Jaguar Land Rover could face a £120 million hit to its finances after it extended its shutdown on car production for another week, experts have warned.
The UK’s largest car maker said on Tuesday that it will pause production across all its factories until at least Wednesday, September 24 as it continued to grapple with the fallout of a damaging cyber attack.
It has reportedly also warned suppliers that disruption could last into November.
JLR was forced to halt production at the beginning of the month at its factories in Halewood, on Merseyside, and Solihull in the West Midlands, and its engine manufacturing site in Wolverhampton.
It followed a major cyber attack that affected its global operations and forced the UK manufacturer to shut down its systems on August 31.
Staff have been told not to return to work while production lines remain affected.
“We have taken this decision as our forensic investigation of the cyber incident continues, and as we consider the different stages of the controlled restart of our global operations, which will take time,” a JLR spokesman said.
“We are very sorry for the continued disruption this incident is causing and we will continue to update as the investigation progresses.”
JLR has said it is “working around the clock” to get things running again, including bringing in cyber security specialists and introducing workarounds to keep activity going.
However, the cost of the prolonged period of disruption is likely to be damaging for the manufacturer, which is thought to usually build about 1,000 cars a day.
David Bailey, professor of business economics at the Birmingham Business School, told the PA news agency that the pause is likely to significantly dent profits and comes at a challenging period for the company.
“The value of cars usually made at the sites means that around £1.7 billion worth of vehicles will not have been produced, and I’d estimate that would have an initial impact of around £120 million on profits,” he said.
“Some of that might be recovered when production restarts but the longer this goes on, the more of a concern this will be.
“If reports are right that this could last until November, then that could mean around 50,000 cars not being produced.”
Mr Bailey also raised concerns that the halt to production could threaten the future of some smaller businesses within JLR’s supply chain.
It is understood that executives from JLR will speak to Department for Business and Trade officials on Tuesday to call for financial support for supply chain firms.
Trade union Unite also warned that thousands of workers in JLR’s supply chain are at risk of losing their livelihoods as a result of the production freeze.
It called on the government to introduce a furlough scheme to secure people’s jobs while work to recover its operations continues.
It said that those directly employed by JLR were not at risk of losing their jobs.
Meanwhile, JLR said last week it believed “some data” had been accessed in the hack although it did not specify who has been affected, such as customers or staff.
The company said it was contacting people if it found their data had been affected.
