Page last updated at 08:28 GMT, Wednesday, 28 January 2009

Car parts firm confirms job cuts

Land Rover grill
GKN makes parts for the Land Rover Discovery and Range Rover Sport

Engineering group GKN has said it has cut 2,800 jobs globally since October and may have to shed more because of the slump in the global car industry.

The UK firm, which supplies carmakers including Land Rover and Ford, said it had cut 242 UK positions so far.

GKN said all its car part plants were now continuing to work shorter weeks due to the falling demand.

Car firms are meeting Lord Mandelson later for talks on the government's 2.3bn loan guarantee package.

'Headcount reduction'

GKN said that its automotive business made a loss in both November and December, and that conditions in the global car industry had continued to decline since then.

This is another body blow for an already beleaguered engineering industry
GMB official Joe Morgan

As a result, it said it was moving ahead with further "selected headcount reduction programmes".

The Redditch-based firm has four UK factories manufacturing car parts in the West Midlands and Telford, that currently employ 2,000 permanent staff out of a UK total of 6,300.

GKN said 2009's additional job cuts and wider restructuring would cost it an estimated 120m.

"This is another body blow for an already beleaguered engineering industry," said GMB official Joe Morgan.

"We need to discuss the implications of this on a plant-by-plant basis, and see if there is any scope for government assistance."

GKN's announcement comes after almost all of the big car firms have announced cuts in production as a result of a substantial fall in demand.

Jaguar Land Rover, to which GKN supplies the main chassis for both the Land Rover Defender and Range Rover Sport models, said earlier this month that it had seen a "severe reduction in demand".

The carmaker is also cutting its workforce by 450.

Jaguar Land Rover chief executive David Smith said he did not expect sales to return to normal levels "for some time".

Government support

The UK government has now moved to try to assist the country's car sector.

Business Secretary Lord Mandelson on Tuesday outlined a package of government support for the UK car industry potentially worth up to 2.3bn.

The package includes a scheme to unlock 1.3bn of loans from Europe for car manufacturers and major suppliers.

He said the government would also guarantee up to 1bn of further loans.

Lord Mandelson is now due to meet car industry leaders to discuss the finer details.

However, the Conservatives said the European loans had already been announced last year.

In addition to making car parts, GKN supplies components to the aerospace industry.

In September last year GKN bought Airbus' Filton plant in Bristol - which makes wing parts for Airbus planes - for 136m.

Its total global workforce totals 42,000.

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