Steel price and 'credit crunch' cost jobs at JCB

JCB is to axe at least 500 jobs in the UK as orders in Europe have dropped by more than 20 percent, while manufacturing costs have risen. However, plans to expand in 'emerging markets' - such as the Middle East - remain unchanged.

Commenting on the cutback, Matthew Taylor, Group Chief Executive Officer, said: "Our products are used mostly in the construction sector, which has been badly affected by the global credit crisis and rising raw material costs. Many JCB dealers around the world are experiencing lower sales rates because of reduced customer activity, mainly in the house building and commercial property sectors, and this has a direct impact on our machine build programme."

Taylor added: "Some emerging markets, such as Russia, Brazil and the Middle East continue to grow and the agricultural sector remains quite strong, but this is only partially offsetting the impact of the downturn in the construction sector, particularly in more developed markets.

Story continues below

Advertisement

FEATURED COMMENT Please click here to comment on this article

These job losses are regrettable but absolutely necessary to ensure that JCB remains competitive and well-positioned to benefit from any market upturn. However, we do not expect to see a recovery until late 2009 at the earliest."

Despite the so-called 'credit crunch' the firm enjoyed a growth in machinery sales throughout 2007, with new or refurbished plants opening in India and China as well as a new sales operation established in the UAE. Last year India overtook the UK as the firm's largest market, with sales up from 10,600 in 2006, to more than 17,000.

However, all regional heavy manufacturing suffered a blow this week as steel priced soared by 10 percent in as many days. The massive hike has been blamed on the amount of reinforcing bars currently needed for GCC construction projects.