Jaguar Land Rover confirmed today it would be shutting one of its West Midlands manufacturing bases – on the same day that it announced the creation of 800 new jobs on Merseyside.

JLR has decided to put the LRX concept – the so-called baby Range Rover – into production but this will take place at Halewood, rather than in the West Midlands.

The firm intends to close one of its plants in the West Midlands but says it has not decided whether Castle Bromwich or Solihull will close. However, Castle Bromwich, which dates back to the 1930s, is thought to be more vulnerable.

JLR has today effectively announced a new business plan, aimed at making it leaner and more streamlined, as a result of the worst recession in living memory.

New car sales, including those of Jaguar and Land Rover, are down globally by 25 to 30 per cent. This has resulted in JLR operating at less than 60 per cent of its manufacturing capability.

Jaguar Land Rover chief executive officer David Smith said: “This is a plan that recognises the impact the economic collapse has had on our business.”

There will be no compulsory redundancies in the short term because of an agreement between unions and the firm, which is owned by Indian giant Tata.

Business Secretary Lord Mandelson said: “I know that trading conditions are difficult for the car industry.

“It is inevitable that we will see further re-structuring across the industry.”