Tata, the Indian conglomerate that owns Jaguar Land Rover and Corus, is planning to make thousands of UK workers redundant next month unless they receive government financial backing.
David Smith, chief executive of Jaguar Land Rover, admitted that he was working on a contingency plan to make job cuts early in the new year. The firm, along with other British-based car makers, continued to lobby business secretary Lord Mandelson last week. Smith added that it would be a "tragedy" if a rescue package was not unveiled soon.
Corus, formerly British Steel, is also in talks with the government about temporarily laying off staff. The steel maker wants the government to pay the majority of laid-off workers' salaries to avoid making permanent redundancies. "If the government doesn't pay, it will end up paying jobseekers' allowances anyway," one source warned. The union Community said it was braced for "significant job cuts" at Corus in the new year.
After bailing out the banks, the government is worried that rescuing other industries will create a precedent of intervention. Tony Woodley, joint general secretary of the Unite union, urged the government and Tata to break the deadlock and help Jaguar Land Rover and the car industry. "Once the industry's gone, it's gone forever," he said.
Analysts say Tata, whose empire was valued at $22bn before the credit crunch, has enough money to keep Jaguar Land Rover and Corus afloat. But Ashvin Chotai, who runs analyst group Intelligence Automotive Asia, said the Tata kitty might not be as full as people think. "Considering they are looking to the Indian public by selling bonds at high rates of interest, and coming out with a rights issue, that may not be the case," he said.
Source : Guardian
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
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