JLR to seek 1 bn pound loan facility and pay cuts: Report

JLR to seek 1 bn pound loan facility and pay cuts: Report
LONDON: Car maker Jaguar Land Rover, is in talks with unions over company-wide pay cuts to avoid further layoffs at its three main UK sites, even as the company is seeking an additional one billion pound loan facility from the UK Government, a media report today said. The Sunday Times said that union leaders have been offered a "menu" of possible changes to pay agreements in return for a pledge by the company to keep staff at work. JLR, owned by India's Tata Motors has already laid off several hundred temporary and white-collar staff and is thought to be considering cutting up to 1,500 more jobs if sales do not revive quickly. The company Chief Executive David Smith told the newspaper that the support package announced by Business Secretary Lord Peter Mandelson last week would do little to revive demand before March, traditionally an important month for UK car sales. "What we have been trying to impress on Mandelson is that it doesn't address the urgent nature of the problem," he said. Smith said "Tata has already put in significant amounts of additional funding, but what we can't access is normal commercial facilities. Like a lot of large companies rolling over existing loans, we are finding it difficult to get refinancing - it requires the government to put in loan guarantees to do that." The government announced a 2.3 billion pounds package, guaranteeing loans of up to 1.3 billion pounds to car and component companies with a further 1 billion pounds in loan guarantees from the European Investment Bank. But Smith needs more. "No, it's not fully what we wanted," he said. "There are elements of the package that are helpful for the long term, and it's good the government has recognised the strategic importance of the industry, but..." "We had a strong start to 2008 with record sales. 2007 was Land Rover's third record year, we made 327 million pounds profit, and more in the first half of 2008, so we were very profitable." Part of Mandelson's package was the provision of loan guarantees to car finance firms - but none qualifies immediately because of technical restrictions, the report said. "We have said if we are going to get finance ready by March, we need something that will take effect now," Smith said. Smith said the company was likely to seek around 400 million Euros (350.8 million pounds) but it was thought it would not be forthcoming until June. "We are trying to bring that forward to April" he said. The group, which employs about 15,000 people in the UK, would apply for a further 1 billion pounds UK government loan facility. Meanwhile, the steelmaker Corus, JLR and construction groups are in talks with ministers about a scheme that would see the government pay part of the wages of workers left idle by sudden downturns in demand to prevent them being laid off. Companies would make up the remainder of the wage packets and retrain the idle staff. The programme, similar to those offered by the Dutch, French and Germany governments, would run for a maximum of six months.
Source : Economic Times (2/1/2009)