Government mulls financial support for JLR supply chain firms

The government is looking at ways to financially support the companies in Jaguar Land Rover’s (JLR) supply chain.

JLR halted car production after a cyber-attack at the end of August forced it to shut down its IT networks. Its factories remain suspended until next month at the earliest.

Fears are growing that some suppliers, in particular the smaller firms who solely rely on JLR’s business, could go bust without support.

One idea being explored is the government buying the component parts the suppliers build, to keep them in business until JLR’s production lines are up and running again.

Unions had called for a Covid-style furlough scheme, but ministers have ruled this out given its likely cost, sources have told the BBC.

Another option being considered is providing government-backed loans to suppliers, though this is understood to be unpopular with suppliers.

The purchase and stockpiling of car parts by the government are also an option on the table, but this would present considerable logistical challenges.

JLR’s manufacturing process relies on the right part arriving at the right place, at the right time.

However, industry experts agree doing nothing risks firms in the supply chain, which employs tens of thousands of workers, facing bankruptcy.

The Business and Trade Select Committee is due to meet on Thursday afternoon to hear testimonies from businesses in JLR’s supply chain because of deep concern for some of these businesses to remain viable.

This evidence will be shared with the government afterwards.

Senior government figures are concerned about a pattern of cyber attacks on UK institutions and businesses, such as the British Library, Marks & Spencer, and the Co-op.

A group calling itself Scattered Lapsus$ Hunters has claimed responsibility for the hack on JLR, Marks & Spencer, and Co-op.

An investigation is under way into the cyber attack on JLR, which is believed to be costing the company at least £50m a week in lost production.

JLR would normally expect to build more than 1,000 cars a day at its three factories in Solihull and Wolverhampton in West Midlands, and Halewood in Merseyside.

However, workers were sent home following the hack – which first came to light on 1 September – with no firm return date.

About 30,000 people are directly employed at those plants with a further 100,000 working in the firm’s supply chain.

On Tuesday, the business secretary and industry minister visited the West Midlands for the first time since the incident to meet JLR and the firms in its supply chain.

The Department for Business and Trade said ministers had discussed “the impacts of the cyber incident and how JLR can work towards restarting production”.

Additional reporting by Pritti Mistry