CBM calls for urgent support package for downstream JLR suppliers

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

Whilst the loan, which was likely timed to coincide with the Labour party conference, appeared good news at the time, it appears that 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 their first-tier suppliers.

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

CBM President Stephen Morley, who supports over 200 members, commented: “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.”

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

The Growth Guarantee scheme is already in place and one existing mechanism that could be used without the burden of interest costs.

“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,” continued Steve.

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 are calling for greater clarity and improved communication from JLR regarding the status of their recovery, in order to enable companies to plan their workforce requirements and secure the finance they need to begin production again.

Michael Beese is Managing Director of Genex UK Ltd, a Walsall-based press work company which employs 17 people and provides parts for several tier 1 JLR suppliers.

He went on to add: “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% and they wanted personal guarantees. Why should l put my business and family home on the line when I’ve done nothing wrong?”

Stephen concluded: “This is a very complex situation. Many assumed that following the government’s announcement, it would be ‘business as usual’, but we are far from that. We must continue building a comprehensive support framework until some level of normality can return.

“There are several stages to this framework – the first is ensuring companies can simply keep operating. Only then can we begin planning for recovery and growth.”

The CBM, which represents over 200 companies involved in metalforming products, warns that without urgent intervention, the whole of the UK automotive supply chain, could face irreversible damage, threatening thousands of jobs and critical industrial capability.

For further information, please visit www.thecbm.co.uk