced,” said the economist. “We’ve seen it get through the global financial crisis, through COVID, through the semiconductor crisis, but we’ve not had anything like this before, where the company has not made any cars for a month.”
He added: “I don’t think listening is enough anymore. The Department for Business and Trade said it has been monitoring the situation – great – but I really think we’re at the point where they need to be putting in place some sort of emergency support because JLR is now saying [they’re going to restart on] October 1… There’s no guarantee that they’re going to restart on October 1. Businesses are running out of money.”
JLR has not issued any further progress updates since last week, at which point it said systems were slowly coming back online, and its invoicing capacity was growing.
The government-backed loan will be provided by a commercial bank and must be repaid over five years, the Department for Business and Trade stated.
The loan is backed by the Export Development Guarantee (EDG) – a high-value loan facility available to UK exporters – and provided by credit agency UK Export Finance (UKEF).
The EDG works for commercial lenders and does not directly support loan recipients. It provides a guarantee to lenders, which covers up to 80 percent of the risk on loans to UK exporters, allowing them to facilitate financial support.
Responding to the news, Graham said: “This is an important first step and demonstrates that the government has listened to the concerns raised in meetings with Unite over recent days. This is exactly what the government should be doing, taking action to protect jobs.
“The money provided must now be used to ensure job guarantees and to also protect skills and pay in JLR and its supply chain.”
Richard Parker, mayor of the West Midlands, where Solihull and JLR’s biggest production plant is located, said: “This support is vital to the West Midlands – it will keep people in work, protect the smaller firms that rely on JLR, and give our region the stability it needs while production is paused.
“I’ll keep working hard with ministers and industry to safeguard jobs and make sure our world-class automotive sector comes through this stronger.”
It’s understood that the support package tabled on September 28 is the first of its kind for a private company stricken by cyber woes in the UK.
UKEF previously authorized a £1 billion ($1.3 billion) loan for Ford in July, although this was to help it support a global transformation and its manufacturing of smart electric vehicles. ®