Christmas shutdown 'could spell the end' for JLR supply chain businesses struggling with cash flow

“It appears that Tier 1 suppliers are mostly back in production, and we hear that JLR were able to fund payments to them from their own resources, rather than take up the government-backed loan assistance.

“But for some further down the supply chain, in particular SMEs, it could be too late.”

Mr Dudley said Tier 2, 3 and 4 supply businesses were being hit by the double whammy of quarterly rent payments falling due and the Christmas two-week shutdown.

“The coming days and weeks are likely to be confronting, and it will become evident which businesses in the JLR supply chain have managed to weather the storm.”

He said there were already reports of some companies taking advice on their potentially insolvent position and some global suppliers have chosen to withdraw from the UK totally - saying this was down to the stoppage at Coventry-headquartered JLR which has large manufacturing bases alongside the M54 near Wolverhampton and Telford, as well as in Solihull.

“Global organisations, who had been manufacturing in the UK, are acutely conscious of the very high industrial energy costs in this country, particularly when compared to other countries." he said - adding: “And this makes manufacturing in the UK very expensive.”

He advises companies that are seeing signs of cashflow problems starting to impact their business to take professional advice as soon as possible.

“There are alternatives. New equity, other sources of investment and obviously restructuring are all options that should be considered, but they need to be examined in the round in order to achieve long term, lasting solutions,” he said.

Businesses seeking advice on managing through the coming weeks can contact [email protected]. 

Crowe has offices in Birmingham, Bristol, Cheltenham, Kent, London, Manchester, Oldbury and Thames Valley.