'Many businesses in JLR supply chain are now clinging on with uncertain cashflow and no clear path to recovery' - expert
Jaguar Land Rover's lower-tier suppliers face a tough six months hanging on for cashflow to improve and new contracts to come through, according to experts speaking in the wake of a debilitating cyber attack.
Johnathan Dudley, head of manufacturing and SME corporates at national audit, tax, advisory and consulting firm Crowe, said an analysis of the three combined surveys of JLR’s supply chain undertaken by the Greater Birmingham, Black Country and Coventry and Warwickshire Chambers to find out how businesses are managing in the aftermath of the cyber attack that hit the automotive giant at the start of September, told the same story.
He said: “The Government’s £1.5 billion commercial loan guarantee is starting to help tier 1 suppliers to survive, but with no new orders placed down the supply chain in recent weeks, cash has dried up in the lower tiers. Many businesses are now facing severe financial strain, clinging on with uncertain cashflow and no clear path to recovery.
“More support is needed to help SME suppliers get through the next three months, ensuring they’re still operating in the new uear, and positioned to benefit when the defence contracts start to filter down the supply chain next year.
“The JLR supply chain has a skillset and range of abilities that can support the Government in delivering its Defence Industrial Strategy. There will be multiple opportunities to win contracts in the next round of defence spending, which begins in April next year.
“But first we have to get there.”
Mr Dudley added that he is concerned there is limited understanding in Whitehall of the real issues facing the lower-tier suppliers to JLR, which resumed operations in a phased return earlier this month after a month on pause following the cyber attack.
He said businesses that supply into the automotive giant, which has large manufacturing bases alongside the M54 near Wolverhampton and Telford, as well as in Solihull, are "doing what they can to survive" and he added: "This includes lay-offs and redundancies just as the run into Christmas begins.
“The key has to be for the Government to take action now to ensure that the supply chain is still there in the spring, and even then, it will take time for MOD contract payments to filter down the supply chain and help to restore cashflow.
“Whitehall seems to think that the problem has gone away, but it clearly hasn’t. I am aware that local politicians are asking affected businesses and individuals to contact their own MPs to keep this issue front of mind.”
Businesses affected by the JLR crisis can contact him on johnathan.dudley@crowe.co.uk or call 0121 543 1900.
