'Really tough decisions': Manufacturing firm boss lays off staff while awaiting support to get through JLR crisis

Michael Beese is managing director of Genex UK Ltd, a press work company which employs 17 people and provides parts for several tier 1 suppliers to car-maker JLR, which had to shut down its production on September 1 after falling victim to cyber attackers at the end of August.

JLR has said it aims to restart production shortly and the Government has in the last few days announced that it will underwrite a £1.5 billion loan guarantee to help the Coventry-based car manufacturer and its struggling supply chain, but there are concerns about how long it will take for cash to trickle down to businesses which are already on the brink.

As a result of the crisis and the uncertainties, Mr Beese told how he has already had to lay off workers at his firm in Fryers Road, Bloxwich, Walsall.

He said: “We’ve kept working, building some stock to keep our employees in work, but we’ve run out of space and material. I have now laid off staff due to the uncertain short-term future.

“Our customers can’t give us clear plans moving forward, so now I’m faced with some really tough decisions. l looked at getting a loan but was quoted interest rates of 16 per cent and they wanted personal guarantees. Why should l put my business and family home on the line when I’ve done nothing wrong?”

The Confederation of British Metalforming (CBM) said today that the the Government’s support package for the automotive sector is not being rolled out quickly enough and is failing to reach suppliers further down the supply chain.

It's believed details of how the scheme will be administered have yet to be finalised, leaving JLR still working through the metrics required to implement payments for first-tier suppliers.

The delay in assistance has created a serious shortfall, with little prospect of second-, third- and fourth-tier suppliers receiving any level of funding in the short term.

Stephen Morley, president of the CBM which supports more than 200 members, said: “We need to find a way to get money quickly to where it is needed most, to prevent the supply chain from completely collapsing, and that could be an additional type of loan.

“JLR is rightly focused on getting payments through to their first-tier suppliers, and it’s best we allow them to complete that process. Our focus now must be on ensuring that second-tier and smaller suppliers in the chain are supported, so the whole framework is in place when production restarts.”

The CBM is urging the Government to urgently provide immediate funding support to spread the impact of the lost revenue and provide the working capital required to complete orders once they resume.

The Growth Guarantee scheme is one existing mechanism that could be used without the burden of interest costs, Mr Morley said, adding: “The companies suffering are excellent businesses, who are superb in what they do and have survived some major economic shocks. This cyber attack on JLR is no fault of the firms involved, and it is in the Government and the banks’ interests for these businesses to survive."

The CBM has also asked the Government to intervene with banks, following reports that some financial institutions are withholding payments from customers that JLR has already released. This is creating further pressure on already fragile supply chain businesses. 

In addition, its members have called for greater clarity and improved communication from JLR regarding the status of its recovery to enable companies to plan their workforce requirements and secure the finance they need to begin production again.