The Confederation of British Metalforming (CBM) has praised Jaguar Land Rover (JLR) for its phased return to production and the introduction of a new funding scheme to stabilise its supplier base. However, the trade body cautioned that severe liquidity challenges continue to endanger smaller firms deeper within the UK automotive supply chain.
CBM President Stephen Morley described JLR’s new payment initiative as a “welcome boost to liquidity” for first-tier suppliers but said the benefits were failing to reach smaller companies at lower levels of the supply chain.
“JLR is to be applauded for its hard work in getting funds in place and for producing a workable payment scheme,” Morley said. “However, there are still key issues, especially for smaller firms. Understanding what qualifies a supplier for support is paramount, and there is still reliance on the goodwill of tier-one suppliers to pass payments down. In some cases, we know this hasn’t happened.”
The CBM confirmed that Industry Minister Chris McDonald has held talks with major banks to explore emergency financial support for businesses affected by production delays and supply chain disruption. Morley expressed gratitude to the minister for his intervention and urged all JLR suppliers to contact their banks immediately to discuss available assistance.
“Suppliers further down the chain need urgent liquidity to survive and then to fund the restart of production,” he said. “The second hurdle is a gap in sales, which could stretch to ten or twelve weeks — and that could be the real breaking point.”
To ease short-term pressures, the CBM has proposed that the government’s Growth Guarantee Scheme be adapted to provide interest-free working capital to smaller manufacturers. Morley said this adjustment would allow firms to bridge revenue gaps and rehire workers without taking on additional debt.
“It’s already in place and could be modified quickly to be used without the burden of interest costs,” Morley explained. “This would spread the impact of lost revenue and provide the working capital required to restart when orders come through again.”
The CBM emphasised that supporting viable firms now would save money in the long run, arguing that “the price of saving good companies is far cheaper than losing them.”
Morley also warned that even if immediate liquidity pressures ease, the long-term consequences for cash flow, credit access, and investment could linger. “If immediate liquidity concerns are alleviated, how does this unwind in the future?” he asked. “This situation will have a material impact on cash flow, long-term liquidity and profits. Supplier relationships with lenders could also be affected, influencing access to future facilities.”
He added that safeguarding smaller manufacturers was crucial to preserving the strength and resilience of the UK automotive supply chain — a vital component of British industry.
