Built to last? JLR redundancies challenge the government’s industrial ambitions

On Monday, and before a backdrop of bowing robotic arms and an increasingly fragile economy, Chancellor John Healey made his first major speech since taking over at the Treasury. Setting out the government’s stall on advanced manufacturing, regional growth and a renewed industrial strategy, the speech was unfortunately juxtaposed with the announcement that Britain’s largest car manufacturer, Jaguar Land Rover (JLR), is to make significant redundancies and cutbacks to its operations, including in the UK. 

The somewhat awkward timing and location of the speech (just down the road from the JLR factory in Coventry) appears to challenge the new government’s renewal narrative, especially as Prime Minister Burnham has been so keen to make reindustrialisation a central pillar of his economic agenda. Is there a contradiction at the heart of the government's growth agenda, or is JLR evidence of the challenges that strategy is designed to address?

A government strategy centred on growth, investment and industrial renewal sits rather uneasily alongside large-scale redundancies in a sector that ministers have repeatedly identified as strategically important. However, it could be argued that JLR’s difficulties illustrate exactly why industrial policy should be a priority.

The automotive sector has become one of the most challenging battlegrounds in the global economy. JLR, like other manufacturers, is struggling with competition from cheap Chinese electric vehicles (EVs), a drop in demand, and 10% tariffs on cars imported into the US (which accounts for 29% of the company’s sales). Healey's speech acknowledged this world shaped by trade tensions, geopolitical uncertainty and fierce international competition. 

His argument is that stronger public investment, support for innovation, devolved growth powers and a renewed industrial strategy are needed precisely because companies such as JLR are operating in an increasingly hostile global marketplace. The fact that one of Britain's most iconic manufacturers feels compelled to make mass redundancies is probably the best indicator of the scale of the challenge.

There is another tension highlighted by recent events. The Burnham government has been keen to set out the need for an active state, but they have stopped short of direct intervention with JLR in the form of a bailout, instead focussing on broader support for the automotive sector. This includes funding for EV production, research and development, and measures designed to improve the competitiveness of UK manufacturing. This perhaps gives us a flavour of things to come: an active state willing to back industrial sectors, skills and technologies, but without shielding individual firms from commercial realities.

Regional growth is also at the centre of Burnham’s agenda and JLR is more than a major employer in the West Midlands. The company sits at the heart of a vast automotive supply chain supporting thousands of additional jobs across manufacturing, engineering and logistics. Any significant reduction in activity has implications far beyond the company's own workforce. That is why the announcement will be watched closely not only in Westminster but across local government, combined authorities and regional economic partnerships.

Although Healey’s speech was delivered in the grave tones of someone who is used to making announcements about war and international security threats, it did offer some optimism. That optimism will not be realised simply through ministerial rhetoric but will be measured by Britain’s ability to remain competitive in an increasingly turbulent market and create sustainable job opportunities.

Ultimately, the JLR announcement serves as an early test of the government's claim that it can deliver a new era of industrial growth. The coming months will determine whether the announcement becomes evidence of the problem the government is trying to solve, or proof that its growth strategy is failing its first major test. The question remains as to whether Burnham’s much-vaunted industrial renewal will be built to last like the Land Rovers Britain has built for the last eight decades, or whether it will break down and be left in the layby of failed strategies awaiting a rescue.